Q&A: Disability Tax Rules

The age limit on setting up an RDSP hurts this reader

 

Q – I was diagnosed in 2010 with a disability. I heard about the disability tax credit in 2014 so I applied and was approved by the CRA. I am 63 years old.

Is the disability tax credit a fixed amount or a percentage of your income? Can I apply the tax credits for 2010 through 2013 to my income in 2014 and 2015 since my income will be higher in these years because of RRSP withdrawals?

Am I allowed to purchase a Registered Disability Savings Plan (RDSP) for all the years back to 2010 and use it to reduce my income in 2014 and 2015? Also, does the RDSP have annual limits like an RRSP? – Robert M.

A – The disability tax credit is a fixed amount, although it is indexed. For the current year, the federal credit is 15% of $7,766, or $1,164.90. You’ll also receive a provincial credit. You cannot apply the credit for past years to 2014-15, but you can request that the returns for earlier years be amended to take the credit into account.

Unfortunately, RDSPs can only be opened to the end of the year when a person turns 59. For more details, go here.

 

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