Transfer the disability tax credit to spouse
Pre-test question
Sorry, that is incorrect
To find out if an individual is eligible for the DTC they must submit a completed Form T2201, Disability Tax Credit Certificate, to the CRA. This form must be completed and signed by a health practitioner.
That is correct
To find out if an individual is eligible for the DTC they must submit a completed Form T2201, Disability Tax Credit Certificate, to the CRA. This form must be completed and signed by a health practitioner.
Instructions
- Open the tax software
- Review the Background information and Required slips (tax slips, receipts, etc.)
- Provide all required information for the appropriate sections of the tax software
- Once completed, compare your results with the solution provided
- Afterwards, refer to Key points of the tax software and the Takeaway points
Background information
Situation
Nadia is employed at Pets R Us. Alexei is retired and receives income from the CPP, old age security (OAS), interest and superannuation (registered pension plan).
Nadia is approved for the DTC and she wants to transfer the unused portion of her credit to Alexei.
| Categories | Datas |
|---|---|
| Name | Alexei Reznikov |
| Social insurance number (SIN) | 000 000 000 |
| Address | 123 Main Street City, Province X0X 0X0 |
| Date of birth (DOB) | October 2, 1959 |
| Marital status | Married to: |
Required slips
T4A – Statement of Pension, Retirement, Annuity, and Other Income (for Alexei)
Text version of the above image
T4A – Statement of Pension, Retirement, Annuity, and Other Income
Protected B
Payer’s name: Bank of Canada
Recipient’s name and address:
Last name: Reznikov
First name: Alexei
123 Main Street
City, Province X0X 0X0
Box 012: Social insurance number: 000 000 000
Box 016: Pension or superannuation – line 11500: 11,000.00
Box 022: Income tax deducted – line 43700: 2,046.00
T4A(OAS) – Statement of Old Age Security (for Alexei)
Text version of the above image
T4A(OAS) – Statement of Old Age Security
Protected B
Issued by: Service Canada
Reznikov, Alexei
123 Main Street
City, Province X0X 0X0
Box 12: Social insurance number: 000 000 000
Box 18: Taxable pension paid: 6,778.44
Box 22: Income tax deducted: 0.00
T4A(P) – Statement of Canada Pension Plan Benefits (for Alexei)
Text version of the above image
T4A(P) – Statement of Canada Pension Plan Benefits
Protected B
Issued by: Service Canada
Reznikov, Alexei
123 Main Street
City, Province X0X 0X0
Box 12: Social insurance number: 000 000 000
Box 21: Number of months – disability: 6
Box 23: Number of months – retirement: 6
Box 22: Income tax deducted: 0.00
Box 14: Retirement benefit: 6,211.00
Box 16: Disability benefit: 8,216.00
T5 – Statement of Investment Income (for Alexei)
Text version of the above image
T5 – Statement of Investment Income
Protected B
Recipient’s name (last name first) and address:
Reznikov, Alexei
123 Main Street
City, Province X0X 0X0
Payer’s name and address:
Bank 1
456 Main Street
City, Province X0X 0X0
Box 13: Interest from Canadian sources: 85.00
Box 22: Recipient’s identification number: 000000000
T4 – Statement of Remuneration Paid (Pets R Us) (for Nadia)
Text version for the above image
T4 – Statement of Remuneration Paid
Protected B
Employer’s name: Pets R Us
Employee’s name and address:
Last name: Reznikov
First name: Nadia
123 Main Street
City, Province X0X 0X0
Box 12: Social insurance number: 000 000 000
Box 14: Employment income: 4,875.00
Box 16: Employee’s CPP contributions - see over: 72.19
Box 18: Employee’s EI premiums: 65.00
Box 22: Income tax deducted: 897.00
Box 24: EI insurable earnings: 4,875.00
Box 26: CPP/QPP pensionable earnings: 4,875.00
Box 44: Union dues: 50.00
Box 45: Employer-offered dental benefits: 1
RC210 – Advanced Canada workers benefit (ACWB) statement (for Nadia)
Text version for the above image
RC210 – Advanced Canada workers benefit (ACWB) statement
Issued by: Canada Revenue Agency
Reznikov, Nadia
123 Main Street
City, Province X0X 0X0
Social insurance number: 000 000 000
Box 10: Total Basic Advanced Canada workers benefit: 759.00
Box 11: Total Advanced Canada workers benefit disability supplement: 392.00
Review your results
Solution to Transfer disability tax credit to spouse
Key points of the tax software
Important note
To access complete instructions on the various steps of entering data into the software, click on the title of each section below.
Alexei's interview
Pension and Saving plans - T4A, T4A(OAS), T4A(P)
- Click Interview setup in the left-side menu
- Tick the box next to Pension income, other income and split pension income, COVID-19 benefits (T4A, T4FHSA, T4A(OAS), T4A(P), T4A-RCA, T4RSP, T4RIF, T1032) in the Pension and other income section
- Click T4A, T4FHSA and pension income in the left-side menu
- Click the + signs next to:
- T4A - Pension, retirement, annuity, and other income (COVID-19 benefits)
- T4A(OAS) - Old age security pension income
- T4A(P) - Statement of Canada or Québec pension plan benefits
- Enter the amounts for each tax slip into the corresponding fields
Interest and other investment income
- Click Interview setup in the left-side menu
- Tick the box next to Interest, investment income and carrying charges/interest expenses/CNIL (T3, T5, T4PS, T5008, RC359) in the Investment income and expenses section
- Click Interest, investment income and carrying charges in the left-side menu
- Click the + sign next to T5 – Investment income
- Enter the amounts from the T5 slip
Nadia's interview
- Click T4 and employment income in the left-side menu
- Click the + sign next to T4 income (earned in any province except Quebec) in the T4 and T4E section
- Enter the information from the tax slip
Advanced Canada workers benefit (RC210)
- Click Other information slips in the left-side menu
- Click the + sign next to RC210 – Canada workers benefit advance payments statement [Federal line 41500]
- Enter the information from the RC210 slip
- Click Medical, disability, caregiver in the left-side menu
- Click the + sign next to Infirmity and Disability amounts claim for yourself* (line 31600) in the Disability deductions, caregiver section
- Enter Unknown into the Name or description of infirmity field
- Select Claim disability amount (default) from the Are you eligible for the disability amount on federal line 31600? drop-down menu
- Select Yes from the Does this infirmity provide entitlement to the Canada caregiver amount? drop-down menu
- Select Yes from the Does CRA already have an approved T2201 form for this disability? drop-down menu
Takeaway points
- Nadia is approved for the DTC so she can claim the disability amount on line 31600 of her tax return
- Name or description of infirmity is a mandatory field in the tax software, Unknown can be entered if the information is not given
Amounts transferred from your spouse or common-law partner
- An individual may claim this amount if their spouse or common-law partner does not need all or part of certain credits to reduce their federal income tax to zero
- The tax software automatically calculates and claims this amount on line 32600 of the tax return
- In this case, Nadia’s unused portion of her disability amount on line 31600 of her tax return was transferred to Alexei
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