Disability Tax Credit in Canada
A number of programs and services are available for persons with disabilities to help them and their caregivers cope with the added expenses and to facilitate their full participation in society. Canada or Québec Pension Plan administers monthly income programs.
The Canada Student Loan Program can help, and the Canada Mortgage and Housing Corporation (CMHC) assists homeowners and landlords in modifying their property to make it more accessible. Each province and territory also provides its own programs and there are several tax breaks administered by the CRA.
What are the tax credits and deductions related to disabilities?
In addition to common deductions like childcare expenses, Canada Child Benefit, or the spouse (spousal RRSPs in Canada) or common-law partner amount, there are many credits and deductions that are particularly relevant to persons with disabilities and their caregivers. The most important is the Disability Tax Credit or Disability amount. Eligibility for the Disability amount opens the door for other credits and deductions. Please note that the CRA’s eligibility requirements may differ from that of other programs.
What is the Disability Tax Credit?
- It is a non-refundable tax credit that taxpayers with disabilities can use to reduce the amount of income tax they have to pay.
- It includes a supplement for children under 18.
If you have no taxable income or if you don’t need the full credit to bring your tax payable to zero, you may want to transfer all or part of it to your spouse or common-law partner, or another supporting person by using the Disability amount transferred from a dependant line.
Who Is Eligible For the Disability Tax Credit?
- People who have a severe mental or physical impairment which impacts the basic activities of daily living and/or needs and dedicate time for Life-Sustaining Therapy are eligible.
- The impairment has to have lasted or is expected to last for a period of 12 continuous months.
Applying for the Disability Tax Credit:
- A medical professional has to fill out and sign the T2201 tax form, the Disability Tax Credit Certificate
- The CRA has to approve the application.
The person (or his/her representative) requesting the credit must complete Part A – Disability Tax Credit Certificate of form T2201.
Part B of Form T2201 has to be completed by a licensed medical doctor. If the claim is for visual impairment, then a medical doctor or a registered optometrist must complete it. If the disability is hearing impairment, a registered audiologist can complete Part B.
There is no harm in applying if you are not sure that you would be eligible. If you have had a disability for some time, your tax returns can be reassessed as far back as 10 years. You can file a formal objection to appeal the decision. The process to file an objection and the time limits are outlined on page 3 of the T2201 disability form.
Children who have the following may be eligible for the Disability amount:
- ADD (Attention Deficit Disorder)
- ADHD (Attention Deficit Hyperactivity Disorder)
- FASD (Fetal Alcohol Spectrum Disorder)
- Asperger’s Syndrome
- Bipolar disorder
- Manic depression
- Anxiety disorders
- IBS (Irritable Bowel Syndrome)
- Type 1/2 diabetes
- Learning disabilities
Deductions and Credits for Caregivers
Finally, you or others can contribute to a special savings account, the Registered Disability Savings Plan (RDSP) for them. Contributions are not tax-deductible but will be partly matched by the government through Canada Disability Savings Grants and Bonds.
Deductions and credits for persons with disabilities
- The Disability supports deduction enables you to deduct expenses related to going to work, to school or to do research.
- The Canada Workers Benefit with Disability supplement is designed to encourage disabled Canadians to enter and stay in the workforce.
- The Home Buyer’s Tax Credit allows people to claim an amount for a home purchased for the benefit of a person with a disability.
- In addition, you may be able to apply for a refund on your gas and be exempt from the GST/HST or duty on a number of goods and services.
Please consult the CRA website for more information about specific programs.
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