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Written by: Wendy Seet, CPA, CA
British Columbians who meet the Person with Disabilities (PWD) designation and certain income and asset thresholds are eligible for:
- A support allowance and a shelter allowance,
- Health benefits such as MSP, prescriptions, optical, dental, paramedical and medical equipment, and
- Transportation subsidies or bus passes.
The maximum support and shelter allowances available are $531.42 and $375.00 per month, respectively*. There will be some nominal increases effective September 1, 2016, ranging from $11 to $77 per month. Health benefits are particularly valuable to adults with disabilities as they are generally not insurable and have ceased to qualify under their parents’ benefit plans.
There are 3 main tests that must be met to be eligible to receive the disability benefits noted above. The following is an overview of the tests, which includes various changes announced by the B.C. Ministry of Social Development and Social Innovation in the past year:
1. Medical test
- Must have a severe physical or mental impairment that is expected to continue for more than two years, and
- Is significantly restricted in one’s ability to perform daily-living activities and requires assistance from another person, an assistive device or assistance animal.
The criteria to obtain the PWD designation are generally easier to meet than the ones for the federal Disability Tax Credit.
2. Asset test
- The general asset limit is $100,000. Any assets owned in excess of this threshold will result in the loss of disability benefits, unless an exemption is available.
- Assets exempted from the above limit include a home, one motor vehicle, clothing and necessary household equipment, a Registered Disability Savings Plan (RDSP), and assets held in a “qualifying trust”.
- Where a large amount of funds have been received such as from an inheritance, a temporary 3-month exemption is available for them to be placed in a “qualifying trust”.
3. Income test
- Any income received is deducted dollar-for-dollar from the monthly allowance, unless one of the exceptions below is met.
- “Qualifying income” is subject to an annual exemption of $9,600.
- Income receipts that are fully exempted from the income test include child support, the HST credit, income tax refunds, child tax (and disability) benefits, UCCB, cash gifts or inheritances, RDSP and RESP withdrawals, rent subsidy, grants/scholarships/bursaries, and payments from trusts.
Recent changes to the disability benefits tests have allowed more recipients to continue receiving benefits while providing them with the ability to contribute to their own financial wellbeing. It has also allowed family members and others to provide additional funds to supplement their benefits. Despite the recent improvements to the asset and income test, proper planning is still essential to preserve disability benefits such as using trusts to meet the asset tests.
* All amounts referred to in this article are for individuals without a spouse or common-law partner.
The above content is believed to be accurate as of the date of posting. Canadian Tax laws are complex and are subject to frequent changes. Professional tax advice should be sought before implementing any tax planning. Manning Elliott LLP cannot accept any liability for the tax consequences that may result from acting based on the information contained therein.