According to the CRA, the Canadian Disability Tax Credit is a non-refundable tax credit that helps persons with disabilities or their caregivers reduce the amount of income tax they have to pay. This Canadian disability benefit creates greater tax equity by providing relief for disability costs. A person with a severe and prolonged impairment in physical or mental functions may claim the disability amount once they are eligible for the DTC.
Currently, the disability tax credit is non-refundable, meaning that it’s worth nothing to you if you don’t earn enough to owe taxes. And while it may be possible to transfer all or part of the tax credit that can’t be used to one’s spouse, common-law partner, or another supporting person.
The requirements to be eligible for the disabled tax credit are laid out in the T-2201 DTC certificate application form. Click on the link above to view or download for printing the form.
Eligibility criteria for the Disability Tax Credit
There are different ways in which a person can be eligible for the disability tax credit (DTC). In all cases, the impairment must be prolonged. Also, the person must meet one of the following criteria:
- is blind
- is markedly restricted in at least one of the basic activities of daily living
- is significantly restricted in two or more of the basic activities of daily living (can include a vision impairment)
- needs life-sustaining therapy
In addition, the person’s impairment must meet all of the following:
- is prolonged, which means the impairment has lasted or is expected to last for a continuous period of at least 12 months
- is present all or substantially all the time (at least 90% of the time)
- Markedly restricted
- The cumulative effect of significant restrictions
- Life-sustaining therapy
A person is considered blind if, even with the use of corrective lenses or medication:
- the visual acuity in both eyes is 20/200 (6/60) or less, with the Snellen Chart (or an equivalent) or
- the greatest diameter of the field of vision in both eyes is 20 degrees or less
A person is markedly restricted if, they are unable or take an inordinate amount of time to do one or more of the basic activities of daily living, even with therapy (other than life-sustaining therapy) and the use of appropriate devices and medication. This restriction must be present all or substantially all the time (at least 90% of the time).
What we mean by “inordinate amount of time”
This is a clinical judgment made by a medical practitioner who observes a recognizable difference in the time it takes a patient to do an activity. Usually, this equals three times the average time needed to complete the activity by a person of the same age who does not have the impairment.
Basic activities of daily living
Among other things, there must be a prolonged impairment in physical or mental functions that must have lasted, or be expected to last, for a continuous period of at least 12 months.
To find out if you’re eligible for the DTC
The disability tax credit can be claimed retroactively for up to 10 years if a person has been experiencing eligible impairments but has only now applied for the credit. That can add up to a major tax refund.
Content source# 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
Contact us now and we can go through it with you.