When you or someone you love and care for has a physical or mental disability, life can feel overwhelming at times.
It can be helpful to know, however, that you may be eligible for financial help from the government. In addition to your local provincial resources, you might also qualify for the disability tax credit (DTC), and up to 10 years of back credit as well. You wouldn’t want to miss out on these benefits if they’re due to you.
In this guide we’ll share a complete rundown of why this tax credit is so important, who qualifies for it, and how the application process works for yourself or a loved one.
- The disability tax credit (DTC) reduces taxes you owe but does not generate a refund.
- You have to apply for the DTC with a medical practitioner’s approval.
- The DTC can be claimed for yourself or others who rely on you for daily assistance.
What is the disability tax credit and why does it matter?
Sometimes a tax credit will add to or create an income-tax refund, and sometimes it will simply reduce the amount of tax you owe. The DTC is the second type—a non-refundable tax credit that may reduce your taxes owing—all the way to zero when applicable.
This tax credit is designed to help offset the extra living costs related to a physical or mental disability.
Who is eligible for the Canadian disability tax credit?
To qualify for the DTC, you or your dependant must have a serious and prolonged physical or mental impairment that is certified by a medical practitioner.
Examples of medical conditions that qualify for the disability tax credit include:
- Loss of vision
- Loss of hearing
- Loss of mobility
Variations of the eligibility criteria are vast. But, in general, if you or a dependant experience difficulty performing daily living activities—such as walking, feeding yourself, hearing, or speaking—you may be eligible for this tax credit and other related benefits.
How do I apply for the disability tax credit?
Form T2201 is the paper version of the DTC application. There is also a digital version, available online; or you can fill out your portion over the phone.
Claiming the DTC for either yourself or a dependant requires filling out and filing form T2201 digitally or via regular mail. You’ll need to complete Part A with information about the applicant—whether that’s you, your dependant, or someone else you’re helping with the paperwork.
How to claim the DTC for yourself or for a dependant
When claiming the tax credit for yourself, you’ll provide basic information—such as your name, address, and birth date—in Part A. This section also requires you to authorize the CRA to contact your medical professional, and enables you to give consent to have previous years’ tax returns adjusted, if applicable.
To keep things simple, claiming the disability tax credit for a dependant involves the exact same steps. You fill out the T2201 form on paper or digitally, supplying the information requested in Part A; but instead of putting in your own information, you’ll put in information about your dependant.
In both cases, you’ll receive a confirmation number after submitting the digital form.
Your medical practitioner must fill out part B
If you filed the form digitally, give the confirmation number to your medical practitioner so they can fill out Part B digitally as well. They’ll need to match the reference number, last name, and date of birth given in Part A.
With paper forms, your medical professional must fill out Part B on page two, otherwise your application will be returned.
What happens after the T2201 is submitted?
Once the CRA receives all required forms and information, they generally mail you a reply notice within 8 weeks. If information is missing or unclear, processing may take longer.
After you receive notice of approval, you can claim the tax credit on your next return using line 31600 for yourself, or 31800 for a dependant.
How much disability tax credit will I get?
When you file your taxes for the 2023 tax year, anyone eligible for the DTC who is 18 years old or older by the last day of the year can claim $8,986. And, where they are dependant on someone else for care, they may be able to transfer all or some of that amount to them.
Is the disability tax credit a monthly payment?
No, it is a reduction in taxes on your current return. However, the disability tax credit is retroactive up to 10 years. If you qualified for the DTC in previous years, and checked the box asking the CRA to adjust all applicable years, they will make the necessary changes on your behalf, and send the final amount due to you.
The base amount over the past 10 years ranged from $7,546 to $8,870 and is increased by the supplement for children in applicable years.
A related service—the child disability benefit (CDB)—provides tax-free monthly payments to families who care for a child under age 18 with a severe and prolonged impairment in physical or mental functions.
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