Common Mistakes when Applying for Disability Tax Credits (DTC)

Disability Tax Credits (DTC) are designed to help individuals and families cope with the added financial burdens that come with disabilities. Unfortunately, far too many Canadians fail to qualify for the DTC simply because of a basic error in their application. If you are eligible, or if you are not sure about your eligibility for a Disability Tax Credit, it’s essential that you complete your application with the utmost care and attention to detail. Below you will find some of the most common mistakes and how to avoid them.

Inconsistencies or Insufficient Information

common mistakes when applying for disability tax credits

When describing the limitations of the applicant or the dependent (if you are a caregiver applying on their behalf), you need to understand what is meant by BADL or Basic Activities of Daily Living. This is one of the main points that will be scrutinized when you submit your application. All of the details you share should be accurate and consistent, and you must also provide sufficient details regarding these limitations and how they impact daily life. For instance, if your account is not consistent with that of the physician, it could result in the instant denial of your application.

It’s also common for a particular activity to be listed followed by detailed limitations that do not pertain to this specific activity. For instance, if you listed ‘feeding’ followed by details that relate to hygiene and dressing, this will be inconsistent in the opinion of the person who is reviewing your case.

Finally, if your application has insufficient evidence of a disability that negatively impacts your BADL, then this can result in the denial of your application. The people who review your case look for detailed language. Declaring that somebody has a mental illness is far too vague. It needs to be defined, detailed and proof of the diagnosis should accompany the application. It is also important that the way in which this disability directly affects their quality of life must be included in detail and without discrepancies.

Incorrect Date of Diagnosis

This might seem like a very small detail, which is why it is so often overlooked by applicants. Some people are confused when it comes to the date that they should include. Some believe that it is the date of diagnosis while others believe it is the date when they started experiencing symptoms. The CRA wants to know when the applicant was deemed significantly limited in BADL. This is the date from which you can claim and, in many cases, you could even be eligible for retroactive Disability Tax Credits for up to 10 years even if you were ‘officially’ diagnosed just a few years prior.

Failure to Claim Retroactive Disability Tax Credits

As briefly mentioned in the previous section, you could be eligible for retroactive credits. If you have been living with a disability for several years and finances are tighter than ever, these credits can be just what you need to turn it all around. It’s always worth applying for as much as you can possibly receive.

Failing to Apply for Disability Tax Credit Transfers

In many cases, you can transfer your Disability Tax Credit to your spouse, common-law partner, or another qualifying family member like your parents, a sibling and so on. This person must be able to demonstrate that they are your primary caregiver and that you depend on them for basic needs like food, shelter and clothing. Remember, the person who applies for a DTC is only eligible if they pay tax. Many disabled people think that they are no longer eligible because they no longer work or only work part-time. It is always worth exploring other options such as transferring your credit.

Applying for a Disability Tax Credit can prove confusing and there is plenty of paperwork involved. For assistance from experienced professionals, call Tax Benefits Canada at +1 (855) 413-6971.