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What does it mean to transfer the Disability Tax Credit?

December 28, 2016

Not all of our clients have disabilities. Some of them are family members of someone living with a disability – like the parent of a child with autism spectrum disorder, or a grandson living with his grandmother with dementia.

Families support one another and take care of each other – the Disability Tax Credit builds on that concept, designed to assist families of Canadians with disabilities.

When someone with a disability can’t claim the Disability Tax Credit themselves (click here for reasons why you might not be able to claim the DTC), or can’t claim the full amount, we let them know that they can transfer the credit to a family member.

It’s no secret that you can transfer the Disability Tax Credit, but you’d be surprised how few people (professionals and non-professionals alike) know the rules and what they’re entitled to do.

We’ll explain who can claim the Disability Tax Credit and under what circumstances.

Who can transfer the Disability Tax Credit?

On the Disability Tax Credit form (form T2201), Section 2 is meant to be completed by the person claiming the Disability Tax Credit. This must be either the person living with the disability, or it can be a blood relative, a spouse, or an adopted child, sibling or parent. So non-blood relatives (for example, a brother in-law) cannot qualify to claim the Disability Tax Credit.

When can you transfer the Disability Tax Credit?

Next, the family member claiming the credit must have supported their disabled loved one’s basic necessities of life by:

a) Supporting the disabled family member’s housing , or
b) Supporting the disabled family member through food, shelter, or clothing

This means, to claim the DTC as a family member, you must have either paid rent for, or housed your disabled loved one. Otherwise, you can also claim the DTC if you regularly bought your loved one food or clothing.

Remember that the frequency of support matters, so one-off gifts may not fit the requirement, but buying a coat for winter, rain boots for spring, summer clothes for the hot weather, and weekly groceries all help build a stronger case.

How many family members can claim the DTC?

The DTC form provides a single space to enter a single family member’s name. We think the form causes most people to assume they are limited to transferring the DTC only once – that’s entirely wrong.

If more than one blood relative is supporting the disabled loved one regularly, they may all claim the DTC. It’s just a matter of determining how much of the Disability Tax Credit is available to transfer.

How much of the Disability Tax Credit can you transfer?

When you’re approved for the Disability Tax Credit, we calculate the Disability Tax Credit amount that you’re eligible to claim. If you can’t claim the entire credit, then you can transfer it. If after transferring the credit, there are still credits remaining, you may transfer those credits, and so on and so on – provided that those family members can demonstrate they’ve supported you adequately.

When can’t you transfer the Disability Tax Credit?

It may be difficult to determine which types of support qualify a person to receive a DTC transfer. For example, even though paying for a new car for your disabled loved one so he/she can get to work may be generous, it won’t satisfy the criteria to allow you to claim the Disability Tax Credit.

You can stay up-to-date with our Disability Tax Credit tips and guides by signing up for our mailing list.

If you need more information about transferring the Disability Tax Credit or Disability Tax Credit eligibility, schedule a call with us and we’ll tell you how it works.

For more information about the DTC, please visit our dedicated information page here.

Click here for our easy-to-use Disability Tax Credit calculator.