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Are you missing tax breaks?

By Garry Angus


"People with disabilities may be missing significant tax breaks on their yearly returns to Canada Revenue," says Doug Lagasse, the TaxAid Western Canada / Maritimes Client Contact.

His company's TaxAid service (toll free 1-866-829-4446) – a division of the firm of Ken Lagasse chartered accounting – provides a free tax review for people with a disability, their families, or those supporting them financially. Under the free service, a client's last ten years of returns can be reviewed, which may reveal significant refunds.

According to Lagasse, one of the most significant issues is "where there have been misunderstandings over who qualifies for the disability tax credit (DTC)." In 2002 the federal government made "significant changes," according to Revenue Canada, "to make the eligibility criteria easier to understand. " But, says Lagasse, "there are still gray areas in interpretation."

"The DTC is not based on the disability one has, but how it affects you," says Lagasse.

"For example, you do not automatically qualify for a DTC if you have an artificial limb, but if you cannot walk a short distance - say 150 metres- without moderate to severe pain, or it takes a significantly longer time to do so than a healthy person of your age, then you will likely qualify."

Under the Income Tax Act, a qualified person from the following list must certify a person for eligibility for the DTC: medical doctors, optometrists, audiologists, occupational therapists, psychologists, and speech-language pathologists.

According to Lagasse, " A lot of the doctors and people with disabilities assume that how the disability affects you must be a lot more severe than the actual intent or requirements of the tax legislation."

As Lagasse explains, physicians may not necessarily be trained in the area of disability tax legislation, "nor in many cases see it as their job to know this area."

"So a lot of them think that the severity needs to be a lot more than not only the intent of the legislation but the precedents being set by the tax courts in the last five years."

Lagasse says, "It is still subjective, and always leads to gray areas, and always requires that doctors somehow qualify the patient based on his/her knowledge of the intent of the tax legislation, and there you have the difficulty."

The TaxAid service looks at a combination of the legislation and records from their database of tax court case decisions to help determine who qualifies for the DTC, he says. "Because we know who qualifies and who doesn't based on our past history of helping our clients, in a nutshell, we insure everybody with a disability, their families and caregivers receive the credits and refunds they are entitled to."

Another feature of the TaxAid service are its free 'Tax Reduction Clinics' - held at various public locations in the lower mainland since last year. With over 13 successful clinics held so far, and more B.C. and Ontario dates just announced for the new year, client feedback for this service has been quite good, says Lagasse.

"In the Tax Reduction Clinics we cover 7 tax credits or deductions that are applicable to people with disabilities, a family member or caregiver," says Lagasse. These seven topics covered are: the disability tax credit; the caregiver tax credit; infirm dependent tax credit; childcare expenses; medical expenses; attendant care expenses; eligible dependent tax credit.

"Eligibility [for a tax credit or deduction] depends on numerous factors including income levels, severity of infirmity, relationships, timing, other claims," says Lagasse.

"Many people with disabilities have low incomes and so a large part of what may be available in the way of tax reductions cannot be utilized by the person with the disability but can be transferred to a relative or caregiver."

According to the TaxWise website (www.taxwise.ca/taxaid), irrespective of a clients income level, the Tax reduction Clinics are intended for: anyone who has suffered a mental or physical illness or injury that markedly affects daily living during the last ten years; anyone under prolonged medical care; those who are providing financial support of any kind to a person with disabilities or infirmities; or anyone with significant personal medical expenses.

"After the clinics, we generally offer free tax reviews, and they can be done over the phone as well," says Lagasse.

In order to cover the costs of providing its free services, TaxWise charges a "one-time contingency fee, based on successful outcomes, to those who wish to take the next step and engage our accountants to prepare and submit their claims to CRA," according to their website.

When asked if he had any parting tips for people with disabilities seeking to maximize their tax return credits and deductions, Lagasse said: "Don't assume that you have maxed out your tax refunds in this [disability tax credit] area. Because of transferability issues, families should take a close look as well."

"The difficulty is who are you going to find to help you out with that, because tax professionals in this area are few and far in between. Of course, they could call us, but I wish there were more people out there because we can't cover everybody."

The TaxAid toll free number in B.C. is: 1-866-829-4446.

 

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