Some experts estimate that millions of dollars in disability tax credits go unclaimed every year. This is probably because people don’t consider their physical or mental impairment—e.g., hearing loss, use of a walker, or type 1 diabetes—to be a disability. However, for tax purposes it might be, and overlooking this credit can be a costly mistake.
For example, an adult in BC that claims the disability amount (often referred to as the disability tax credit, or “DTC”) will reduce his or her tax payable by about $1,500 each year. And, if you missed out on the DTC in prior years because you didn’t realize that you were eligible, don’t worry, you can claim up to 10 missed years.
You may qualify for the DTC if you:
- are blind;
- receive life-sustaining therapy (e.g., for certain types of diabetes); or
- are “markedly restricted”1 in your speaking, hearing, walking, elimination, feeding, dressing, or in performing the mental functions necessary for everyday life.
Children are also eligible for an even greater DTC2 if the meet they criteria above. Depending on the severity, certain relatively common conditions may qualify for the DTC; these include: ADD, ADHD, Asperger’s Syndrome, anxiety disorders, autism, bi-polar disorder, diabetes (type 1 or 2), epilepsy, FASD, learning disabilities, or manic depression. If your child qualifies for the DTC, you may also be able to receive the monthly child disability benefit.
If your partner, child, or other dependant can’t benefit from their entire DTC (usually because their income isn’t high enough), they can transfer the unused portion to you. Transferring your child’s DTC can reduce your tax payable by up to $2,500.
If you think you or someone in your family might qualify, the CRA has a great tool that lets you determine whether you might be eligible for the DTC.
If you think you are eligible, have your qualified practitioner complete a form T2201, and send it to the CRA. After they have reviewed your T2201, the CRA will confirm whether you qualify. You must have a valid T2201 on file with the CRA before claiming the DTC on your return.
Finally, you should be wary of companies that specialize in the DTC, claim everything is a disability, and charge a commission for their services. You don’t need a special company to claim this credit; all you need is a valid T2201 completed by your doctor and approved by the CRA.
1 “Markedly restricted” means you are unable, or it takes you an inordinate amount of time (often described as three-times the amount of time) to perform one or more of the listed activities, even with therapy and the use of appropriate devices and medication.
2 The DTC is increased for people who are under 18 years of age and can be worth up to an additional $1,000.