The Disability Tax Credit explained – applying for and claiming the DTC
Do you or a family member live with a disability? Do you anticipate paying income tax, or have you paid income tax in the last 10 years? Then maybe you can claim the Disability Tax Credit – or not.
Many people don’t realize you must first apply for the Disability Tax Credit with the Canada Revenue Agency – they determine if you’re approved. Only then, can you claim the DTC.
We’ll explain these two components of the Disability Tax Credit process:
- Applying for the Disability Tax Credit
- Claiming the Disability Tax Credit
Applying for the Disability Tax Credit
Here are the basic steps for applying for your Disability Tax Credit:
- Get the Canada Revenue Agency T2201 form (the Disability Tax Credit certificate)
- Fill in the form with your personal details
- A qualified medical practitioner must complete the form as well
Seems straightforward enough, but we get questions like these all the time: “what conditions qualify for the DTC” or “my doctor says I don’t qualify so is my condition not a disability?”
That’s where we say, “STOP” – you may be asking the wrong questions.
The Canada Revenue Agency isn’t looking for a doctor’s diagnosis for a qualifying condition. Actually, the CRA wants to know how your condition impacts your ability to perform Basic Activities of Daily Living (BADL).
Specifically, the CRA wants to know if your condition is a marked restriction to your BADL. Basically, a marked restriction refers to a severe and prolonged condition that is present 90% of the time.
Not everyone’s Disability Tax Credit application receives a straightforward approval or decline. You can be approved the Disability Tax Credit for some of the years that you applied for, while being declined for other years. Or the CRA may ask your doctor to clarify what they wrote on your application. There are lots of possible outcomes.
So does the Disability Tax Credit application process make sense? If not, you can always still call us to learn more. After all, disabilities come in all forms – and two people living with the same conditions may be affected by them differently.
Claiming the Disability Tax Credit
After you’ve been approved the Disability Tax Credit, you can claim it – on your present, future or past tax returns. Which tax years you can claim the DTC depends on which years the CRA approved you as qualifying for the Disability Tax Credit. Consider this example:
- If your disability started in 2014
- It’s now 2017
- The CRA only approves you for the DTC starting 2015
Even though your disability started in 2014, you can only claim it for the 2015, 2016 and 2017 years (and possibly future ones – subject to CRA’s approval). You may want help to claim the DTC for 2015.
Some people receive a large refund on income taxes that they technically overpaid for all the years they were not claiming the DTC.
The CRA may automatically adjust one’s taxes, or some people leave it to their tax specialists to figure out. Among clients who come to us after having claimed the Disability Tax Credit for many years, we’re still able to find more money – there are hundreds of combinations of factors that go into how much the Disability Tax Credit is worth.
To summarize, there are 2 parts to the Disability Tax Credit program:
- The CRA must approve your Disability Tax Credit certificate
- You must claim the Disability Tax Credit
We bridge the gap between all parties involved (doctors, patients, tax specialists and the Canada Revenue Agency) and work on your behalf to
- assist with successfully applying for the Disability Tax Credit
- maximize your Disability Tax Credit refund
Because we take the time to know our clients – their unique family, living and financial situation, we account for anything that can go wrong and we maximize your DTC claim when we work for you.