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Disability Tax Credit Advice for Parents with Children with Learning Disabilities or ADD/ADHD

Finances, Health
7 min read
girl with learning disability looking for letter

Do you have a child with a learning disability or ADD/ADHD? Is it putting an enormous financial burden on you? If yes, then this article is a must-read, because there is hope and relief for you in the form of the Disability Tax Credit!

For over 30 years, the Disability Tax Credit has helped disabled Canadians recoup these financial expenses but to date the Disability Tax Credit is misunderstood and underutilized especially when it comes to mental disabilities. An important part of the Disability Tax Credit is the Child Disability Tax Credit and it is a supplemental amount to the Canada Child Benefit paid to claimants of the DTC for children under 18 years of age. 

Want to know how much money you could receive if you qualify for the Child Disability Tax Credit? You can calculate the amount by using the Child Disability Tax Credit Calculator.

As a parent of a child with ADHD, you probably have high annual medical costs due to increased use of hospitalizations, primary care office visits, outpatient mental health visits, and pharmacy fills. A growing body of literature, primarily published in the United States, has demonstrated that ADHD places a substantial economic burden on parents, patients and third-party payers. There is good news, however, so please read on.

Prior to 1986, the Canada Revenue Agency (CRA) only offered a standard deductible for people who were blind or were bound to a wheelchair. However, when more disabilities & mental illnesses became visible and recognized, the CRA decided to provide taxable income benefits to Canadians who suffered from these severe impairments as well.

The Disability Tax Credit (DTC) was thus created and added as a tax credit for the purpose of helping Canadians who were living with prolonged physical or mental impairment and their families offset the various costs associated with those impairments such as medications, physical and psychological assistance in the form of therapy sessions, specialized equipment, etc.

When you apply for Disability Tax Credit for your child below 18 years of age, you are actually applying for both the DTC itself and the CDB. The CDB will automatically apply to you if you are eligible to receive the DTC for your child. This fact is sometimes not easily apparent to most Canadians who apply for the program.

What are the Child Disability Tax Credit (CDT) and the Child Disability Benefit (CDB)?

The Child Disability Tax Credit and the Child Disability Benefit programs are related but different. Firstly, the Child Disability Tax Credit is a tax credit based on the taxes you paid or will pay annually. This means that you will not receive any DTC if you have not filed or paid any taxes for that year.

Meanwhile, the Child Disability Benefit is a program that is meant to directly assist Canadians in raising their children with impairments. This means that you are still able to receive the CDB even if you have no taxable income for the year. The reason that these two programs are normally put together is that your eligibility to receive CDB is reliant on your eligibility to receive DTC.

Who Can Apply For Child Disability Tax Credit and How Does It Work?

The Child Disability Tax Credit can be applied for by any parent who is taking primary care of the child under the age of 18 who has an impairment. If both parents provide for the child equally, only one of them can receive the tax credit.

When you claim Disability Tax Credit for yourself or for an adult you are taking care of, you only receive what is called the base amount for the tax credit. However, if you are claiming the tax credit for a child you’re taking care of, the CRA also credits a supplemental amount. Both these amounts have a federal tax credit and a provincial tax credit component. Your annual Child Disability Tax Credit is the sum of both these amounts.

The Child Disability Benefit (CDB) is separate from the Child Disability Tax Credit. However, the CDB is reliant on the fact that you are receiving the DTC. It is a supplemental benefit that is added to the base Canada Child Benefit if the disabled individual is below 18 years of age. This benefit is available if you are already eligible for the Canada Child Benefit (CCB) and your child is eligible for the DTC. This benefit will come to you as an increase in the monthly amount you receive for the Canada Child Benefit. 

The most important things to know about the Child Disability Benefits are:

  • The CDB is paid to you in addition to the DTC refund that you will receive.
  • You are still able to receive CDB payments even if you have no taxable income for the years your child is eligible for the DTC. This applies to retroactive as well as current and future payments.
  • Instead of a yearly tax refund like the DTC, current and future CDB payments are added to the CCB payments you receive monthly.
  • Retroactive Payments for Child Disability Tax Credit and Child Disability Benefit

Retroactive Payments for Child Disability Tax Credit and Child Disability Benefit

When you are approved for your child’s Disability Tax Credit and Child Disability Benefit, you will be able to receive up to the amount 10 years before both as a retroactive payment. The CRA reassesses you taxes for the previous ten years then decides which years you are eligible for both programs and will pay you the corresponding tax credit amount and disability benefit amounts.

If you are eligible for the Child Disability Tax Credit, you are eligible to receive:

  • A retroactive lump-sum refund for up to the past 10 years that is the total of the Disability Tax Credit refunds for taxes paid during eligible years (this will include the supplemental DTC amount given for claiming a child under 18 years old)
  • The CDB payments for up to the past 10 years. You will first receive retroactive payment for the previous two years of the benefit. You will need to submit a written request for the remaining amount.
  • A yearly DTC refund based on your paid taxes when you file your income tax.
  • A monthly CDB payment that is added to the Canada Child Benefit payment you are already receiving.

The CRA reserves the right to decline Child Disability benefits and Child Disability Tax Credit based on the information you have submitted. In such cases, you have the right to amend your application by submitting additional relevant information.

In order to successfully appeal the CRA’s decision, we highly recommend that you provide clear and concise new information, as well as ask your child’s medical practitioner to thoroughly certify his or her condition. You could also contact Toronto-based Disability Credit Canada Inc. for professional assistance in this regard.

This article was written and reviewed by those at Disability Credit Canada, Inc., who are dedicated to helping Canadians receive the most out of their disability tax credit and CPP disability benefits. We know how important tax benefits are, as disabilities can cause financial burdens many are not ready for, and we want to help you understand your rights in relation to government support for these disabilities. Disability Credit Canada is committed to keeping The life going on for you and your loved ones.

Updated March 16-2023

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