2019 Disability Tax Credit Guide

The Disability Tax Credit serves as a safety net for Canadians who are unable to work because
of a severe and prolonged mental or physical disability. This tax credit was introduced back in
1988 after the government realized that in order to help more Canadians struggling with

disabilities, a broader definition of ‘disability’ was required. Once a definition that encompassed
more than just people who were blind or in a wheelchair was agreed upon, the tax credit was
made available to more Canadians. The type of disabilities that can qualify someone for this tax
credit is always updated as the malleable definition for ‘disability’ is updated to ensure that
people facing difficulties with day-to-day tasks are supported.

In order for a Canadian to qualify for this tax credit, they must be approved by the Canadian
Revenue Agency (CRA). The CRA has money reserved to help people struggling with
disabilities, and they decide who receives the tax credit. Anyone struggling with a disability can
apply for the tax credit by filling out the Disability Tax Credit Form T2201. A person who is
approved by the CRA for the disability tax credit can receive up to $25,000 or more in tax credits
from the Canadian government.

Table of Contents

The Disability Tax Credit

The Disability Tax Credit (or DTC) is a non-refundable tax credit that helps people with
disabilities or the people who support loved ones with disabilities, reduce the amount of income
tax they have to pay. The primary goal of this tax credit is to ensure tax equity, which is

achieved by providing relief from unavoidable costs that make life difficult for those living with a
disability. To put it simply, this tax credit is income tax that has been reduced, which means that
any payments of refunds to an applicant would not be considered income.

A person can only start receiving money after completing the T2201 Form and submitting it to
the Canadian Revenue Agency for consideration.
Anyone concerned about being negatively impacted by the Disability Tax Credit need not worry.
Being approved for the Disability Tax Credit does not classify someone as disabled. Getting
approved for this credit merely signifies that the applicant qualifies for an annual income tax
reduction during a certain amount of time.

Am I Eligible to Receive the Disability Tax Credit?

That is the million-dollar question for anyone considering applying for the Disability Tax Credit.
Indeed, questions about eligibility for The Disability Tax Credit are some of the most popular
ones we receive. First and foremost, you must be able to provide irrefutable proof that you are
suffering from a severe and prolonged mental or physical disability to the Canadian Revenue
Agency in your T2201 form. This form must convince the CRA that you are not able to return to
the workforce in the foreseeable future because your disability prevents you from doing the work
you were previously doing.

Beyond your disability, you must be between the ages of 18 – 65. You must also have
contributed to the CPP for 4 of the 6 years prior to applying OR contributed for 3 of the past 6
years if you have contributed for at least 25 years.

Furthermore, people under the age of 18 can also be registered to receive benefits. However,
they would have to be registered under the Child Disability Benefit. Like the Disability Tax
Credit, this tax credit helps families caring for a child with a severe and prolonged physical or
mental disability. The amount that the family receives is based on the family’s net income.

What Disabilities Qualify for the Tax Credit?

Simply put, many. There is a long list of common disabilities that can qualify for the DTC. The
the list includes arthritis, back injuries, PTSD, obesity, dementia, Parkinson’s disease, and so much
more.

There still isn’t a universal definition of ‘disability’ in Canada, but that does not mean that it will
be impossible for you to receive the Disability Tax Credit. It does, however, mean that your
application must provide incontrovertible proof that a disability exists, and that it prevents you
from working.

Filling out the Disability Tax Credit Form (T2201)

The T2201 form consists of two parts: an application and a certification. Both parts of the form
MUST be completed for your application to be approved. Overall, the DTC application process
is complex when you get past the first part. The first part of the application is the easy part, as it
asks you to fill out your basic personal information like your name, address, date of birth, and
social insurance number.

The second part of the application is the more exhaustive part of the process. In order to
adequately fill out this portion of the application, you will need the help of a medical practitioner
to provide medical information on you. They will need to certify your medical state in many
areas, including vision, speaking, hearing, walking, bowel or bladder functions, feeding,
dressing, and mental functions.

Getting approval for the tax credit is a difficult task for many people who apply because they do
not properly fill out the T2201 form. Rather than provide incontrovertible proof that they are
dealing with a serious disability that keeps them from working, they merely state that they have
a disability. It is very important to be thorough and detailed when filling out this form, as you will
have to convince the CRA that you have a debilitating disability.

Once your application has been submitted, it can take 90 to 120 days for it to be processed.

What Happens if my Application is Denied?

If you receive a notice that your application has been denied, you can request to have your
application reconsidered. If you have your application reconsidered, staff members from Service
Canada who were not a part of processing your original application are assigned to look over
your case.

The benefit of this process is that you have the right to submit additional information that you
believe will help strengthen your case for receiving the Tax Disability Credit.
In order to have your case reconsidered, you MUST request that your case be reconsidered by
Service Canada within 90 days of being notified that your original application was denied. It is
important to note that the process for your application to be reconsidered can take up to several
months.

When you make your written request for reconsideration, you must include the following
information:

  • Your name, address, phone number, and social insurance number.
  • A detailed explanation about why you think the original decision on your application
    was wrong and why you are requesting reconsideration.
  • Any additional information you believe is relevant.

Frequently Asked Questions (FAQ)

How does the disability tax credit work in Canada?
If you are out of work because of a severe, long-term mental or physical disability, you may be
eligible to receive a credit of up to $1,845 annually. In order to apply to receive the tax credit,

you must submit the Disability Tax Credit Form (T2201) to the Canadian Revenue Agency
(CRA).

Can I claim this tax credit for previous years?

Many Canadian aren’t aware of the Disability Tax Credit, which is why so many miss out on the
opportunity to receive money from the government while suffering from a disability. In order to
receive the credit for previous years, you must request a T1 return adjustment at your nearest
tax centre. You will also need to include a letter detailing the specifics of your situation, and you
will have to provide medical records that prove how long you’ve been dealing with your
disability.

Where do I send my application for the Disability Tax Credit?

You must mail a hard copy of your application to the Canadian Revenue Agency (CRA), and
you must also mail a copy to your designated provincial tax centre.

Who qualifies for the Disability Tax Credit?

If you suffer from a severe impairment, you can qualify for the disability tax credit. In the eyes of
the Canadian government, the term ’severe impairment’ encompasses people who take an
inordinate amount of time to perform essential activities, or people who undergo life-sustaining
therapy to allow the body to perform vital functions.

You can also qualify if you can prove that your physical or mental impairment is severe and
prolonged. If you meet both of these criteria, you can be eligible to receive the Disability Tax
Credit.

Do I file taxes if I receive the Disability Tax Credit?

YES. You will need to file taxes even if you get the Disability Tax Credit.
Can you receive the Disability Tax Credit if you have never worked?
The Disability Tax Credit is meant to be a safety net for people who have paid federal taxes.
However, if you have a family member who supports you and pays their taxes, then you can
claim the Disability Tax Credit on that family members’ taxes.
Does the Disability Tax Credit expire?

Once you are approved for the Disability Tax Credit, you are automatically approved to receive
it for future years. The Canadian Revenue Agency may look at your application to determine
how long you are covered. If you are only approved for a few years (rather than unlimited
years), you will need to reapply for the Disability Tax Credit.

How long does it take for my application to be processed by the CRA?

Once the CRA receives your application, you can expect to wait 4 – 10 weeks before you hear back from the CRA.

Where do I get the Disability Tax Credit Form (T2201) from?

You can obtain a copy of the T2201 form from the Government of Canada’s website here:
https://www.canada.ca/en/revenue-agency/services/forms-publications/forms/t2201.html

Do I qualify if my condition is not present all the time?

There are health conditions that produce persistent and continuous after-effects, even though
the condition isn’t seemingly present. Qualifying for the Disability Tax Credit with a condition that
is not always present depends on the severity of the after effects. It would help to consult a medical practitioner when applying for the Disability Tax Credit.

Can I qualify if my condition has improved?

If your disability was present continuously for a minimum of 12 months sometime in the last 10
years, then yes, you can still qualify for the Disability Tax Credit.

How is the Disability Tax Credit paid?

The Disability Tax Credit is a tax deduction, which means the tax credit comes in the form of a
reduced tax bill. If you become eligible to receive the tax credit, then the Revenue Service of
Canada will calculate how much you are eligible to receive and subtract that amount from the
money you would have paid in income taxes. You receive the money for the credit in your tax
return.

Can I claim on behalf of my child?

Yes. Parents of children with disabilities can receive the Disability Tax Credit. They would have
to register their child under the Child Disability Benefit. Like the Disability Tax Credit, this tax

credit helps families caring for a child with a severe and prolonged physical or mental disability.
The amount that the family receives is based on the family’s net income.