What is the Disability Tax Credit?
The Disability Tax Credit (DTC) is a non-refundable tax credit in Canada designed to help reduce the amount of income tax that individuals with disabilities or their supporting persons might owe, providing financial relief to offset some of the additional costs associated with a disability. The credit recognizes the impact of disability-related expenses on an individual’s ability to pay tax.
Who is eligible for the Disability Tax Credit?
To be eligible for the DTC, an individual must have a severe and prolonged impairment in physical or mental functions, as certified by a qualified medical practitioner. The impairment must be expected to last, or has lasted, at least 12 months, and it must significantly restrict the individual’s ability to perform basic activities of daily living, or it requires a significant amount of time for personal management (therapies, personal care, etc.).
How can I apply for the Disability Tax Credit?
The process of applying for the DTC involves completing the Form T2201, Disability Tax Credit Certificate, where a medical practitioner needs to provide detailed information about the nature and duration of the impairment, along with its effects on the individual’s daily life. The Canada Revenue Agency (CRA) reviews and must approve this form before an individual can begin claiming the credit on their income tax and benefit return.
How is the Disability Tax Credit related to other benefits?
Once approved, the DTC can also open eligibility for other federal, provincial, or territorial programs, such as the Registered Disability Savings Plan (RDSP), making it a key component in financial planning for individuals with disabilities and their families.