The Disability Tax Credit (DTC) is one of the more challenging disability benefits to understand and ultimately get approved for. The eligibility requirements are stricter, and the definition of impairment is more specific. For that reason, we decided to write this article to help people better understand the requirements as well as how to apply and appeal a denial. So, if you’re looking for a comprehensive summary of the DTC, you have come to the right place.
- What is the Disability Tax Credit
- Why is the DTC Important?
- Who is Eligible for the DTC?
- Can I Work and Receive the Disability Tax Credit?
- How Much Does the Disability Tax Credit Pay?
- How to Calculate the Disability Tax Credit
- How Long Can I Get the Disability Tax Credit
- Recent Update to Mental Functions
- How to Apply for the Disability Tax Credit
- How Long Does It Take to Get a Decision From CRA
- Challenges of Getting Approved for the DTC
- Appealing a DTC Denial
- DTC Disability Lawyers and Representatives
What is the Disability Tax Credit
The Disability Tax Credit is a non-refundable tax credit that helps reduce the amount of income tax people with impairments or their supporting family members may have to pay. It was introduced in 1988 by the Canadian Government and Canada Revenue Agency (CRA) to recognize the additional expenses associated with having a severe and prolonged impairment.
Those who qualify for the DTC can either receive the program’s base amount or the base amount plus a supplemental amount. The base amount is for eligible adults aged 18 or more. The supplemental amount is for people who are under the age of 18 as of the end of the applicable tax year. So, eligible people under age 18 can get both the base and supplemental amounts.
Those who were eligible in past years but didn’t claim the credit can also back-file it for up to 10 years and receive the full credit for each year.
Although the DTC is a federal tax program, the credit comes from both federal and provincial sources. In other words, you will receive an amount from your province of residence and an amount from the federal government. These provincial amounts vary from province to province, while the federal amount is the same across the country.
Why is the DTC Important?
Many people aren’t aware that a DTC approval can open many doors and allow you to apply for other federal, provincial, and territorial programs. These programs include the registered disability savings plan, Canada’s workers’ benefit and the child disability benefit. These programs cannot be accessed without qualifying for the DTC.
On top of that, the DTC is designed to reduce the amount of income tax you pay. So, getting approved could save you some money on your next tax return. Overall, the DTC is meant to benefit you, so applying is something you should consider if you are eligible for the program.
On that note, let’s move on to the eligibility requirements for the DTC.
Who is Eligible for the DTC?
The eligibility criteria for the Disability Tax Credit are different from those of other disability income plans, like the Canada Pension Plan, Workers’ compensation programs, or disability insurance plans.
According to the government of Canada, you may be eligible for the DTC if a medical practitioner certifies that you have a severe and prolonged impairment resulting in a marked restriction in one of the categories, significant limitations in two or more categories, or receive therapy to support a vital function. You must also be a Canadian citizen or a permanent resident.
The eligibility criteria for the Disability Tax Credit fall under the following categories:
- Mental functions
- Eliminating (bowel or bladder functions)
- Life-sustaining therapy
- Cumulative effect of significant limitations
What does a marked restriction mean?
An individual may be eligible for the DTC if they have severe and prolonged physical or mental impairment, resulting in a marked restriction.
You may qualify for the DTC under the marked restriction qualifier if:
- You are unable to do a basic activity of daily living, or it takes three times longer than someone of similar age without the impairment, even with the use of appropriate therapy, medication, and devices;
- This restriction is present all or almost all of the time (generally at least 90%), and
- The restriction has lasted or is expected to last for a continuous period of at least 12 months
The basic activities of daily living include the following:
- Mental functions
- Eliminating (bowel or bladder functions)
Cumulative effect of significant limitations
To be eligible for the DTC under the cumulative effects of significant limitations category, an individual must have limitations in two or more categories, with the exception of life-sustaining therapy.
In order to qualify, these two limitations must:
- Exist together all or almost all of the time (usually 90% or more)
- Have a combined impact that is:
- equivalent to being unable, or taking three times longer than someone of similar age without the impairment, to do an activity in 1 of the categories
- present all or almost all of the time (generally at least 90%), even with the use of appropriate therapy, medication, and devices
Life-sustaining therapy is another qualifier for the Disability Tax Credit. To be eligible for it, the therapy must meet the following criteria:
- It is essential to sustain a vital function of the individual;
- is required to be administered at least three times each week for a total duration averaging not less than 14 hours a week; and
- cannot reasonably be expected to significantly benefit persons who are not so impaired.
Some examples of therapies that may qualify include taking insulin, kidney dialysis, and medical foods and formulas.
Can I Work and Receive the Disability Tax Credit?
Unlike many other disability programs in Canada, you can work and receive the DTC. Remember, the program doesn’t focus on your ability to work. Instead, it focuses on the severity of your medical condition and how it affects your ability to do the basic activities of daily living.
For example, someone who is blind automatically qualifies for the DTC. However, many blind individuals are still able to work even though they are eligible for the program.
What Medical Conditions Qualify for the Disability Tax Credit?
Any medical condition can technically qualify for the Disability Tax Credit. The CRA does not give-out benefits based on a medical diagnosis. Instead, they provide benefits based on the severity of your impairment and how it affects your ability to perform activities of daily living. In other words, the level of disability caused by your medical condition and whether you meet the requirements is always the focus, not the diagnosis.
The following are some of the medical conditions that qualify for Disability Tax Credit:
- Chronic pain
- Visual disorders
- Chrohn’s disease
- Hearing Disabilities
- Elimination Disabilities
- Mood disorders (such as depression or bipolar disorder)
- Anxiety disorders
- Personality disorders
- Psychotic disorders (such as schizophrenia)
- Eating disorders
- Trauma-related disorders (such as post-traumatic stress disorder)
- Substance abuse disorders
- Multiple sclerosis
- Alzheimer’s disease
- Parkinson’s disease
There are two impairments that automatically qualify you for the DTC: being blind and having type 1 diabetes.
According to the CRA, you are considered blind if, even with the use of corrective lenses or medication, both eyes meet at least one of the following criteria: visual acuity is 20/200 (6/60) or less on the Snellen Chart and/or the greatest diameter of the field of vision is 20 degrees or less.
How Much Does the Disability Tax Credit Pay?
The Disability Tax Credit does not pay a monthly or annual benefit like other disability programs. Rather, it allows you to get a tax refund, if you have paid taxes to Revenue Canada that have not already been refunded to you.
For example, if your income is below $14,398 then you likely do not have to pay income taxes in Canada. Or if you pay taxes, you will receive a full refund when you file your tax return. In this situation, the Disability Tax Credit would not result in any payment to you because there are no un-refunded taxes being held by Revenue Canada.
On the other hand, if your income was $18,000 in 2022, then you would owe approximately $181 in federal and provincial income tax if you live in Ontario. Revenue Canada is holding $181 in un-refunded taxes. If approved for the Disability Tax Credit, you would get a tax refund for some or all of the $181. But $181 is the maximum amount you could get from the Disability Tax Credit for yourself. In this case you would be eligible to receive further refund if it was available, but there are no taxes beyond the $181 to refund.
If you haven’t paid taxes or you don’t need the entire credit to reduce your income, then you can transfer your credit to a supporting family member. This can be your spouse, child, grandchild, parent, brother, sister, uncle, aunt, niece, or nephew. To qualify as a supporting family member, you must depend on that person for one of the basic necessities of life (food, shelter, clothing).
The amount you, or your supporting family member, will receive depends on many factors, so we can’t provide you with an exact number. However, an adult can expect to receive anywhere from $1,500 to $2,500 per year of eligibility. And a child may receive between $3,000 to $4,500 per year of eligibility. This figures assume that you and/or the supporting family member have paid income taxes in excess of the above amounts.
If an adult is eligible for the 10-year retroactive refund, they can expect to receive between $15,000 and $25,000 in a lump sum amount. And if a child under 18 is eligible for the 10-year refund, they can expect to receive between $30,000 and $45,000. Again, this payment would only happen if you, or your supporting family member, paid in excess of $2,500 to $4,500 in taxes in each of the retroactive years.
You may be wondering how these numbers are calculated. If so, proceed to the next section.
How to Calculate the Disability Tax Credit
Calculating the DTC can be extremely difficult — especially for someone who isn’t an accountant or bookkeeper. This is because the amount you will receive depends on a variety of factors, including your income, the province you live in, your age (if you are an adult or a minor), and more. For that reason, we can’t provide you with the exact amount you will receive; however, after reading this section, you should have a general sense of what you may get and how the calculation works.
Before we jump in, it’s important to know that the Disability Tax Credit is comprised of a base amount and a supplemental amount. Both the base and supplemental amounts are provided from federal and provincial sources and are subject to change yearly. Additionally, each province has a different base and supplemental amounts.
Federal disability tax credit amounts for the 2022 tax year:
- Base tax credit amount: $8,870 for an adult who is 18 and older
- Supplemental tax credit amount: $5,147 for a child under 18. For a total credit of up to $14,044.
If you want to calculate how much you will get, you need to multiply the federal and provincial disability amounts by the lowest federal and provincial tax rates and then add them together.
For example, in 2021, an adult living in Ontario would use the following calculation:
- The federal portion of the DTC is $8,870; then you would multiply that by 15% to get = $1,330.50
- The provincial portion of the DTC is $8,870, then multiply that by 10% to get = $887.
- Adding them together: $1,330.50 + $887 = for a total of $2,217.59
- Please note this is just an estimate, and it may or may not represent how much you will actually receive. You must have paid in taxes of at least $8,870 to receive the amounts in the examples above.
Claiming for past years
If you were eligible for the DTC in past years but did not claim the disability amount, you may be able to claim it going back up to 10 years. The calculation for the 10-year retroactive refund is pretty much the same as the current year’s, the only difference is you need to use the maximum disability amounts for each year.
The following are the maximum federal disability amounts over the past ten years:
|Year||Disability amount||Supplement for children (17 and younger)|
An adult and minor who are eligible for the 10-year refund can expect to receive the following amounts:
- Adult: $15,000 and $25,000 in a lump sum amount
- Minor: 30,000 and $45,000 in a lump sum amount
- Please note this is an estimate and may not represent exactly how much you will receive from the CRA
How Long Can I Get the Disability Tax Credit
Provided you continue to meet all eligibility criteria, you can receive the disability tax credit up to the time of your death. This makes the Disability Tax Credit different from other programs that only pay to age 65 (e.g., CPP disability, Workers Compensation, Disability Insurance). Revenue Canada approves the tax credit for several years at a time. You may need to re-apply several times to continue to get the tax credit over your lifetime.
The only age limit related to the disability tax credit is the supplemental amount available only to children age 17 or younger.
Recent Update to Mental Functions
In 2022, the Disability Tax Credit updated and expanded its criteria for mental functions. The new list of mental functions necessary for everyday life includes:
- Adaptive functioning
- Goal setting
- Perception of reality
- Regulating behaviour and emotions,
- Verbal and non-verbal comprehension
In 2020 and earlier tax years, the mental functions considered necessary for everyday life only included:
- Adaptive functioning
- Judgement, problem-solving, and goal setting (taken together)
Note: If your application under mental functions was denied on or after January 1, 2021, to June 23, 2022, you do not need to reapply. Your application will be reviewed under the new criteria. Please allow until December 31, 2022, for the CRA to review your original application. You will receive a letter informing you of the outcome of the review
How to Apply for the Disability Tax Credit
You apply for the Disability Tax Credit by submitting the T2201- Disability Tax Credit Certificate. There are two parts to the application: Part A and Part B. You complete Part A, and your doctor completes Part B.
Applications can be submitted online or by mail. With the online method, medical practitioners can complete Part B of the form using the DTC digital application. Once Part B is completed, the medical practitioner must print and sign the form to certify it. After that, you must complete Part A. Once you finish completing your section, you can send it to CRA by signing into your CRA My Account and selecting “Submit documents.”
With the paper method, you must print off the T2201- Disability Tax Credit Certificate. The T2201 form has Part A and Part B. You fill out Part A, and your medical practitioner fills out Part B. After that, you can submit the application by mailing the completed Form T2201 along with any supporting documentation to one of the following CRA tax centers:
Jonquière Tax Centre
2251 René-Lévesque Blvd
Jonquière QC G7S 5J2
Sudbury Tax Centre
Post Office Box 20000, Station A
Sudbury ON P3A 5C1
Winnipeg Tax Centre
Post Office Box 14000, Station Main
Winnipeg MB R3C 3M2
What Medical Practitioners Can Fill Out Part B of the T2201 Form for the DTC?
A medical practitioner is not limited to your family doctor. It includes several health professionals, including doctors, nurse practitioners, optometrists, audiologists, occupational therapists, physiotherapists, psychologists, and speech-language pathologists.
The medical doctor and nurse practitioner can certify all sections of the Form. Other practitioners can certify sections related to their area of expertise:
- Occupational Therapists can certify impairments with walking, feeding, dressing, and the cumulative effect of these activities
- Physiotherapists can certify impairments in walking
- Optometrists can certify impairments in vision
- Psychologists can certify impairments in performing the mental functions of everyday life
- An audiologist can certify impairments of hearing
- Speech-Language pathologists can certify impairments in speaking
How Long Does It Take to Get a Decision From CRA
It usually takes the CRA between 3 to 6 months to assess your application and determine if you are eligible for the DTC. However, depending on the time of year, the processing center, and the complexity of your impairment, it may take longer.
Additionally, if you are found to be eligible for previous years, the CRA will need to reassess your tax returns. Processing retroactive tax credits can take anywhere from 1 to 3 months.
You can also use the Check CRA Processing Times tool to find out how long you will have to wait for a decision.
Challenges of Getting Approved for the DTC
There are several challenges involved with getting approved for the DTC. In this section, we will go over each in detail, and I’ll explain what you can do about it.
When we say unsupportive, this could mean two things: your doctor genuinely understands the requirements and doesn’t think you qualify for the program, or your doctor doesn’t understand the Disability Tax Credit’s eligibility requirements and thus thinks you are ineligible.
What you can do
Luckily for you, most unsupportive doctors fall under the ladder category. Although doctors have gone through extensive schooling and are some of the most educated in their communities, many are unaware of how disability programs like the DTC actually work. Oftentimes they believe inaccurate stereotypes that suggest you can only be eligible for the DTC if you are in a wheelchair — we have heard a doctor say this. If this is the case, print off a copy of the eligibility requirements and show it to your doctor. Explain how you meet the requirements and why getting approved would benefit you.
If you are dealing with a doctor who understands the program’s requirements but doesn’t think you qualify, you should still print off a copy of the requirements and explain how you meet the criteria. Sometimes doctors will not believe that you are eligible until you show them. If that doesn’t work, you can also contact another one of your medical practitioners to complete the form — see the previous section to learn what medical practitioners can fill out Part B of the T2201 form. Alternatively, you can also book an appointment with an online doctor or visit a walk-in medical clinic.
For more information on how to deal with an unsupportive doctor, check out our article: What To Do if Your Doctor Won’t Fill Out Medical Report Forms.
Your doctor doesn’t have time to invest in your application
Many doctors will refuse to fill out forms because they simply don’t have time. Doctors have insane schedules, and the last thing they want to do is fill out a form at the end of a long day. So, even if your doctor is supportive, they may not have time to complete the form or any of the other questionnaires they may receive from CRA.
What you can do
If this is the case, book a separate appointment with your doctor to complete the form. That way, they won’t have to make time in their busy schedules to complete it.
Understanding what the CRA is looking for in your application
If you are applying for the DTC on your own, it can be difficult to understand what the CRA is specifically looking for in your application. Many people don’t have a strong understanding of the eligibility criteria and the specific requirements for certain disabilities. So, figuring out what documents and evidence you need to provide can be extremely challenging.
What you can do
If you are struggling to complete your application, you should educate yourself about the process as much as possible. The fact that you are reading this article shows that you are already on the right track. Make sure to include all relevant documents in your application so that the CRA can fully understand your case from the start without asking you for more information.
It’s also important to note that many organizations have profited immensely from this implication that the DTC application is extremely complicated. However, in reality, the application is pretty straightforward. You don’t need to spend thousands of dollars on a service for something you could have done for free.
With that said, there are situations where you should consider getting legal support:
- You have an uncooperative doctor
- You are unsure if you are eligible for the retroactive refund and don’t know the best way to maximize your credits
- There are discrepancies in the start date of your disability
- You are unsure if you qualify
Here at Resolute Legal, we have helped hundreds of people get approved for the DTC. We support you through each stage of your claim, including the initial application, internal appeals, and hearings before the Tax Court of Canada. Call us at (888) 732-0470 to book your free consultation today.
Appealing a DTC Denial
A denial can feel like a slap in the face, but the good news is you don’t have to simply accept CRA’s decision. If Revenue Canada denies your application, you can appeal the denial or re-apply.
Request a review (Revenue Canada)
If you decide to go the appeal route, you can start by contacting the CRA in writing to request a review of your application. Along with this request, you should submit any important medical information that you haven’t already sent. This can include new or updated medical reports and/or a letter from a medical practitioner.
Filing an objection (Revenue Canada)
If your application is denied after the review, you can file a Notice of Objection (Form T-400A). Keep in mind you must file this objection within 90 days of receiving the initial denial letter from CRA. So, make sure to do it as soon as possible. Once submitted, an appeal officer with Revenue Canada will review your objection and decide whether to approve or deny your application.
If you receive an unfavourable decision from Revenue Canada’s appeal officer, you can file a Notice of Appeal to the Tax Court of Canada. The Tax Court of Canada is a special court that hears all appeals related to income tax decisions by the CRA, including decisions about the Disability Tax Credit.
Notice of appeal (Tax Court of Canada)
Once you file the Notice of Appeal, the Tax Court will schedule your case for a hearing. You must attend the hearing to give testimony and verbal arguments to support your case. Many people will have a lawyer represent them at this hearing to assist with the presentation of evidence and verbal submissions to the judge. Representatives from Revenue Canada will also appear at the hearing to give evidence and arguments for why your claim should be denied. After hearing from both sides, the judge will normally give a written decision within a few months after the hearing.
DTC Disability Lawyers and Representatives
As discussed earlier, the Disability Tax Credit is designed for people to apply on their own. Or with help from a friend or family member. However, sometimes it is hard to win on your own. Even if you are legitimately disabled and should qualify, it can be very frustrating. In difficult cases, it is common for people to work with a representative. This can be a disability lawyer. Or another person who is experienced with the process. Do your research before hiring any lawyer or advocate.
At Resolute Legal, we have successfully represented DTC clients in provinces all over Canada. We represent clients in disability tax credit appeals before the Tax Court of Canada. If you’re dealing with an appeal, we can review your situation and see if we can represent you. Call us toll-free today at (888) 732-0470 or fill out a form to request a free case evaluation.
NOTE: This evaluation is free. We handle appeals and hearings for a flat fee that is payable win or lose. We do not offer contingency fee arrangements for disability tax credit cases.