For persons with disabilities, a variety of credits and benefits are available from the Canada Revenue Agency (CRA), as well as for the people who support or care for them.
The largest is the Disability Tax Credit (DTC), a non-refundable tax credit that helps persons with disabilities, or their supporting persons, reduce the amount of income tax they may have to pay by increasing non-refundable tax credits. The DTC’s purpose is to provide tax equity by supplying some relief for disability costs, as these are unavoidable additional expenses that other taxpayers don’t have to pay.
Being eligible for the DTC can open the door to other benefits and programs, such as the working income tax benefit, child disability benefit and others described below.
To claim the DTC, you need to first obtain approval by the CRA. You will need to meet the CRA criteria of disability and have a qualified medical professional attest that you meet it. The CRA criteria is detailed, but in general terms is based on a person meeting one of the following criteria:
- is blind
- is markedly restricted in at least one of the basic activities of daily living
- is significantly restricted in two or more or the basic activities of daily living (can include a vision impairment)
- needs life-sustaining therapy
In addition to the above criteria, your disability must be prolonged and must be present all or at least 90% of the time. Generally, short-term illnesses or conditions expected to recover and/or heal quickly will not qualify.
To apply for the DTC, you will need to complete and submit Form T2201 – Disability Tax Credit Certificate to the CRA for approval. Part A of the form can be completed by yourself or your legal or tax representative. Part B is to be completed by an eligible medical practitioner.
If your T2201 certificate is approved, you will receive a letter from the CRA, which you will need to retain for your records, should you need to provide proof of eligibility. You can now claim the DTC on your income tax return. The CRA will advise you on the validity period of your certificate in terms of taxation years. For example, the CRA may say that they have approved your claim for the DTC for your impairment commencing in 2012 and that your certificate expires 2022. Tax year 2022 would be the final year the DTC can be claimed until renewed, if eligible.
You will not need to complete the form again until 2022 taxes have been filed. If your condition persists you will need to resend the form prior to claiming the DTC in 2023. After the application is approved, the CRA will automatically adjust your tax return(s). They will include the federal and provincial disability amounts for all years that apply.
Other benefits and credits
If you are eligible to receive the DTC, you may also apply for the benefits and credits below.
Registered Disability Savings Plan: A Registered Disability Savings Plan (RDSP) is intended to help parents and others save for the long-term financial security of a person who is eligible for the DTC. Anyone can contribute to an RDSP with the written permission of the plan holder; the plan holder is not the beneficiary. An RDSP can only have one beneficiary, and an individual can only be a beneficiary for one RDSP. Contributions to an RDSP are not tax deductible, like RRSPs, and can be made until the end of the year in which the beneficiary turns 59.
In addition to the RDSP, a beneficiary may be eligible for government contributions to the RDSP through the Canada Disability Savings Grant and/or the Canada Disability Savings Bond.
Canada Disability Savings Grant: This grant is another way for the federal government to contribute money to your RDSP. When you (or family or friends) deposit money into the RDSP, the federal government will also put in some money. The amount of Disability Savings Grant you receive depends on your income tax returns for the previous two years.
- For the first $500 contributed into the RDSP, the beneficiary will receive $3 for every $1 contributed.
- For the next $1,000, the beneficiary will receive $2 for every $1 contributed.
- The maximum grant for any one year is $3,500. The lifetime maximum grant is $70,000.
Canada Disability Savings Bond: This bond is an amount paid by the Government of Canada directly into an RDSP. The government will pay a bond of up to $1,000 a year to low-income Canadians with disabilities. No contributions have to be made to get the bond. The lifetime bond limit is $20,000. A bond can be paid into an RDSP until the year in which the beneficiary turns 49.
Unlike the DTC which requires certification of eligibility the CRA prior to claiming, you or a dependent may be eligible to claim additional credits pertaining to an impairment.
Amount for an Eligible Dependent: You may be able to claim this amount if, at any time in the year, you met all of the following conditions at once:
- You did not have a spouse or common-law partner or, if you did, you were not living with, supporting, or being supported by that person.
- You supported a dependent in the previous tax year.
- You lived with the dependent (in most cases in Canada) in a home you maintained. You cannot claim this amount for a person who was only visiting you.
Canada Caregiver Amount: The Canada Caregiver Amount helps caregivers with the expenses involved with taking care of their spouse or common-law partner or dependent who has an impairment in physical or mental functions. The Canada caregiver amount can be claimed on different lines of your tax return depending on whom you are claiming an amount for. If you can claim an amount for your dependent with an impairment in physical or mental functions who is 18 years of age or older, you may be able to include the Canada caregiver amount.
Home Accessibility Expenses: You may be able to claim this non-refundable tax credit if you own a home in Canada and paid for eligible renovations to improve the safety or accessibility of your home.
Refundable tax credits
Refundable tax credits reduce the amount of tax you owe and could result in a refund. They include:
Refundable medical expense supplement: If you are working, have low income, and have high medical expenses, you may be able to claim this supplement.
Working income tax benefit supplement: This benefit is for low-income individuals and families who earned income from employment or business; this benefit consists of a basic amount and a disability supplement.
Regular medical expenses: You may be able to claim regular medical expenses on your tax return such as attendant care and care in a facility. Note that you cannot claim both the DTC and medical expenses; your tax preparer will determine which claim is more beneficial for an eligible taxpayer to make.
Applying for these benefits and credits can be a complex process, but can yield important financial assistance. To aid persons with disabilities and those who support and care for them, the CPA Financial Literacy Program offers free workshops on this topic – contact our FinLit team to book your presentation today.
Note: This article contains information from the CPA Canada presentation, “Disability – Accessing your benefits” and from the Government of Canada website. Information on the various credits and benefits was correct as of September 24, 2020, but is subject to change;
Stefanie Ricchio, CPA, CGA, is an author, professor, entrepreneur, and volunteer with the CPA Financial Literacy Program. She is also an advocate for education from elementary through post-secondary, working on initiatives to elevate the learning experience and to advocate for the needs of all students.