Having a Disability Tax Credit Certificate can reduce the tax burden of disabled taxpayers. The tax credit for the Disability Amount can be claimed retroactively for up to ten years.
What Is the Disability Amount?
The Disability Amount is a credit that reduces the taxes payable by people with severe and prolonged impairments in physical and mental functions. According to the Canada Revenue Agency (CRA), the disability amount provides relief from unavoidable expenses which impaired taxpayers face. Adjusted yearly for inflation, the amount of the credit for 2019 is $8,416.
Eligibility
- To be eligible for the Disability amount you must have a valid Disability Tax Credit Certificate (DTC) on file with the Canada Revenue Agency.
- In order to be eligible for a DTC, your impairment must have lasted, or be expected to last, for at least twelve months.
- The CRA also requires that the effects of the impairment must cause the person to be significantly restricted all or at least 90 percent of the time in one or more of the basic activities of daily living, even with appropriate therapy, medication and devices.
The types of impairment generally admissible for the DTC are those related to speech, hearing, vision and mobility, as well as the mental functions necessary for everyday life.
How to Apply for the Disability Tax Credit Certificate
- To obtain a DTC, you must fill out the first section of the T2201 tax form. The form is available both online and from CRA offices across Canada.
- Your medical doctor or other qualified professionals will need to verify and certify your condition on the DTC application.
- The Disability Amount can also be transferred to family members and spouses if the impaired person is dependent on them for basic needs, such as food, shelter and clothing.
Once approved by CRA, the DTC allows you to claim the Disability Amount on your tax return.
Retroactive Claims
According to the CRA’s regulated taxpayer relief provisions, if you were eligible for the DTC in previous years but did not claim it when you filed your return, you can request adjustments for up to 10 years in the past.
While filling out the DTC Certificate, your doctor will indicate when you became markedly restricted in your daily activities. You may be eligible to retroactively claim the DTC depending on that date.
- To make a retroactive claim, you should make an adjustment request for your tax returns for all pertinent years.
- The request is made either online using CRA’s My Account service or mailing a T1ADJ form to the CRA.
- On this form or when using My Account, you should indicate that you are asking for an adjustment to line 316 of your return.
- An adjustment request must be filed for each year you wish to claim the Disability Amount.
Family members with impaired dependents can also claim the Disability Amount transfer retroactively under these provisions. In this situation, they must ask for an adjustment to line 318 of their returns. For spouses, the adjustment for a retroactive Disability Amount transfer claim is line 326.