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The Disability Tax Credit (DTC) is a federal income tax credit that may be claimed by people who meet certain requirements.
The DTC is for people of any age.
People who have been denied in the past should consider re-applying because, since 2005, the government has broadened the criteria for obtaining disability status and there is now more flexibility in qualifying.
1. Benefits
There are many benefits of qualifying for the DTC, including:
- Eligibility to open a Registered Disability Savings Plan (RDSP) and receive up to $90,000 in government matching grants and annual government bonds
- Lump-sum refunds for the person or a qualifying family member
- Reduced future taxes for you or your eligible family member/caregiver for the years that you are eligible for the DTC
- Access to, or enhancement of, other tax credits, deductions or social benefits (e.g. Working Income Tax Benefit – Disability Supplement)
- Tax-deferred estate planning options for family members and their RRSPs.
The DTC reduces taxes that people have to pay. If a person does not pay any tax, the tax credit can be transferred to an eligible family member who does pay tax, such as a parent or spouse.
Depending on the province of residence, the DTC will create tax savings from $1,443 to $2,344 for the 2010 tax year. There is also an additional amount for children under 18 years of age. The tax credit and any transfers may be claimed retroactively for the previous 10 years.
2. Eligibility
The DTC has no age restrictions and may be claimed by a Canadian resident with a mental and/or physical disability that has lasted (or is expected to last) for a minimum of 12 consecutive months – including prolonged and serious medical conditions which restricts or slows him/her from performing the basic activities of daily living.
The individual may be eligible if he/she has impairments or restrictions in one or more of the following:
- Speaking
- Hearing
- Vision
- Walking
- Dressing
- Mental Functions
- Elimination (bladder/bowel functions)
The Disability Tax Credit is not granted on the basis of having a specific disability. A person might have a physical disability, visual or hearing impairment, developmental disability, mental illness, learning disability, acquired brain injury or medical condition. A person’s eligibility is dependent on how the condition has impacted his/her life on a daily basis. It is important to note that this may include mental as well as physical restrictions. Feel free to call us or send an email to discuss your situation.
3. Application
To apply for the Disability Tax Credit, a person must submit a two part Canada Revenue Agency form. The first part is to be filled out by the applicant, while the second part is to be completed by a qualified medical practitioner (medical doctor, optometrist, audiologist, occupational therapist, physiotherapist, psychologist, and a speech-language pathologist, depending on the nature of the disability).
After both sections of the form have been filled out, the form is submitted to CRA for assessment. Following this assessment, CRA’s Disability Unit will determine eligibility. If an application is denied, the decision may be appealed.
4. Claiming the Disability Tax Credit
Usually the Disability Tax Credit will be claimed by the person with the disability themselves. However, a supporting parent or caregiver (non-paid) may claim the credit on his/her income tax return on behalf of the person with a disability.
The Disability Tax Credit can be received retroactively for the past ten years, if the person with a disability was eligible for the tax credit but has not been claiming it.
(Note: Where a caregiver has been claiming a dependant’s DTC, the DTC certificate has been traditionally filed with the caregiver. This has resulted in initial delays for some people as Canada Revenue Agency initially deems the dependant as unqualified. This is currently being fixed.)
5. We Can Help
The RDSP Resource Centre is able to assist people in qualifying for the Disability Tax Credit. We have professional knowledge of the tax system and extensive experience in assisting people with their applications. Find out more about how we can help you qualify for the DTC and open your RDSP!
