Have you ever heard of the Disability Tax Credit (DTC)? If you are suffering from a long term disability, or are caring for someone who is, chances are you have. And if you’ve ever tried applying for this particular benefit, you probably know how tedious and frustrating the process can be. So it’s no surprise that only forty percent of Canadians with severe disabilities have successfully claimed the Disability Tax Credit. Other reasons include: low awareness of the tax credit, a complicated test, and the exclusion of many types of disabilities such as mental disabilities. Also, many medical practitioners do not understand the criteria or application process.
So Why Apply?
Despite the challenges surrounding the application process, you can benefit alot from the Disability Tax Credit. Some of these benefits include: a reduction in your household’s tax burden, more disposable income, and access to other government benefits such as the Registered Disability Savings Plan. In this article, we will break down the application process as well as the qualification criteria.
Activities of Daily Living
One of the biggest criteria for determining whether you qualify for the Disability Tax Credit is your level of restriction in activities of daily living. Applicants must be markedly or significantly restricted in at least one or two of the basic activities of daily living respectively. These activities are: speaking, hearing, walking, eliminating (toilet use), feeding, dressing and mental functions necessary for everyday life. People who are blind or need life sustaining therapy may also qualify. Whatever your impairments are, they must be prolonged (at least 12 months) and be present 90 percent of the time.
Markedly Restricted vs Significantly Restricted
People are considered markedly restricted if they take an inordinate amount of time to perform an activity of daily living. This is usually three times the average time taken by someone without the impairment. People who are significantly restricted cannot perform at least two activities of daily living even with the appropriate therapy, devices or medication at least 90 percent of the time.
It is imperative that you prove your restriction in the application process, because this is the main criteria for qualification. It should be noted that the cumulative effect of at least two or more significant restrictions can be the equivalent to being markedly restricted in one activity of daily living.
If you are on life sustaining therapy, the therapy must support a vital function and must be undertaken at least three times per week for at least fourteen hours. Note that the fourteen hours does not include activities prior to and after the therapy, such as travel time. Also, the therapy must take time away from everyday activity.
The Application Process
The Disability Tax Credit application form is known as the T2201 and is available on the CRA website. The form is divided into part A and part B. Part A is to be completed by the applicant or tax payer. The applicant must provide details on the person with the disability as well as the claimant (if different from the person with the disability). If you are completing the form on behalf of the person with the disability, then you must specify your relationship with that person as well as detailed information how you provide regular and consistent support to the said person.
Part B (pages 2-5) must be completed by the medical practitioner (usually a doctor or nurse). However, the said medical practitioner can complete the entire form. If your medical practitioner is someone other than a nurse or doctor, then he/she may only complete parts of the form that are relevant to their field of expertise. Practitioners other than a nurse or doctor who are qualified to complete the form are: optometrist, occupational therapist, audiologist, physiotherapist, psychologist and speech-language pathologist. You or your medical practitioner can attach additional sheets if needed.
Send the completed T2201 to the Disability Tax Credit Unit of the tax centre for your region by mail. The mailing address can be found on page 6 of the form. You must send the original signed copy (so be sure to keep another copy for yourself).
You’ve Applied, So Now What?
Once the CRA has received your application they will notify you of their decision. Should they require additional information they will contact you or your medical practitioner. The CRA will send you a notice of determination which informs you whether you have been approved or denied. If you are approved, the notice will specify what year (s) you are eligible for the Disability Tax Credit. Unless requested to do so, you do not need to submit an application to the CRA every year. You will also be informed about other programs you are eligible for. If your condition improves, you must notify the CRA.
If your application is denied, the determination form usually provides a reason for the denial. If you disagree with the decision, you can write to the tax centre to ask them to review their decision. It is recommended that you consult with your medical practitioner before writing the letter. Be sure to refer to the information you put in your original application (this is where the copy comes in handy) if it contradicts the reasons given for the denial. Alternatively you can file an appeal with the Tax Court of Canada within a period of 90 days. Be aware that due to a backlog of cases facing the Tax Court the process can be lengthy.
Applying for the Disability Tax Credit can be a tedious and frustrating process, but for those who qualify it is worthwhile. In order to save you (and others) time and effort, you should do your best to determine whether or not you qualify before you begin the application process. If you feel your personal circumstances make you eligible then you should apply. Good luck!
If you have any questions, concerns, or would like to share your personal experience with the application process, please reach out to us at firstname.lastname@example.org or leave a comment below.