Looking back on the madness that is the April 30th filing deadline for individual tax returns, this year’s rush of clients presented me with a number of opportunities to raise awareness of the often overlooked Canada Disability Tax Credit. A number of people I asked about the credit were unaware of its existence and when I told them how much their potential benefit could be, many were left wondering why the CRA hasn’t done a better job of promoting its availability to qualified persons.
Although there is an estimated 1.8 million Canadians living with a severe disability, only about 40% of them take advantage of the DTC. The reason for this surprisingly low number may lie in the fact that the Canada Revenue Agency has made the qualification process very frustrating with long wait times, vague qualifying criteria, and an approval team that may not be properly trained in determining medical eligibility. Having said this, the application process is available to any person suffering with a physical or mental disability, or their primary caregiver, who submits a properly filled out Form T2201 from a qualified medical practitioner. Although a submitted Form T2201 is a requirement, this doesn’t necessarily mean an automatic qualification, and is just the first step in the approval process for receiving the credit. CRA will then review the application and make a judgement based on a set of criteria that you can read more about here: https://www.canada.ca/en/revenue-agency/services/tax/individuals/segments/tax-credits-deductions-persons-disabilities/information-medical-practitioners/eligibility-criteria-disability-tax-credit.html
How much is it?
Although the approval process is rigorous, the payoff can be quite substantial for those people coping with a disability while working, or the primary caregiver of a person with disabilities. For the 2017 tax year, an adult can expect to receive a federal tax credit of up to $8,113, while a child under 18 years old qualifies for as much as $12,846. These figures represent the maximum federal tax credit for 2017, and the actual benefit will vary based on which Province you live and your reported income for that year. An added bonus is if you have lived with the disability for a number of years, CRA will allow for a claim to be back dated up to 10 years retroactively.
How do I claim it?
The application process is quite simple (fill out and submit a Form T2201), but it does require you have the form filled out by a qualified medical practitioner before submission. Your accountant can also help with reviewing the form and submitting it to the CRA once your qualified medical practitioner has signed off on it. Once your claim has been submitted, the CRA estimates the assessment period will take between 4-10 weeks, although many people have noted this is grossly underestimated and these claims can take several months to process. Frequently additional information is requested from your doctor before approval, and this can extend the approval time. Your best advice is to talk with your accountant to ensure you have all the documentation required before submitting your application to avoid any unnecessary delays.