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DISABILITY TAX CREDIT: Get the Facts
Disability Tax Credit: Get the Facts[1]
- The Disability Tax Credit (DTC) gives income tax relief to help cushion costs[2] for Canadians who are markedly restricted in at least one basic life activity, (including taking an inordinate amount of time) due to a severe and prolonged impairment in physical or mental functions.
- Taken from Statistics Canada’s most recent Participation and Activity Limitation Survey in 2006 (PALS), about 4.5 million people in Canada “severely” disabled and less than one third of those individuals were getting what they were entitled to.
- In 2009, the ‘face amount’ of the DTC, i.e. the amount on the income tax form, was $7,196.
- This is misleading, because the DTC is not worth that amount. Rather, it is worth 15% of that amount[3], or $1,079.
- 889,600 Canadians qualified for the DTC and the caregiver credit[4] in 2008, the most recent year for which data is available.
- In 2009, the cost to the federal treasury of the DTC was $415 million.
- Recent news stories citing the cost to the federal government in the range of “several billion” dollars are simply wrong, and may be using the ‘face amount’ figures from above to inflate the perceived cost.
- The DTC reduces tax that the person has already paid or is liable to pay. DTC refunds, therefore, amount to the person in effect getting back their own money, that is, money they should not have paid (or should not pay) in taxes.
Get the facts straight.
[1] The main source for figures in this facts sheet is: A Basic Income Plan for Canadians with Severe Disabilities, by Caledon Institute of Social Policy, November 2010.
[2] For example, these include higher utility or transportation costs, and higher prices for goods due to fewer shopping choices.
[3] The true value of the DTC is calculated as the face amount multiplied by the lowest tax rate. In 2009, this was 15%.
[4] Separate data for Canadians receiving the DTC only are not available. The caregiver credit is given to a taxpayer who supports a family-member, living with them and dependent on the taxpayer due to physical/mental impairment.
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