The
(DTC) is a non-refundable tax credit score that’s meant to acknowledge the affect of assorted non-itemizable disability-related prices. For 2025 the worth of the federal credit score is $1,521 however add the provincial tax financial savings and the mixed annual worth might be as much as $3,243, relying on the worth of the provincial credit score. Not each incapacity qualifies and there are particular standards relying on the kind of incapacity. The DTC can also be a requirement to qualify for opening a
registered incapacity financial savings plan
(RDSP).
In a current case determined earlier this month, a taxpayer who was affected by extreme obstructive sleep apnea tried to assert the DTC for the 2014 to 2023 taxation years. To this finish, he accomplished the Canada Income Company’s required
, Incapacity Tax Credit score Certificates. The CRA subsequently reviewed the shape and issued a discover of willpower informing the taxpayer that he was not eligible. The taxpayer objected and finally appealed the CRA’s determination to the Tax Courtroom.
The taxpayer is a small enterprise proprietor. Greater than a decade in the past his partner seen that she was now not sleeping properly as a result of she can be woke up every evening by her husband’s respiratory. The taxpayer described waking up at evening, lurching, gasping and sweating. He was additionally falling asleep through the day, together with whereas in conferences at work or throughout dinner. The taxpayer finally sought medical consideration from his physician.
His physician suspected that he had sleep apnea and organized for a sleep research with a respiratory providers agency involving an in a single day oximetry take a look at. Based mostly on the outcomes of the take a look at the physician recognized the taxpayer with obstructive sleep apnea and prescribed using a steady constructive airway strain (CPAP) machine, a heated humidifier and a nasal masks, to be worn on a nightly foundation, indefinitely.
The taxpayer bought a CPAP machine and began to make use of it at evening. In time, the taxpayer seen a big enchancment in his wellbeing and well being. His capability to perform returned with CPAP remedy and he was now not waking up lurching and gasping and soaking in sweat.
The taxpayer sought to qualify for the DTC on the idea that his use of a CPAP machine meets the eligibility standards for what’s known as “life-sustaining remedy.” Beneath the tax regulation, 5 circumstances have to be happy to be eligible for the DTC for life-sustaining remedy. First, the person should have a number of extreme and extended impairments in bodily or psychological capabilities. Second, the person is receiving remedy that’s important to maintain an important perform of the person. Third, the remedy is required to be administered no less than two occasions every week for a complete length averaging not lower than 14 hours every week. Fourth, the remedy can’t moderately be anticipated to be of serious profit to individuals who do not need a extreme and extended impairment in bodily or psychological capabilities. And fifth, the consequences of the impairment is such that with out the life-sustaining remedy the person’s capability to carry out a primary exercise of each day residing can be markedly restricted.
The CRA accepted that, on this case, the taxpayer met circumstances 1, 2, 4, and 5 however it was situation 3 that was problematic. That situation requires the remedy to be administered no less than two occasions every week for a complete length averaging not lower than 14 hours weekly. Moreover, the Tax Act specifies that the time spent on administering remedy consists of solely time spent on actions that require the person to take time away from “regular on a regular basis actions” with a view to obtain the remedy.
The taxpayer testified that, though he was ready to go to sleep with using the CPAP machine, it was not so simple as placing the masks on and sleeping for eight hours. He described having to spend so much of time attempting to get to sleep with the CPAP masks. As well as, the masks would vent and the humidity would go away his face moist. When he rolled over through the evening, the taxpayer mentioned water would generally run throughout his face and wake him up, generally a number of occasions an evening. He would want to stand up to scrub his face after which return to mattress, place the masks on and take time to fall again asleep.
The taxpayer accepted that sleep itself is a traditional on a regular basis exercise and so the time he spent sleeping whereas utilizing the CPAP machine shouldn’t be included within the 14 hours. However he testified that the time he spent every evening organising the CPAP machine, the time he spent attempting to go to sleep utilizing the CPAP machine, the time spent being woke up by the CPAP machine and the time spent attempting to get again to sleep after his sleep was disrupted totaled greater than 14 hours every week and ought to be thought-about “time away from regular on a regular basis actions.”
Whereas the choose was sympathetic to the affect that extreme sleep apnea has on the taxpayer and acknowledged the challenges that sleeping with a CPAP masks created for the taxpayer, he concluded that using the CPAP machine whereas falling asleep and whereas making an attempt to fall again asleep following a sleep disruption didn’t require the taxpayer to take time away from regular on a regular basis actions with a view to obtain the CPAP remedy.
Because of this, the choose concluded that the taxpayer didn’t obtain remedy that was required to be administered for a complete length averaging not lower than 14 hours every week as required by the tax regulation, and subsequently situation 3 for eligibility was not happy. The taxpayer was subsequently discovered to be ineligible for the DTC for the taxation years in query.
Jamie Golombek,
FCPA, FCA, CFP, CLU, TEP, is the managing director, Tax & Property Planning with CIBC Personal Wealth in Toronto.
Jamie.Golombek@cibc.com
.
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