Raising a child isn’t a cheap endeavour for anyone, but families who are raising children with physical or mental impairments often incur even more costs. In an effort to help these families, the CRA has provided income benefits to qualifying individuals in an attempt to help alleviate some of the financial stress that comes with raising a disabled child. One of the benefit programs is called Canada’s Child Disability Benefit or CDB for short. Here’s what you need to know about the Child Disability Benefit including how it works, who is eligible, how to apply, and how much you can receive.
What is the Child Disability Benefit?
The Child Disability Benefit is a government program aimed at assisting Canadians who are raising children with severe and prolonged impairment in either physical or mental functions. Those families who qualify for the Child Disability Benefit will receive tax-free monthly payments to help assist in the care of their children under the age of 18.
Who is eligible for the Child Disability Benefit?
To be considered eligible for the CDB:
- You must be eligible for the Canada Child Benefit (CCB)
- And your child must be eligible for the disability tax credit (DTC)
Again, this benefit is meant for children, so individuals under the age of 18.
How do I apply for the Child Disability Benefit?
If you are already receiving CCB for your child who is eligible for DTC then you do not need to apply for the Child Disability Benefit- it will be given to you automatically.
If you have not yet applied for these programs, then you can follow these steps:
For DTC a medical practitioner needs to fill out Form T2201 (The Disability Tax Credit Certificate) and certify that the child has severe and prolonger impairment in physical or mental functions. The CRA will then need to approve the form.
For CCB, there are three ways to apply; through birth registration, online via My Account, or by mail. Applying online via My Account is probably the easiest method as you just need to log in, click ‘apply for child benefits’ and enter your information as well as the child’s information then submit.
How much can I get from the Child Disability Benefit?
How much you can expect to receive in CDB payments will depend on the following:
- The number of eligible children
- The adjusted family net income
- Marital status
These benefit payments are calculated every July based on the calculations made given the above information.
There is a maximum amount that you can receive which can change from year to year. For example, during the period of July 2020-June 2021, the maximum was $2,9886 per year which equals $240.50 per month for every child who was considered eligible.
Those with lower incomes will be more likely to get the maximum CDB payments. Payments start being reduced when the adjusted net family income exceeds $69,395. In this case, the reduction of the CDB payment is calculated based on the following:
- For families with one eligible child, the reduction is 3.2% of the amount of the adjusted family new income that is greater than $69,395.
- For families with two or more children that are eligible for the benefit, the reduction is 5.7% of the amount of adjusted family net income greater than $69,395.
The Government of Canada website has a child and family benefits tax calculator that you can find here to help estimate how much you will get.
To continue getting benefits, you and your child must remain eligible for the DTC. Additionally, to avoid any delays or interruptions when receiving your payments, you need to complete your taxes on time every year. Remember, even if you have no taxable income for the year you can still qualify for the CDB as long as you file.
It’s also worth noting that once you are approved for the Child Disability benefit, you can take advantage of retroactive payments up to a maximum of 10 years.
Other programs for individuals with disabilities
The Child Disability Benefit is a great program for parents and caregivers to take advantage of, however, there are also more options available to disabled Canadians navigate through life and save on their taxes. Other Canadian programs and tax credits worth noting include:
Disability Tax Credit (DTC): This is a non-refundable tax credit aimed to help reduce income tax for individuals who have a disability and/or their caregivers. As a tax credit, you are only eligible for DTC if you file your annual taxes.
Registered Disability Savings Plan: This is a tax-deferred plan to help families and caregivers save for the beneficiary who is eligible for the DTC. Contributions into the RDSP are not tax-deductible but are tax-deferred. Learn more about the RDSP here.
Canada Caregiver Credit: This tax credit is for Canadians who support a dependent with a physical or mental impairment (can also be a spouse or common-law partner). The dependent must qualify for DTC for the caregiver to be eligible.
Disability Supports Deduction: This credit is to help with expenses incurred due to work, business, or going to school. This credit can only be claimed by the eligible individual.
Finally, don’t forget that many medical expenses can also be claimed against your payable income taxes.