Qualifying for the Disability Tax Credit, easier than you think

disability_dollsI was doing some research recently for an article about the Disability Tax Credit (DTC) and I came upon some alarming statistics. According to CBC News, Canada Revenue Agency (CRA) estimates show that at least 1.1 million Canadians are eligible for the DTC, half of them seniors. But only 620,000 claimed it in 2012-13, saving themselves a total of almost $1 billion in federal tax.

Considering that the in 2014 the federal non-refundable DTC for adults was $7,766 and there was an additional supplement of $4,530 for children under 18, eligible Canadians who do not claim the DTC are leaving a lot of money on the table.

To claim the DTC, you or your relative or dependant must complete and submit a Form T2201, Disability Tax Credit Certificate to CRA and get approval. You can make this application at any time of the year, but until you receive the approval you cannot take advantage of the tax credit when you file your income tax return.

If you receive Canada Pension Plan or Quebec Pension Plan disability benefits, workers’ compensation benefits, or other types of disability or insurance benefits,it does not necessarily mean you are eligible for the DTC. These programs have other purposes and different criteria such as an individual’s inability to work.

Part A is completed by the applicant. Part B must be filled out by a doctor or other medical professional (i.e. optometrist, physiotherapist), depending on the nature of the disability. To be approved, you have to meet either of the following two sets of criteria:

1. Your impairment of physical or mental functions has lasted or is expected to last for a continuous period of at least 12 months. You are blind or you have a physical or mental impairment that causes you to be markedly restricted at least 90% of the time in one or more of the following activities of daily living even with the appropriate therapy, medication and devices:

  • Speaking
  • Hearing
  • Walking
  • Elimination (bowel or bladder functions)
  • Feeding
  • Dressing
  • Mental functions necessary for everyday life

 

2. Because of the impairment you are significantly restricted in two or more of the basic activities of daily living listed above or you are significantly restricted in vision and one or more of the basic activities of daily living listed above even with the appropriate therapy, medication and devices.

It may be easier for some people to meet the second test than the first. Several years ago I successfully applied for the DTC for my mother (now age 87) based on hearing deficiencies and lack of mobility that significantly restrict her activities of daily living. Her DTC certificate is for an indefinite period. However, in some cases approvals are time-limited and future re-applications may be required.

If your disability pre-dated your application you can retroactively claim the DTC for up to 10 years by filing a T1 Adjustment request or a letter containing the details of your request with your completed T2201. My Mom’s retroactive rebate came to over $9,000!

It usually takes about eight weeks for a DTC application to be processed. In cases where a DTC application is refused, you can file additional information and request a review. There is also a formal objection procedure. (See back of T2201).

While the application process may appear to be intimidating, think twice about retaining “disability tax credit consultants” to help you file your claim. Fees can be up to 35% or more of your expected rebate – a stiff price to pay for services that are often relatively straightforward. Charities or non-profits may offer the same assistance for free.

In 2014 the federal government passed the Disability Tax Credit Promoters Restrictions Act to regulate the industry. It is expected that the legislation will be proclaimed once Ottawa determines limitations that can be placed on these fees.

My Mother’s physician is very busy and I was concerned that he would not carefully read Part B of the T2201 and complete it with the amount of detail required. Therefore I filled in all of the notes and made an appointment to review the form with him and have it signed while I was in his office. That worked really well and her DTC certificate was issued without any delays.

DTC certification is also required to claim the working income tax disability supplement and to open a Registered Disability Savings Plan.

 

 

 

 

 

 

 

 

 

 

 

 

 

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