Episode 28: Disability Tax Credit
Welcome back to another episode of Chat with Brandy, a weekly show where we talk personal & business finance, taxes, and how to make money while doing what you love! I’m your host, bookkeeper and tax preparer Brandy Miron, and this is episode 28!
This episode is all about the Disability Tax Credit and the different deductions and benefits that are related to it. I talked about this credit briefly in episode 25, where I went over all benefits and credits related to being a senior in Alberta, but I thought this particular credit deserved it’s own episode.
I’ve broken down the program information into segments below:
Disability Tax Credit
A person with a severe and prolonged impairment in physical or mental functions may be eligible for the disability tax credit (DTC) of $8,235. Once they are eligible for the DTC, the disability amount could be claimed on the tax return, and can be adjusted up to 10 years back. Depending on what your income was during those years, this could amount to over $10,000 back in your pocket, tax-free.
Who is eligible
For you to be eligible for the DTC, a medical practitioner must certify that you have a severe and prolonged impairment in physical or mental functions. The medical practitioner also needs to describe the effects of the person’s impairment. Here are some examples of disabilities or symptoms that may qualify you:
Slowed Walking Knee/Hip Problems, Osteoarthritis, Poor Circulation, Foot Disorders
Digestion Disorders Inflammatory Bowel Disorder, Crohn’s/Colitis, Incontinence, Prostate
Limited Upper Body Mobility Weak/Shaky Hands or Arms, Back/Neck Problems
Breathing Disorders COPD, Emphysema, Tuberculosis, Chronic Asthma, Sleep Apnea
Hearing Impaired Hearing Aids, Need of Hearing Aids, Poor Hearing
Cognitive Issues Memory Loss, Confusion, Alzheimer’s, Anxiety, Dementia, Depression, ADHD
Any illness that requires life-sustaining therapy at least 14 hours per week Insulin-dependant diabetes,dialysis, ongoing antibiotics, even certain types of physiotherapy
Eligibility for the DTC is based on the effects of the impairment, not on the medical condition itself. You can fill out this self-assessment questionnaire to find out if you may be eligible.
1. Has your impairment in physical or mental functions lasted, or is it expected to last, for a continuous period of at least 12 months? Yes No
If you answered yes, answer questions 2 to 5 below. If you answered no, you are not eligible for the DTC. To claim the disability amount, the impairment has to be prolonged.
2. Are you blind? Yes No
3. Do you receive life-sustaining therapy (therapy is needed to support a vital function, even if it eases the symptoms AND the therapy is needed at least 3 times per week, for an average of at least 14 hours per week)? Yes No
4. Do the effects of your impairment cause you to be markedly restricted (you are unable or it takes you an inordinate amount of time to complete, even with therapy, devices, and medication) at least 90% of the time in one or more of the following basic activities of daily living, even with the appropriate therapy, medication, and devices?
■ Mental functions necessary for everyday life
5. Do you meet all of the following criteria?
■ Because of the impairment, you are significantly restricted in 2 or more of the basic activities of daily living, or you are significantly restricted in vision and 1 or more of the basic activities of daily living listed in question 4, even with appropriate therapy (other than therapy to support a vital function), medication, and devices.
■ These significant restrictions exist together at least 90% of the time.
■ The cumulative effect of these significant restrictions is equal to being markedly restricted in one basic activity of daily living.
If you answered yes to question 1 and to any one of questions 2 to 5, you may be eligible for the DTC. If you answered no to all of questions 2 to 5, you are not eligible for the DTC. To be eligible for the DTC, you have to answer yes to at least one of these questions.
Applying for the credit
Get an application form at https://www.canada.ca/en/revenue-agency/services/forms-publications/forms/t2201.html and have a qualified practitioner complete and sign the form, such as a doctor, optometrist or psychologist, depending on the disability.
Once the form is complete, send a copy into your tax centre and wait for approval.
If you believe you *may* be eligible, I strongly encourage you to apply. You don’t have much to lose, aside from the time and possibly small fee your doctor may charge you, and you may have a substantial amount to gain. I’ve personally seen this credit come through and be life-changing for people who needed it.
Other benefits related to DTC
If approved for DTC, you may also qualify for several other tax credits:
Home Accessibility Expenses: DTC-eligible individuals who are over 65 who own their home may claim a deduction of up to $10,000 on a qualifying renovation to allow the individual to gain access to, or to be mobile or functional within, the dwelling
Disability Supports Deduction: DTC-eligible individuals who pay for certain medical expenses in order to work, go to school, or do research for which they received a grant may be eligible for a deduction (i.e. braille devices, note-taking services, reading services, captioning, voice over text software)
Additional Medical Expenses: DTC-eligible individuals may claim certain medical expenses that others may not (i.e. attendant care expenses, nursing homes, specialized care)