Life is more challenging for people who have a severe and prolonged impairment, in physical or mental functions. These people often have extra expenses that other taxpayers don’t. The Canadian Disability Tax Credit (known as the DTC) helps to offset some of those costs.

Marlene_McGraw_Millards_Brantford

Marlene McGraw
CPA, CA, LPA, Partner
Millards Chartered Professional Accountants

Marlene McGraw, CPA, CA, LPA and Partner from Millards Chartered Professional Accountants in Brantford says that the tax credit has some conditions but should be considered by caregivers and anyone with a physical or mental disability. McGraw is encouraging the community to share this post and reach out to anyone they know that might qualify.

“The disability tax credit is a non-refundable tax credit. That means that while you won’t receive the benefit as a payment to you, the credit will reduce any tax that you might owe. It can provide substantial benefit in many situations and we believe that there are many qualified Canadians not taking advantage of this tax credit”

marieThe Canadian Revenue Agency explains the purpose of the DTC “is to provide for greater tax equity by allowing some relief for disability costs, since these are unavoidable additional expenses that other taxpayers don’t have to face.”

The disability DTC helps persons with disabilities or their supporting persons reduce the amount of income tax they may have to pay. An individual may claim the disability amount once they are eligible for the DTC. This amount includes a supplement for persons under 18 years of age at the end of the year.

The DTC offers benefits to those with disabilities and McGraw points out that “being eligible for the DTC can open the door to other federal, provincial, or territorial programs such as the registered disability savings plan, the working income tax benefit, and the child disability benefit.”

The CRA website includes additional information on the Disability tax credit here:

http://www.cra-arc.gc.ca/dtc/

The Disability tax credit page features a number of examples of people and scenarios that might qualify for the benefit. A scenario titled “Meet Evelyne and Joan,” outlines a common caregiver relationship where the Disability tax credit might offer some relief.

evelyne “Evelyne is the caregiver to her mother, Joan, who lives with her. Evelyne applied for the disability tax credit (DTC) for her mother. Thanks to the information that the medical practitioner provided on the DTC application form, Joan is now eligible for the tax credit as she now needs constant care and supervision. As Joan has little taxable income and her daughter helps with her food, clothing, and shelter throughout the year, Evelyne may claim any unused portion of the tax credit.”

So who is eligible for the DTC?

You can review examples of impairments and see the basic differences between impairments that qualify for the DTC by clicking here:

http://www.cra-arc.gc.ca/tx/ndvdls/sgmnts/dsblts/qlfd-prcts/dtrmnng/menu-eng.html

McGraw reminds those pursuing this tax credit that they must complete the application and have the support of their doctor.

“You are eligible for the DTC only if the CRA approves Form T2201. A medical practitioner has to complete and certify that you have a severe and prolonged impairment and must describe its effects.”

Step by step instructions for completing the form can be found here:

http://www.cra-arc.gc.ca/tx/ndvdls/sgmnts/dsblts/dtc/pply-eng.html

The CRA released a new video recently that explains the Disability Tax Credit. Watch the video below for an overview of the program.

Marlene McGraw’s practice areas include accounting for small and medium sized corporations as well as business and computer advisory services. Her industry experience includes manufacturing, building contractors, condominium corporations and law firms.