The Disability Tax Credit: Don’t Forget About It
W, the surviving spouse of a G.M. retiree, spent the last thirteen (13) years of her life suffering from dementia, and living in long term care for most of that time.
Her children looked after her financial affairs. As her Attorneys for property, they prepared and filed her income tax returns, and every year there were income taxes to pay to the Canada Revenue Agency(CRA).
When W passed away, her children, in their capacity as Estate Trustees, consulted with our Oshawa office to seek advice. During their initial interview with Sharon Lees, the Estates Law Clerk at the Oshawa office, they were asked if they had ever applied for the Disability Tax Credit for W during her lifetime, to reduce her annual income taxes.
The Estate Trustees had not applied for the Disability Tax Credit. This is not an unusual situation. Many Canadians are not aware of its existence.
Sharon advised them to contact W’s doctor, who agreed to complete the application for the Disability Tax Credit (DTC), back‐dated for W’s 13 years of dementia prior to her death. Her Estate Trustees then filed the application, and it was approved by the CRA, for the ten (10) tax years prior to the year of W’s death.
The Estate Trustees will now re‐file W’s tax returns for the previous ten taxation years, and expect that the Estate will receive significant tax refunds for each of those tax years, plus an additional refund for the year of death, just under $20,000 altogether.
Also, qualifying for the DTC will allow them to refile claims for additional medical expenses that could increase the refund for each year, so the total refund could be greater still.
One question from our very experienced Estates Clerk during the initial interview, and a few minutes to tell them what to do, was all it took.
But for the Plan, it may have been an opportunity missed!
…Submitted by Bill Clark Managing Lawyer, Oshawa Office