Updated: Mar 3
Living with a long-term disability can be both costly and can make it difficult to earn adequate income to support your needs. There are many tax credits and other benefits available to assist eligible individuals. The disability tax credit may be an option to provide tax relief for you or your dependants.
The disability tax credit is a non-refundable tax credit for individuals who have a severe and prolonged impairment in physical or mental functions. An impairment is prolonged when it has lasted, or can reasonably be expected to last, for a continuous period of at least 12 months.
An individual is eligible for the credit for a tax year where the following requirements are met:
the individual has one or more severe and prolonged impairments in physical or mental functions;
the effects of the impairment or impairments are such that the individual is either:
markedly restricted in the ability to perform a basic activity of daily living or would be markedly restricted but for life-sustaining therapy; or
significantly restricted in the ability to perform more than one basic activity of daily living and the cumulative effect of the significant restrictions is equivalent to being markedly restricted in the ability to perform a basic activity of daily living; and
a medical practitioner certifies that the individual meets the above requirements.
An individual is markedly restricted or equivalent to markedly restricted when they are unable to perform basic activities of daily life or significantly restricted in performing these activities all or substantially all (greater than 90%) of the time. Basic activities of everyday life include the mental functions necessary for everyday life (memory, problem-solving, goal-setting and judgement, and adaptive functioning), feeding oneself, dressing oneself, speaking, walking and bowel or bladder functions.
Each person’s eligibility for the credit is examined on a case-by-case basis. If you believe the above may apply to yourself or one of your dependants, you will need a doctor or other medical practitioner to certify that the requirements are met. Generally, a medical doctor or nurse practitioner must assess whether an individual is markedly restricted. Other medical practitioners may be eligible to make this assessment if the impairment relates to their specialization, such as optometrists, speech-language pathologists, audiologists, occupational therapists or psychologists.
The medical practitioner that provides certification must complete Form T2201. On this form, they will provide details regarding the impairment and how the impairment restricts the individual in performing the basic activities of daily life. They must also certify when the restrictions began and when, or if, the restrictions are expected to end. This signed form will be submitted to Canada Revenue Agency for approval.
The disability tax credit can be claimed once Form T2201 has been approved by CRA. The credit includes both a base amount available to all individuals and a supplemental amount available to individuals who are under the age of 18 at the end of the year. If the individual has been certified as eligible for the credit in earlier tax years, you can submit a request to have prior year returns reassessed to reflect the credit. This can be done by requesting reassessments on Form T2201, submitting T1 Adjustment Requests for the applicable tax years or by submitting a letter to your tax centre describing the details of the request and the tax years effected along with a copy of the certified Form T2201.
While the tax credit is non-refundable, any unused portion may be eligible to transfer to the individual’s spouse or common-law partner or to a supporting individual. A supporting individual is someone who supplies the basic necessities of life such as food, shelter and clothing on a regular and consistent basis.
The disability tax credit can provide additional financial resources to those in need.
For more information, please contact firstname.lastname@example.org or 1 844-GYTD-CPA