Principal Issues: [TaxInterpretations translation] Is the wholly dependent person tax credit available in respect of a child who is not a dependant of the individual pursuant to subsection 118(1)(d) of the Income Tax Act? If the answer to this question is no, is the individual entitled to claim the unused portion of the disability tax credit under section 118.2 of the Income Tax Act?
Position: The wholly dependent person tax credit is not available in respect of a child who is not a dependant of an individual. In addition, the individual is not entitled to claim the unused portion of the disability tax credit if the individual is not eligible for the wholly dependent person credit.
Reasons: Interpretation of the Income Tax Act.
XXXXXXXXXX 2005-012625
June 24, 2005
Dear Sir,
Subject: Request for technical interpretation: Wholly dependent person tax credit for a person over 18 years of age with a disability and the Disability Tax Credit
This is in response to your letter dated April 8, 2005, regarding the above subject. In this regard, we are providing you with a copy of Information Guide RC4064, Medical and Disability-Related Information.
You wish to know whether you can claim the wholly dependent person tax credit for disabled dependants over 18 years of age and/or the unused portion of the disability tax credit for your daughter who is now over 18 years of age. In your letter, you stated that you have placed your daughter in a specialized centre since she was 2.5 years old and that you no longer have to pay for her since she is receiving social assistance benefits.
The wholly dependent person tax credit for dependants over 18 years of age with a physical or mental impairment (line 306 of the 2004 Income Tax and Benefit Return) is available to an individual if the individual is responsible for, inter alia, the individual’s child.
The Income Tax Act stipulates that “dependant of an individual for a taxation year means a person who at any time in the year is dependent on the individual for support”. Generally, a person is dependent on an individual if the individual provides for the individual's basic needs or necessities on a regular and consistent basis. Although this is a factual determination, the information you have provided leads us to conclude that you cannot claim the wholly dependent person tax credit for dependants with physical or mental disabilities.
The disability tax credit (line 318 of the 2004 Income Tax and Benefit Return) is a tax credit that may be claimed by a person with a severe and prolonged mental or physical impairment the effects of which are such that the person's ability to perform a basic activity of daily living is markedly restricted in the absence of certain therapy. For the purposes of this policy, we have assumed that your child qualifies for the severe and prolonged mental or physical impairment credit.
The Income Tax Act provides that any unused portion of this tax credit by the person with the impairment may be transferred to an individual, including a parent. One of the conditions for entitlement to the transfer of the unused portion is that the parent be able to claim the disability tax credit, as discussed above. Given our preliminary comments to you on this issue, it appears that you will not be able to claim the unused portion of the disability tax credit.
For more information, please contact the Quebec City Tax Services Office at the following address
Quebec Tax Services Office
165 Pointe-aux-Lièvres Street
Quebec QC G1K 7L3
Fax machine: (418) 649-6478
Best regards,
Director
Business and Partnerships Division
Income Tax Rulings Directorate