Disability Tax Credit

Disability Tax Credit (DTC)

The Disability Tax Credit (DTC) is a non-refundable tax credit that helps people with disabilities, or their supporting family member, reduce the amount of income tax they may have to pay.

If you have a severe and prolonged impairment, you may apply for the credit. If you are approved, you may claim the credit at tax time.

By reducing the amount of income tax you may have to pay, the DTC aims to offset some of the extra costs related to the impairment.

Also, being eligible for the DTC is the only way to qualify for the Registered Disability Savings Plan (RSDP). This savings plan helps disabled Canadians save for long-term financial security.

The Disability Tax Credit is a federal tax credit designed to reduce the federal income tax burden for Canadians with disabilities. It serves as the Canadian government’s initiative to assist disabled Canadians and their families in managing the diverse expenses associated with impairments or disabilities.

There are two different refunds one can receive from the Disability Tax Credit:

  • An annual refund of up to $2,000 per year for eligible adults or up to $4,000 for those caring for a child with a disability.
  • A retroactive refund of up to $20,000 for adults and up to $40,000 for those caring for a child with a disability, paid in a one-time lump sum if found eligible for years before being qualified for the DTC.

If a person was eligible for the DTC for previous years but did not claim the disability amount when they sent their tax return, they can request adjustments for up to 10 years under the CRA’s Taxpayer Relief Provision. To claim the disability amount for those prior years, you can ask for a reassessment.

Frequently Asked Questions

Pre-Application

You can obtain a copy of the application form (known as T2201) here

If your disability was present continuously for a minimum of 12 months sometime in the last 10 years, then yes, you can still qualify for the Disability Tax Credit.

Yes, as long as you have a family member who supports you and pays their taxes, then you can claim the Disability Tax Credit on that family member’s taxes.

It depends on the severity of the effects. It would help to consult a medical practitioner when applying for the Disability Tax Credit.

Each case is different, and while there is no exact list of disabilities that qualify for disability tax credit, there are certain conditions that affect a person’s ability to perform daily functions. These include:

Arthritis, ALS, Alzheimer’s disease, autism, bipolar disorder, blindness, glaucoma, cerebral palsy, chronic pain, deafness, dementia, Down syndrome, dysgraphia, epilepsy, fibromyalgia, Parkinson’s disease, multiple sclerosis, and others.

Although you are responsible for any fees that the medical practitioner charges to fill out the form, you may be able to claim these fees as medical expenses on line 330 or line 331 of your tax return

Post-Application

Once the CRA receives your application, you can expect to wait 4 – 10 weeks to learn the outcome of your application

The Disability Tax Credit is a tax deduction, which means the tax credit comes in the form of a reduced tax bill. If you become eligible to receive the tax credit, then the Revenue Service of Canada will calculate how much you are eligible to receive and subtract that amount from the money you would have paid in income taxes. You receive the money for the credit in your tax return.

Yes for both

Not only can parents of children with disabilities apply for the Disability Tax Credit on behalf of their children, the Canadian government grants additional amounts for children under 18. This is called the Child Disability Credit, where families who care for a child with a qualifying disability, who is under the age of 18 at the time of approval, will receive a monthly tax-free payment.

In the family member case, if the person with the disability does not have sufficient income to qualify for the full amount, then you can receive the credits directly.

If you were found eligible to receive the DTC for previous years, you don’t have to wait for “tax season” to request the reassessment

However, if you were approved and already received your retroactive refund, you should be claiming the Disability Tax Credits annually when preparing your taxes. If you neglect to claim the DTC while preparing your taxes, you will not receive the refund for that year as part of your tax refund.

Please note: if you are eligible and you neglect to claim the Disability Tax Credit refund when preparing your taxes, it doesn’t mean that the money is lost rather, you will now have to send a written request the CRA and ask them to reassess that specific year, which will take longer to process as compared to claiming the DTC when filing your taxes.

Yes, you can. A person can re-apply for the DTCas many times as they want without penalty. Many people who apply for the first time are denied.

Yes, for up to the last 10 years

As a spouse, dependent, family member, caregiver or legal executor, you can make a claim in the name of a deceased person. The executor is the person listed on the last will and testament of the deceased person and carries out the instructions in the will.

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