Danielle Kubes is a trained journalist and investor who has written about personal finance for the past six years. Her writing has been published in The Globe and Mail, National Post, MoneySense, Vice and RateHub.ca. Danielle writes about investing and personal finance for Wealthsimple. She has a Bachelor of Humanities from Carleton University and a Master of Journalism from Ryerson University.
The Canadian government offers monetary support to those living with a disability. The two main programs it offers are the Disability Tax Credit (DTC), worth around $2,700 annually, and the Registered Disability Savings Plan (RDSP), worth up to $90,000 over your lifetime. Children with disabilities are eligible for the child disability benefit worth $2,832 annually.
In order to qualify for these programs you must essentially prove to the government you have a serious and persistent disability. This is accomplished through Form T2201, which is filled out by your medical practitioner and approved by the government.SimpleTax is simple, even if your tax situation isn’t. File your return with confidence it’s done right, and pay what you want—there’s no catch.
What is Form T2201?
Form T2201 Is the application you and your health professional must fill out to determine your eligibility for these disability support programs.
How to fill out Form T2201
You fill out any applicable lines in section A and a relevant medical practitioner fills out section B. Depending on your disability, a medical practitioner can include:
|Health professional||What they can certify|
|Medical doctor||all sections|
|Nurse practitioner||all sections|
|Occupational therapist||walking, feeding, dressing, and the cumulative effect for these activities|
|Psychologist||performing the mental functions necessary for everyday life|
T2201 approval can seem erratic and strict. An approval can also be time-limited, expire, or be withdrawn. Doctors are often confused how to fill out the form, and interpretations of the eligibility standards can vary. It’s unclear who within the CRA is reviewing the applications and what methods they are using to screen them. Complaints abound of an opaque process and unfair rejections. That, and low awareness of the programs, is likely why only 40% of the more than 1.8 million people who live with severe disability in Canada use the DTC.
Physical impairments that
Mental illnesses that may be eligible include:
Mood and psychotic disorders (such as depression, bipolar disorder, and schizophrenia)
Substance abuse disorders
Neurological impairments that may be eligible include:
Simply having an impairment will not render you eligible. Rather, it’s the effects the impairment has, and it must be severe.
In general, to qualify, a person must be “markedly” restricted in at least one of the basic activities of daily living, the impairment lasts for at least one year, continuously, and it must be present at least 90% of the time
You must also be a Canadian citizen.
Where to send in Form T2201
You can send in the form and any supporting documents electronically through your CRA “My Account” section or mail it in. It’s best to send it before you file your yearly tax return. Keep a copy for your records, in the unlikely event the CRA loses your application.
What happens after you send in Form T2201?
It can take anywhere from three months to one year to get a response. The CRA will review your application and may ask for some follow-up information. Once it is satisfied, the CRA will send you an approval or denial letter. You may be approved indefinitely, or your approval may have an expiry date. You are now eligible for the DTC and RDSP, and any other disability programs the government offers.
If your situation improves to the point where you no longer meet the criteria then you should let the CRA know.
If your application was denied and you disagree then you can call the CRA to discuss the decision. You can also contact the CRA in writing to request a review of your application with new or updated information and file an appeal within 90 days of getting the rejection letter.
What happens once your T2201 is approved?
Once your T2201 is approved you can now collect money from the government. The first step is to apply for the DTC, which is a on-refundable federal tax credit. You apply the federal tax you would have paid, based on your tax bracket, and subtract it from your total tax payable. It can reduce your tax payable until $0, but not beyond.
For example, let’s say you made $40,000 and would therefore pay 15% federal tax on that income, for a total of $6,000. If you qualify for the DTC, you can claim 15% of $8,416, or $1262.40. The tax you owe is now reduced to $4,737.60 ($6,000 minus $1262.4).
You can also claim a supplemental DTC amount for your children until 18 years old, worth about $4,909.
For 2019, the federal DTC is $8,416 and since the highest federal tax bracket is 33% the most you can get back is around $2,777.
You also may be able to claim backdated tax breaks for up to 10 years prior depending on how long you’ve been living with the disability.
The next step is to open an RDSP, which is a tax shelter to help people with disabilities save for retirement. Do this even if you can’t save anything: Ottawa will deposit up to $20,000 to low-income families with no contribution necessary and match contributions up to $3,500 annually up to a lifetime maximum of $70,000. This will go a long way to ensuring financial security.
Bottom line: It’s valuable for a person with a disability to have their T2201 approved. It’s the gateway form to qualify for a whole host of measures meant to provide people with disabilities a measure of financial security.