Process of Claiming for Disability Tax Credits
If you or a loved one are living with a disability, it’s assumed that you will incur living expenses that other citizens of Canada won’t – which is why the Government of Canada offers Disability Tax Credits to help those living with disabilities to rest just a little bit easier.
However, applying for Disability Tax Credits can be confusing if you’ve never done it before. Thankfully, we have – and once you know what you’re doing, it’s not as difficult as it seems. Here, we’ve laid out the process of claiming for Disability Tax Credits in an easy to follow manner.
Step 1: Finding Out if You Are Eligible for Disability Tax Credits
In order to claim your Disability Tax Credit, you must of course be eligible (You can read our disability tax credit eligibility guide). A general rule here is that the disability for which you are claiming must have lasted or is expected to last for more than 12 months. As well, the impairment must significantly restrict your ability to perform functions that are a core part of your daily routine. (Feeding, walking, speech, vision, etc.)
The same rules apply if you are claiming a Disability Tax Credit on behalf of a child or dependent. You can also read a comprehensive guide on Child Disability Tax Credit by us to find out more information.
A full self-assessment questionnaire is available on the Canada Revenue Agency website.
Step 2: Filling Out Form T2201: ‘Disability Tax Credit Certificate’
Available on the CRA website, Form T2201 comes in two parts – Part A and Part B.
You will be responsible for filling out Part A. This section will require information on the person claiming the disability. There are various standard pieces of information to input, which include name, address, social insurance number and birth date. In the case that the disabled person is not the one claiming the tax credit, information on the financial provider/legal guardian will also be taken.
Once Part A has been completed, it will be necessary to have a full assessment by a suitable medical practitioner. In most cases, your regular medical doctor (MD) will suffice, but there may be instances where a specialist is needed, and this is determined on a case-by-case basis. Your MD should also be able to tell you whether or not he/she is qualified to do the assessment. If not, they will refer you to an Optometrist, Psychologist, Occupational Therapist, or other specialist.
Once the correct medical practitioner is chosen, they will be responsible for filling out Part B of the form. This section will include details of the impairment – and will confirm whether or not the person in question fits the eligibility criteria as set by the CRA. In most cases, a complete assessment by a professional will have been done previous to this application, but it is necessary to have a doctor sign off on the condition in order to receive any benefits.
Step 3: Form Submission
Once you have collected all the necessary information, it’s time to submit your form. Most people submit the form with their yearly taxes – but if it’s the first time you’ve submitted, it might be a good idea to submit this form separately, well before you submit your regular tax documentation.
The process of filing for a Disability Tax Credit can be quite time consuming – especially if you don’t have the correct information on your form the first time around. Form T2201 can be submitted anytime within the year, and will be taken into account when it comes time to submit your regular taxes – so it is recommended that you submit the form sooner rather than later just in case the CRA needs time to clarify any claims you have made.
To speed up the process, it is possible to hire certified accountants to complete the process for you – increasing your chances of a quick and successful process (but this does typically cost a few hundred dollars).
Step 4: Re-Application
If you’re accepted for the Disability Tax Credit (DTC), the CRA will give you a period of approval. For instance, if the disability is something such as autism which will last a lifetime, the period of approval will be much longer than someone who has had a severe injury but is expected to recover in a couple of years.
If you are approved long-term, than you do not need to re-apply the following year. However, if you are approved for one or two years only, you may need to re-apply if your impairment persists. Keep in mind, that the Government of Canada requires you to notify them immediately should your condition improve at any time.
Step 5: Receiving Payment for Previous Years
If you have been accepted for the tax credit, and feel that you should have been accepted for years previous as well, you can get your money back! Once accepted for the DTC you are able to claim your tax credits for up to 10 previous years. In order to receive a review, however, you must send a letter to the CRA describing how many years you wish to claim, and any identifying details. A CRA agent will then calculate the amount owed for previous years and will issue you a refund cheque if all information provided is satisfactory. This process can often take close to 6 months, but it can also potentially provide you with thousands of dollars – which has got to be worth the wait! To learn more, do read our guide on calculating disability tax credit.
Step 6: Exploring Your Options
If you have been accepted for the DTC, you may also be eligible for the Registered Disability Savings Plan (RDSP). An RDSP is basically a government savings fund available only to those with disabilities, which makes saving much easier. The Government will match all deposits made into the account with a contribution of their own equal to 300% of your own contribution, up to a maximum amount of $3,500 per year. At 5% return, this is an excellent way to save money faster – so be sure to see if you’re eligible for this or any other available programmes.
As you can see, applying for the DTC is less daunting than many suggest. The most important part is ensuring your eligibility and finding an appropriate medical practitioner who is able to sign off on your form.