Living with a disability can have a significant impact on your finances. Fortunately, you may qualify for the disability tax credit to help you cover some of the costs that come with living with a disability.
As of 2022, there were 1,465,420 unique eligible people with DTC certificates. The Disability Tax Credit (DTC) in Canada recognizes the challenges associated with having or caring for someone with a disability. That is why the federal government wants to ease the tax burden of people who have or who care for people with disabilities.
Find out if you qualify for the DTC and how much you can get.
Key Points You Should Know About The DTC
- The DTC is a non-refundable tax credit.
- Adults can claim up to $9,428 with the DTC.
- You may be able to claim the DTC as far back as 10 years if you haven’t done so before
What Is The Disability Tax Credit In Canada?
The Disability Tax Credit in Canada is a federal non-refundable tax credit that persons with disabilities or their caregivers can claim to reduce their income taxes. The individual with the disability can use the credit or transfer it to their spouse or supporting family member.
Check out these tax tips for low income individuals.
Are You Eligible For The Disability Tax Credit In Canada?
You may qualify for the DTC if:
- You have a severe and extended impairment in one disability category (listed below).
- You have significant limitations in at least two of the disability categories.
- You receive therapy to help with a vital function.
Types Of Disability Categories
Several categories of disabilities may qualify you for the DTC:
- Mental functions
- Life-sustaining therapy
- Eliminating (bowel or bladder functions)
How Much Can You Get Through The Disability Tax Credit?
The Disability Tax Credit does not pay out a regular benefit like other disability programs. It is a non-refundable tax credit. Meaning, it allows you to claim a certain amount to reduce your overall income taxes.
This may result in you receiving a higher tax refund when you file your income taxes.
For 2023, here’s how much you can claim on your tax return based on your age on the last day of the year:
|Disability Amount You Can Claim
|18 years and older
|17 years and under
|$14,928 (includes the $9,428 (regular disability benefit) + $5,550 (children’s supplement))
You aren’t limited to utilizing the DTC in the current tax year only. It can be carried back up to 10 years, which may result in substantial tax refunds.
To have the credit backdated to prior tax returns, you must file a T1-ADJT1 form for each tax year that you’d like to claim the benefit for (provided you qualify). Another option to backdate the credit is to fill out Section 3 of Form T2201.
How Do You Apply For The Disability Tax Credit In Canada?
The DTC’s application process has a reputation for being complicated and drawn-out, so much so that few people are willing to apply for it. However, if you exercise patience, use sound judgment, and obtain advice when needed, the process will be a lot smoother. You can apply for the DTC by yourself or with the help of an expert.
Applying By Yourself
If you have all the information required to apply for the DTC, you can complete the application yourself.
To begin, you need to submit form T2201, which can be completed on paper or online.
- T2201 – Part A: You will need to fill out your personal details in Part A.
- T2201 – Part B: Your doctor needs to fill out the necessary information in Part B. Your doctor must certify that you have a severe and prolonged ailment that interferes with your ability to perform everyday functions.
Attach all relevant supporting documents. You can help expedite the approval process by providing as much evidence as possible that you meet the eligibility requirements for the DTC.
Keep the following in mind:
- The CRA must approve your application before you file your tax return
- The CRA may grant you approval to use the DTC indefinitely or only for a specific time
Applying With A Disability Tax Credit Consultant
As mentioned, getting approved for the DTC isn’t an easy task. If you’re not confident with navigating the approval process on your own, consider seeking the help of a DTC consultant to guide you. These experts specialize in aiding people with qualifying ailments to obtain the DTC.
There are many reasons why hiring a DTC consultant is a good option:
- The application is long, confusing, and detailed. A consultant can provide advice and help you understand the process.
- Application errors can lead to rejection or a lower tax credit amount. Many medical professionals themselves don’t understand the rules and may assume you don’t qualify, when in fact, you do. A consultant will know the rules and regulations surrounding the DTC very well.
- DTC consultants can ensure you get the maximum amount you’re entitled to under your circumstances.
How Long Does The Disability Tax Credit In Canada Take To Get Approved?
It takes the CRA some time to process your tax credit application. That said, you should receive a notice of determination after about eight weeks of the CRA receiving your application, as long as no information is missing. If you send your application along with your income tax return, your application will be reviewed before your income tax return is assessed.
Disability Statistics In Canada
Some notable facts from a recent Statistics Canada report about Canadians with disabilities include:
- 27% of Canadians aged 15 years and older had at least one disability
- The disability rate in Canada has increased by 5% since 2017
- The disability rate was higher among women (30%) than men (24%)
- Youth experienced the largest increase in disability rate over the last five years
- 20% of youth had a disability in 2022
- 24% of working-age adults had a disability in 2022
- 40% of seniors had a disability in 2022
Canadians living with disability can spend anywhere from hundreds to thousands of dollars every year, on top of the regular cost of living. As such, many go without necessary medical aids, medications, and other needs. More specifically, 26% of people with disabilities in Canada (over 1.6 million) say they have unmet needs due to cost.
Check out the difference between a tax credit and a tax deduction.
Disability Tax Credit: Our Final Thoughts
The DTC is a helpful financial tool if you have a severe disability, or if you’re supporting someone who is. Instead of getting into debt because you need loans to care for yourself or someone with a disability, use the DTC tax break. The credit provides you with much-needed financial relief, making each day a little less stressful and challenging.