The Disability Tax Credit

Throughout the year, but even more so during tax season, I meet with various individuals many of which have differing forms of disabilities. One of the benefits available to individuals with a disability is the Disability Tax Credit. This credit is a non-refundable tax credit available to individuals who apply and receive approval from Canada Revenue Agency (CRA). Being approved for the credit provides access to various benefits to the individuals and/or those that they depend on, other than the credit itself. If approved, the individual will also have access to the Registered Disability Savings Plan, increased benefits from the Child Tax Benefit, the Caregiver amount, and availability to claim enhanced medical expenses relating to accommodations in a long-term care facility, to name a few.

In order to qualify for the credit, an individual’s daily activities of living must be “markedly restricted” for a “prolonged” period of time or the individual must require “life sustaining therapy.” The exact criteria that qualifies and explains the above are found in form T2201, however the following provides some explanation.

Markedly restricted: The CRA defines this as “…if, all or substantially all the time, you are unable (or it takes you an inordinate amount of time) to perform one or more of the basic activities of daily living…even with therapy and the use of appropriate devices or medication.” The CRA defines the basic activities of daily living as: walking, speaking, hearing, elimination (bowel or bladder), feeding, dressing and performing mental functions necessary for everyday life. Vision is also a basic activity of daily living but there are specific criteria that CRA defines as being markedly restricted.

Prolonged: CRA defines prolonged as at least 12 months.

Life Sustaining Therapy: This covers situations where individuals can perform the basic activities of living, however spends a significant amount of time in therapy to do so. Some examples of such therapy can include management of Type 1 diabetes, kidney dialysis, physiotherapy to facilitate breathing. A combination of therapies to manage these and other conditions could also qualify. In order to qualify you have to dedicate time for the therapy at least three times per week, for an average of at least 14 hours a week. Qualifying time will not include time needed to recuperate after therapy, for travel, medical appointments, or shopping for medication and it must take you away from your normal everyday activities.

In addition to individual impairments, the CRA’s definition of disability also allows for the cumulative effect of multiple impairments which, on their own, would not qualify, but together would result in a significant impairment. As an example, someone with multiple sclerosis who constantly experiences fatigue, depression, and balance problems may qualify depending on the extent of such symptoms and the doctors’ assessment.

In order to qualify for the disability tax credit, you must have a qualified practitioner complete form T2201 Disability Tax Credit Certificate. A qualified practitioner can be a medical doctor, however can also be optometrists, audiologists, occupational therapists and psychologists, as long as they are certifying a disability in their own field.

Beware of companies who market themselves as Disability Tax Credit specialists. Over the years, but especially over the past year, I have noticed a significant number of radio and online advertisements from companies claiming to get those with disabilities $10,000 to $30,000 back from Canada Revenue Agency if you have a disability. Although you may legitimately be entitled to such benefits, these companies will have you sign a contract where you will commit to paying them fees ranging from 20 percent to 30 percent of the benefits you receive from the claim(s).

My advice would be to speak with your CPA, CA and your doctor to see whether you might qualify. Ultimately your medical practitioner will be the one completing the forms and providing the additional information requested by CRA to substantiate your claim, but your accountant can also provide additional insight and information to help you in understanding what conditions or severity may result in qualifications, and can then assist in ensuring that you are then claiming the maximum benefits you are then entitled to if you are approved. Obtaining the assistance from you accountant, if needed, would be much less costly than the companies that charge a contingency fee based on the benefits you receive and is likely to yield increased benefits as they will know how best to allocate the claims to current, past and future claims.

Angele Charbonneau, CPA, CA is a Partner with MNP LLP. MNP provides tailored expertise in tax, accounting and a wide range of business advisory services.

 by Angele Charbonneau, CPA, CA