Lisa MacColl is a writer, investor and former compliance consultant in the group retirement and individual wealth management fields. Lisa has written about personal finance for 14 years and currently writes about investing and investment providers for Wealthsimple. Lisa's past work has been published in Canadian Money Saver, Advisor’s Edge, CBC, and CreditCards.ca. She was a nominee for the 2015 Oktoberfest Women of the Year, Professional Category. Lisa holds an M.A. and B.A. from the Wilfrid Laurier University.
The Disability Tax Credit (DTC) is a non-refundable tax credit which allows people with verified disabilities, or their caregivers, to reduce the amount of income tax they owe. The intent of the tax credit is to help with some of the extra costs a disability can create.
Before a person can claim the DTC, they must submit a form T2201, Disability Tax Credit Certificate, which has been completed by a medical practitioner to the Canada Revenue Agency (CRA). Once CRA approves the form T2201, the person is eligible to claim the tax credit.
Eligibility for the DTC can also qualify the person for other federal, provincial. or territorial disability programs.Wealthsimple Tax is a simple way to file your taxes. File your return with confidence it’s done right, and pay what you want—there’s no catch.
What is the Disability Tax Credit?
The Disability Tax Credit is a non-refundable federal tax credit intended to help people with disabilities or their caregivers reduce their income taxes owing. It is not automatic; the individual must submit a completed form T2201 for approval, and must meet the eligibility criteria. Once they are approved for the DTC, the individual may also become eligible for other federal, provincial, or territorial programs, including the Child Disability Credit, the Registered Disability Savings Plan, and the Canada Workers Benefit.
Who is eligible for the DTC?
In order for an individual to qualify for the Disability Tax Credit, they must have a severe and prolonged physical or mental impairment that has been certified by a medical practitioner. This impairment must cause a “marked restriction” in day-to-day activities. Canada Revenue Agency (CRA) defines marked restriction as: “….even with appropriate therapy, devices, and medication, the individual is unable or takes an inordinate amount of time to perform activities or functions in one of the impairment categories, and this is the case all or substantially all of the time, even with therapy and the use of appropriate devices and medication.”
The categories of impairment are:
Bowel and Bladder Function
Essential Mental Functions for Everyday Life
Life Sustaining Therapy
Cumulative Effect of Significant Limitations
Three categories—vision, cumulative effect of significant limitations and life-sustaining therapy—have their own specific eligibility criteria.
In order to meet the eligibility criteria, the impairment must be “severe” (for example, a person with difficulty dressing must take much longer than a person of similar age with no impairment—usually three times longer), be present “substantially all the time” (constant or at least 90% of the time), and be considered “prolonged” if it has been present at least 12 months.
The form T2201 must be completed by a medical practitioner. A medical doctor or nurse practitioner can complete the form for any of the impairments. Vision can be completed by an optometrist, hearing can be completed by an audiologist, an occupational therapist can complete the form for feeding or dressing, and either an occupational therapist or physiotherapist can attest to walking. A speech language pathologist can attest to speaking difficulties, and a psychologist can complete the form for essential mental functions of everyday life. It’s important to ensure the medical practitioner who completes the form is familiar with the individual, their medical history, and symptoms or condition.
Some medical practitioners charge a fee to complete the forms. You might be able to claim the fee under medical expenses on your income tax return.
What happens after you send Form T2201?
NOTE: If you send the application for the DTC with your income tax return, CRA will process the form T2201 first, and then process your income tax return. It take several weeks to process the T2201, so there could be quite a delay if you are expecting a refund.
Once CRA receives form T2201, it will be reviewed to determine if the applicant meets the eligibility criteria for the DTC. CRA will review the medical information, they may request additional information, either from the individual or the medical practitioner.
You can track the status of the application in the CRA My Account, and you can check the CRA processing times tool to see how long it could take to receive a response.
CRA will then:
Approve the application or…
Request additional information, including medical reports. If they do not receive the information within the timeframe they specify, the application process will be terminated or…
Deny the application.
If the T2201 is approved, CRA will send you a notice of determination which will confirm eligibility. It will also advise for what period of time the DTC covers.
The DTC is only valid for a specific period of time. At the end of the period, the approval will expire and you will need to start the process again. If the DTC is for a minor child, the form will need to be completed again in the year the child turns the age of majority (normally 18).
If at any point the condition improves to a point it would no longer meet eligibility criteria, the individual is expected to notify CRA.
If CRA requires additional information, they will either contact the individual or the medical practitioner who completed the form. You can track the status of your application on the CRA My Account.
If your application is denied, the notice of determination will explain the basis for the denial. Check your copy of form T2201 against the reasons for the denial, and if you disagree, you can apply for a review in writing. You must specify why you are requesting the review, and you can include new or additional medical reports, additional information from a medical practitioner familiar with the applicant’s medical history. You have 90 days from the notice of determination to file an appeal.
How to claim the DTC
You may be eligible to amend prior years’ tax returns to apply for the DTC retroactively. You may be able to request a reassessment for up to 10 years of adjustments. The notice of determination will tell you what period of time the DTC applies for. Since the DTC amount varied by year, you should speak with a tax professional to assist you.
Once you have been approved, you can claim the disability amount for yourself on line 31600 of the T-1 General Income Tax Form. If you are claiming it for a dependent, use line 31800 and if you are claiming it for a spouse or common-law partner, use line 32600. The guide will tell you how much to claim each year.
Other programs or deductions
You may also be eligible to claim additional medical expenses, disability supports, or, if the individual is under age 18, the child disability benefit. For example, if you qualify for the DTC and you have a registered service animal, the costs of the animal, vet bills, food and medical expenses, and travel, board, and lodging for training could be considered medical expenses.
Child Disability Benefit
If the individual is a minor under age 18, if they qualify for the DTC, they may also qualify for the Child Disability Benefit, which is a monthly amount to assist families with expenses.
If the child’s family is eligible for the Canada Child Benefit (CCB), once the DTC is approved, the Child Disability Benefit will automatically be added to the monthly CCB amount.
People with permanent disabilities may qualify for student loan relief, grants and financial assistance for tuition, books, and accommodation at a post-secondary educational institution.
Where to get more information
If you have questions or need more information you can check the Canada.ca site under Canada Revenue Agency. Search for “Tax Credits and Deductions for People with Disabilities“ or call CRA at 1-800-959-8281.
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