Disability tax credit – What does that really mean? It is a non-refundable tax credit for taxpayers with disabilities which can be used to reduce your personal taxes. I’m sure you have heard about the basic tax credit where approximately the first $11,635 of income has no tax. The disability tax credit is in addition to that and is a tax credit of about $8,113 which would result in tax savings of approximately $1,600 (calculated using the current federal and BC’s provincial rate of 15% and 5%, respectively). There is also a further credit of $4,732 for those under 18 which results in additional tax savings of up to $946.
Most people often think about disabilities being people who have lost a limb, being in a wheelchair, being deaf or blind. But it can be for WAY MORE than that. It can be someone with Crohn’s, Colitis, IBS, Parkinson’s, Multiple Sclerosis, etc. Symptoms for some of these medical issues could be minor but still have a huge impact on your life.
Another misnomer is that you don’t have to be unable to work. In fact, many people work and deal with these things at the same time…which is the reason, I wanted to write about it.
Some general facts: If you don’t work or have any income, the credit can be transferred to your spouse or if you have a child with a disability, you can claim it as the parent. As well, if the disability is for a child, there are additional benefits; i.e. additional amounts of childcare can be claimed, you may receive an increase in child tax benefits and working income tax benefits (if you qualify), or up to double the fitness and arts credits.
So many people are unaware of the DISABILITY TAX CREDIT or they think they don’t qualify because it isn’t as apparent as being in a wheelchair or being blind.
The disability tax credit applies to the following:
- Impairments in physical or mental functions that are expected to last for a continuous period of at least 12 months;
- Receiving life-sustaining therapy
- Markedly restricted in a basic activity of life including:
- elimination (bowel or bladder),
- dressing, or
- mental functions necessary for everyday life
You might be wondering how some of these medical issues are considered disabilities. It basically comes down to an “inordinate amount of time” or where a basic life activity takes longer than a normal person. For example if you have stomach issues, you may require more time in the bathroom. CRA’s benchmark is that it takes three times more than the normal amount required in completing the activity.
Two other definitions are markedly or significantly restricted. Markedly restricted is where at least 90% of the time you are unable or it takes you an inordinate amount of time to perform ONE or more basic activities of daily living.
Significantly restricted is where you do not meet the criteria of markedly, but your basic living activities are substantially restricted at least 90% of the time. To qualify under this option, you must have TWO or more basic activities of daily living affected.
Another example is receiving life-sustaining therapy. If it is required to support a vital function and a minimum 3 times a week for an average of 14 hours per week.
Some activities not included are following a special diet, needing to exercise, travel time for therapy, attending doctor appointments (other than where therapy is received), shopping for medication. For example, if you are celiac, you do not qualify however there are ways to claim additional costs for the special food under the medical expense tax credit.
To apply, you must complete a form T2201 Disability Tax Credit Certificate. Your doctor or qualified practitioner will also be required to fill out a section (which there is usually a fee of $100 from your doctor for this). You then submit it to CRA for their in-house Doctors to review which they will either approve or deny. If they approve it, you can request under the Fairness Provisions with CRA to go back up to 10 years, if you have had the disability that long, however I would suggest having a Professional assist you with that part. If they deny it and you believe you qualify, you can also challenge their decision.
Furthermore, if you qualify, there are other programs available that may provide additional savings; i.e. rebate on vehicle gas, discount on car insurance (contact your insurance broker), the ability to open a Registered Disability Savings Plan where the government will contribute to as well.
I am not a doctor and am unable to determine whether you qualify, however I would suggest you check out the self-assessment questionnaire and speak with a Professional Accountant if you have any questions before proceeding.
***This blog is for information only and not to be used as tax advice or planning. Information is subject to change without notice.