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Claiming Child Care and Disability Benefits

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Raising children is an expensive endeavour; those costs are even higher when you have a disabled child. Here are some additional benefits available to you if you have young children or a disabled child.

The Universal Child Care Benefit

[Credit: www.cra-arc.gc.ca/E/pbg/tf/rc66]
Credit: www.cra-arc.gc.ca/E/pbg/tf/rc66

The Universal Child Care Benefit, or UCCB, is paid by the federal government to provide direct support to the costs of raising a child. The payment is $100 per month for children under 6.

The UCCB is taxable. An annual tax slip, RC62 “Universal Child Care Benefit Statement,” is sent each year to the recipient of the UCCB. When the child’s (children’s) parents are living together the amount is taxable to the lower-income parent. The amount is included on line 117 of the tax return.

If the recipient is a single parent, he or she has the option of

  • Including the amount in his or her income.

  • Including the amount in the income of the child for which the UCCB was received.

In most cases, the second option will result in no income tax being paid on the UCCB at all. However, if the parent is making a claim for the amount for an eligible dependant for the same child the tax savings from the claim will be reduced.

You must apply to receive the Universal Child Care Benefit. The application form is RC66 “Canada Child Benefits Application” and can be found on the CRA’s website. The application form is a combined application for the taxable UCCB and the income-based non-taxable Canadian Child Tax Benefit (CCTB). With payments of up to $1,200 per year, per child, it’s worth your while even if it is taxable!

Transferring your child’s (or other dependant’s) disability credit amount to you

If you have a disabled child, the child may be eligible for a disability tax credit and disability supplement to help reduce taxes payable. However, the child may have low or no income, meaning these tax credits could go unused if it were not for favourable tax rules to allow the tax credits to be transferred to a supporting individual.

You may be able to claim all or part of a child’s (or other dependant’s) disability amount that is not needed to reduce the dependant’s taxes — because, say, the dependant’s federal taxes are already zero. You can claim the unused portion if he or she lived in Canada and was dependent on you for all or some of the basic necessities of life (food, shelter, or clothing). One of the following must apply:

  • The dependant was your or your spouse/common-law partner’s child, grandchild, parent, grandparent, brother, or sister and lived with you

  • The dependant was your or your spouse/common-law partner’s child, grandchild, parent, grandparent, brother, sister, aunt, uncle, niece, or nephew and

    • You made a claim for the caregiver credit amount (see the following) or the infirm dependant credit amount (see below) for that dependant or

    • You could have made a claim for the caregiver credit amount or the infirm dependant credit amount, if the dependant had no income and was 18 years of age or older during the year.

Where the dependant is under 18 the disability supplement can be transferred to a supporting individual in addition to the disability tax credit amount.

If you’re required to make child-support payments for your child, you cannot claim a disability amount for that child.

For CRA to accept a claim for a disability tax credit in respect of a dependant they must receive a completed form T2201, “Disability Tax Credit Certificate.” This form needs to be completed and signed by a qualified practitioner (such as a medical doctor, optometrist, audiologist, occupational therapist, physiotherapist, psychologist, or speech-language pathologist). If you have not filed the form prior to submitting your tax return, ensure it is included with your return.

If you’re splitting this claim for a disability amount transferred from a dependant with another supporting person, attach a note to your tax return including the name and social insurance number of the other person making this claim. The total disability amount claimed for a dependant cannot be more than $7,546 or $11,948 (2012 amounts) if the full disability supplement can be transferred as well.

In addition to being able to claim the disability tax credit in respect of a child, you may qualify for the Child Disability Benefit (CDB). The CDB is a tax-free supplement to the Canada Child Tax Benefit (CCTB). Ensure the CRA has form T2201 on file for your child and that you file your tax return so the CRA can assess your eligibility for this credit.

Claiming additional tax credits when you support dependants age 18 or older

In addition to your spouse/common-law partner, child, or other dependants being able to transfer their disability tax credit amount to you, three other tax credit amounts may be available:

  • The caregiver credit amount

  • The infirm dependant credit amount

  • The family caregiver credit amount

Caregiver Credit Amount

If at any time during the year you maintained a dwelling, alone or with another person, where you and a dependant lived, you may be able to claim this credit amount. The maximum credit amount for 2012 is $4,402.

To claim this credit amount, your dependant must be your or your spouse/common-law partner’s:

  • Child or grandchild

  • Parent or grandparent

  • Brother, sister, niece, nephew, aunt, or uncle

In addition, the dependant must be

  • Age 18 or over at the time he or she lived with you

  • Dependent on you due to an impairment in mental or physical functions, or, if he or she is your or your spouse/common-law partner’s parent or grandparent, at least 65 years of age.

The maximum 2012 credit amount of $4,402 is reduced dollar for dollar by the dependant’s income in excess of $15,033. When your dependant’s income reaches $19,435, the credit amount is reduced to nil.

Provide the details of the claim for an infirm dependant (name, age, net income, nature of infirmity) on schedule 5 of your tax return. The credit amount available to you is to be noted on line 315 of schedule 1 of your tax return.

Infirm Dependant Credit Amount

The infirm dependant credit amount can provide tax relief to you if you supported an adult infirm relative. It is similar to the caregiver credit amount, except that no requirement exists that the dependant must have lived with you. As with the caregiver credit amount, the maximum credit amount to claim in 2012 is $4,402, which results in a maximum federal tax savings of $660 (15 percent) plus provincial/territorial tax savings.

The credit amount available to be claimed is reduced by the dependant’s net income in excess of $6,420 (20122 amount). The 2012 maximum credit is amount is completely eliminated when the dependant’s net income reaches $10,822. Provide the details of the claim for an infirm dependant (name, age, net income, nature of infirmity) on schedule 5 of your tax return. The credit amount available to you is to be noted on line 306 of schedule 1 of your tax return.

To claim this credit amount, your dependant must be your or your spouse/common-law partner’s:

  • Child or grandchild

  • Parent, grandparent, brother, sister, niece, nephew, aunt, or uncle and must have been resident in Canada at some time during the year.

The dependant must be:

  • Age 18 or over at the end of the year

  • Dependent on you due to an impairment in mental or physical functions, and

  • Dependent on you, or you and others, for support.

You cannot claim both the caregiver credit amount and the infirm dependent credit amount for the same dependant.

Family Caregiver Credit Amount

This credit began in 2012. The credit amount is $2,000, which results in a federal tax savings of $300 (15 percent). The credit results in additional tax relief for caregivers of infirm dependant relatives. Unlike the caregiver tax credit amount and the infirm dependant credit, this credit amount is extended to those caring for a spouse, common-law partner, or a minor child.

An enhanced tax credit amount can be claimed for an infirm dependant on top of the regular credit amount for the following:

  • The spouse or common-law partner credit amount

  • The child tax credit amount

  • The eligible dependant credit amount

  • The caregiver credit amount

  • The infirm dependant credit amount


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