If you live with a disability or care for someone who does, you may face unique financial challenges. Claiming certain Canadian tax credits, specifically the disability tax credit, is a strategy that can help you manage these challenges by reducing your annual income tax bill.
What is the disability tax credit?
The disability tax credit, or DTC, is a non-refundable tax credit available to people with disabilities or their primary caregivers.
The DTC was created to help offset some of the unavoidable costs incurred by people who live with disabilities, such as mobility aids or therapeutic treatments. The disability tax credit does this by reducing the amount of income tax that a person may owe.
People who live with disabilities and are under the age of 18 (or their caregivers) can receive an additional DTC supplement.
To qualify for the disability tax credit in Canada, you need to submit Form T2201, the Disability Tax Credit Certificate. This form can be completed digitally or manually, and it has two sections. Part A is to be filled out by the person with the disability or their legal representative. Part B has to be completed by a medical practitioner, who must certify the person’s condition.
Qualifying medical practitioners include:
- Medical doctor.
- Nurse practitioner.
- Occupational therapist.
- Speech-language pathologist.
Form T2201 can be submitted at any time during the year, even if it’s before you file your taxes.
Once you’re approved for the DTC, you can start claiming the disability credit on your next tax return. You’ll be given notice about the tax year(s) in which you are eligible for the DTC. Plus, DTC eligibility gives you access to additional programs such as the registered disability savings plan and the child disability benefit.
Once approved, you won’t need to submit Form T2201 every year, unless the Canada Revenue Agency (CRA) requests it.
How to claim the disability tax credit in Canada
As soon as the person with the disability becomes eligible for the DTC, you can claim the credit when you’re filing your taxes. Where you make the claim depends on the situation:
- Use line 31600 if you’re claiming the DTC for yourself.
- Use line 31800 if you’re claiming the DTC for your dependent.
- Use line 32600 if you’re claiming the DTC for your spouse or common-law partner.
The maximum disability amount you can claim depends on the tax year and the age of the person with the disability. The amount is adjusted for inflation every year. The maximum amounts for 2022, and for previous years, are as follows:
|Year||Maximum disability tax |
|Maximum amount for
persons under 18
If you were eligible for the DTC in previous years but didn’t claim it, the CRA allows you to adjust your returns for up to 10 years under the Taxpayer Relief Provision. That means you can have up to 10 years’ worth of your previous tax returns assessed. This reassessment could increase your tax refund if you were eligible but didn’t claim the DTC for several years.
If your DTC application is denied
If you receive a notice of determination stating your application for the DTC has been denied, you do have some recourse.
First, read the notice carefully. It’ll explain why you were denied. You’ll then want to check your Form T2201 against the reason given, since the CRA bases its decision on the information you provided.
If you think that you should have been approved, you can do the following:
- Contact the CRA: You can ask any questions and go over your application with a representative.
- Request a review: If you contact the CRA in writing and provide any new medical information, they can take another look at your application.
- Send in relevant medical information: Providing additional information such as medical reports or a letter from your medical practitioner could help the CRA approve your application.
- File an objection: If you still don’t agree with the decision, you can file a formal objection within 90 days of the original notice of determination.
Additional disability tax credits in Canada
While the DTC is a federal program, there are also provincial and territorial tax credits available. These programs can be combined, so if you qualify, you would get both credits.
Additionally, people who are approved for the DTC may also be eligible to claim medical expenses, disability supports, and the Canada workers benefit disability supplement. Since tax credits change frequently, it’s a good idea to do some additional research every year to see if any updates apply to you.
Frequently asked questions about the disability tax credit
No. The disability tax credit is claimed when filing your annual taxes and paid in the form of a tax credit, reducing the total amount of you owe.
The maximum disability tax credit amount you can claim depends on the tax year and the age of the person with the disability. For the 2022 tax year, the maximum amount that can be claimed by an adult is $8,870.
The Registered Disability Savings Plan (RDSP) is a tax-sheltered matched savings program that helps those with disabilities create long-term savings.