How do you stop the automatic Schedule 2 transfers of 2 low income spouses (Seniors) with connected returns specifically the DTC credit and age credit

[JanetC1]

How do you stop the automatic transfer of the schedule 2 transfers of the DTC and age credit between connected returns for 2 low income Seniors/Elderly spouses? They do not need these credits to be transferred as their personal credit is enough to eliminate any taxes payable. 

This automatic transfer causes the following issue:

The one spouse has the DTC which is transferred to their daughter to claim on her tax return. However for 2021 we left the automatic schedule 2 transfers on the tax returns for the spouses and the daughter received a letter from CRA that she is not entitled to claim the DTC as the spouse "claimed" the DTC.

However the DTC was only shown as a credit on the spouse's return but they did not use the credit because of their low income and their personal credit eliminating any taxes. CRA noted that they did not adjust the daughter's tax return for 2021 for claiming the DTC but noted that she might not qualify claiming it again.

We would like to eliminate the automatic schedule 2 transfers so that any possible issues with CRA can be avoided for the daughter when claiming the DTC of her dependant in 2022

[katherinetax]

The Disability Tax Credit Transfer is non-refundable, which means it can only be used to reduce taxes owing. Since the higher earning spouse is more likely to have taxes owning, it goes to that spouse by default.

Unfortunately, if you are using TurboTax Online, there is no way to change which spouse is getting the disability transfer from the dependant. You can do so in TurboTax CD/Download, but you may not be able to NETFILE the return if you do.

According to the Canada Revenue Agency (CRA), the person with the impairment may transfer all or some of the disability amount to the supporting family member who is identified on the DTC application form. 

A supporting family member is someone who the person with the impairment depends on for at least 1 of the basic necessities of life (food, shelter, and clothing).

If the supporting family member who wants to claim the credit was not identified on the initial application, they can submit a written request to the CRA for the transfer. This request must be signed and include details of the support they provide for the basic necessities of life.

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