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Avoiding Common Errors When Applying for the Disability Tax Credit

November 20, 2018

The Canada Revenue Agency can be stringent when deciding who qualifies for the Disability Tax Credit, but a significant number of declined Disability Tax Credit applications are the result of human error.

Just a single mistake on your Disability Tax Credit certificate can render a claim invalid. Hundreds of denied Disability Tax Credit applicants come to us every week, and these are the process and paperwork errors we see the most:

Insufficient or Inconsistent Details

When it comes to describing a person’s limitations of the Basic Activities of Daily Living (BADL) – one of the key factors in determining Disability Tax Credit eligibility – on Form T2201, we regularly catch inconsistencies or insufficient details that would result in an outright decline from the CRA.

For example, the physician may select one or several BADL catagories that would certify the patient as markedly restricted. If the doctor chooses ‘feeding’ as the restriction, then the details describing the disability should be consistent with that BADL.

On countless applications we’ve come across, we see a BADL listed, followed by a list of limitations that don’t directly pertain to it (i.e. after listing feeding, they may describe the patient’s inability to keep up personal hygiene). The description must align with the condition.

We also see insufficient details documented by physicians; the CRA looks for specific language in a person’s restrictions on his or her BADL. It isn’t enough to say the patient has a mental illness, and therefore needs disability benefits – the CRA will need proof on how that condition limits their ability to perform everyday tasks.

Incorrect Dates on When You Were Diagnosed with a Disability

One essential tidbit of information that must be included in a claim is the date in which the disability began.

But this is ambiguous to applicants – is that the date from the year of the doctor’s diagnosis? The year the disability actually started? Or is it when the person started seeing this particular doctor for disability?

This simple question has resulted in an array of answers on the Disability Tax Credit applications our Benefits Specialists review. Even doctors are often confused about what the CRA is really asking.

What the CRA is looking for is when the patient was deemed markedly or significantly restricted in BADL. This means a patient may be able to claim retroactive Disability Tax Credits for up to 10 years for his or her condition, for example, despite being ‘officially’ diagnosed five years ago.

Not Claiming for Retroactive Disability Tax Credits

Speaking of retroactive benefits, many people forget or are unaware that the CRA allows you to file for the DTC for past years. Again, the CRA will require proof that the condition has affected the ability to perform one or more BADL for the retroactive years claimed. This maximizes Disability Tax Credit refunds for the amount a person is truly entitled to, which can be life changing.

Forgetting About Disability Tax Credit Transfers

Another oversight in Disability Tax Credit applications is the ability to transfer the Disability Tax Credit to a common-law partner, spouse, or qualifying family members such as parents, grandparents, brothers, sisters, etc.

To be eligible for this DTC transfer, the family member must prove he or she has consistently provided financial support for food, clothing, or shelter for the person transferring the Disability Tax Credit.

While a person does need taxes payable to claim the DTC, that doesn’t prevent a Disability Tax Credit transfer to an eligible family member. Many people don’t bother applying for the DTC because they assume they’re automatically ineligible due to not paying enough tax, but this is not the case – don’t leave those Disability Tax Credits unclaimed!

To ensure your Disability Tax Credit journey is smooth and streamlined, our Benefits Specialists are diligent in maximizing DTC refunds and minimizing application blunders.

Get your Disability Tax Credit the easy way with Canada’s largest DTC service provider – call us at 1-888-389-0080 or apply online now!