The disability tax credit (DTC) is a non-refundable tax credit used to reduce the income tax you pay. It’s available for people with a severe and prolonged physical or mental impairment, subject to approval by the Canada Revenue Agency (CRA). It’s meant to help even out the tax burden by allowing some relief for disability costs, since these are unavoidable additional expenses that other taxpayers don’t have to face.
In 2014, the federal non-refundable DTC for an adult was $7,766. If the person with the disability was a child under 18, there was an additional supplement of $4,530, for a total DTC of $12,296.
To qualify for the DTC, you must submit the Form T2201, Disability Tax Credit Certificate, and the CRA must approve your application before you file your income tax return for the year you’re claiming the credit. The disabled person (or a family member) completes Part A of the form and, depending on the nature of the disability, a medical doctor or other health practitioner such as an audiologist, optometrist or psychologist fills out Part B.
We understand the process can be frustrating and long. While the lengthy form may at first appear intimidating, Exceedia sees no reason why DTC claimants should have to pay hefty fees to consultants to prepare their application. At Exceedia, we are committed to helping guide you through the process and helping you follow up with your medical professionals.
Based on the circumstances of each case, the CRA may approve the DTC certificate indefinitely or for a shorter, specified period.
Depending on the onset of the disability, you may use the credit both in the current year and going back as far as 10 years, resulting in sizeable retroactive tax refunds. To have the disability tax credit back-dated, you must file a form T1Adj for each previous tax year in which the disabled individual qualifies. At Exceedia, our tax professionals can assist with this process.
Approval for the DTC can also open the door to other valuable federal, provincial or territorial financial assistance programs beyond the tax credit itself. For example, if you are in a nursing home, you can claim the medical expense tax credit for the portion of the expense paid for nursing care, but only if you first qualify for the DTC.
The registered disability savings plan, the working income tax benefit disability supplement and the child disability benefit are other programs for which the DTC is a “gatekeeper credit.”