Did you know there is a little-known federal benefit available across Canada for individuals with medically-verified disabilities? Qualifying for the Canadian Disability Tax Credit (DTC) opens access to several other significant federal, provincial, and territorial programs, benefits, and tax deductions. By reducing the amount of income tax payable, the DTC aims to offset some of the extra costs related to impairment, thereby offering an important way to extend one’s resources and potentially access additional help as needed. Read an overview of the program here.
At GEM Health Care, we have significant experiencing helping clients, or their family members, apply for the DTC. We’re happy to share some details of the program with you:
Eligibility
You may be eligible for the DTC if a medical practitioner certifies that you have a severe and prolonged impairment in one of the approved categories (e.g. walking, mental functions, vision and more), or significant limitations in two or more approved categories, or receive therapy to support a vital function. Read more about the eligibility criteria here.
Applying for the credit
The individual, or their legal representative, initiates the application by completing Part A of form T2201 online, by phone or with paper forms. Once a reference number for the application has been issued, the appropriate medical practitioner (e.g. physician, nurse practitioner, optometrist, psychologist, etc.) completes Part B online. Find details about the application process here.
When to apply
You may apply for the DTC at any time during the year. However, to avoid a possible delay, it is better to submit your application before you file your tax return. If you intend to split or transfer the credit, it will save you time to include the supporting family member information in Part A, question 2 of the DTC application.
Key advantages
Financial Relief and Tax Savings: these include a non-refundable federal tax credit; provincial tax credits (e.g. Ontario Disability Support Program) may also be available. The credit is transferable, so if the person with the disability doesn’t need the full credit, it can be transferred to a supporting family member. This is defined as someone who the person with the impairment depends on for at least one of the basic necessities of life.
Retroactive Refunds: If eligible, you can apply for up to 10 previous years and potentially receive a lump-sum refund for previously unclaimed credits.
Access to other financial programs: Being eligible for the DTC may help you access other federal programs such as:
- The new Canada Disability Benefit
- Registered Disability Savings Plan
- Canada Caregiver Credit: Tax relief for caregivers of dependents with disabilities
- Child Disability Benefit: Monthly payments for families caring for a child under 18 with a disability
- Canada Workers Benefit Disability Supplement: extra support for low-income workers with disabilities
Simplified Tax Planning
Once approved, the DTC can be claimed annually without reapplying unless the impairment condition changes.
Summary
If you or someone in your family has a severe and prolonged impairment, applying for the DTC could unlock thousands of dollars in savings and support. For additional information, we encourage you to contact us so we can help guide you through the process of applying for and receiving the Disability Tax Credit.