The Disability Tax Credit

There are two types of disability tax credits: non-refundable and refundable.  Non-refundable tax credits can reduce tax owed to zero, but can’t be used to get a refund. A refundable credit can reduce your tax below zero and provide you with a refund.

The Disability Tax Credit (DTC) is a non-refundable tax credit, which means that someone who has low or no income will not benefit from this credit. However, the credit is transferable. So someone who qualifies could transfer all or a portion of the DTC to a spouse – legal and common law — who can then reduce his/her tax payable.

A lot of confusion comes from is the fact that the criteria for qualifying for the DTC is not precise.  In 2001, the criteria were expanded to include life sustaining treatments requiring 14 hours per week or more. In 2005 the criteria were expanded further to include the time needed to calculate dosage for medications that require dosage on a daily basis.

To simplify the qualifying criteria, the condition must exist for longer than 12 months, and must markedly affect one or more of the basic functions of life, which include walking, eating,  speaking, and self-care, or require a significant time commitment to manage life sustaining treatments.

You are eligible for the disability amount only if a qualified practitioner certifies that you have a severe and prolonged impairment and it’s effects on the form T2201, and the form is approved. There is a self-assessment questionnaire available on the T2201 form itself, so you can have a look-see to determine if you might qualify.  Also on the form are definitions of “life sustaining treatment” along with other terms. If you believe you may qualify, proceed with an application. No harm is done if you don’t receive approval but tremendous benefits can be claimed if you are.

If you are approved for the DTC, it is usually retroactive and in place for several years. Once approved, claims for the past years are done through a T1 adjustment. In the event that the approved taxpayer does not require the entire credit, an adjustment must also be done for a spouse’s or parent’s return.  These adjustments are processed manually by the tax centre so they may take some time, but they can result in large refunds.

Here are some examples for you:

  • A man and his wife have never applied for the credit.  Based on statements by the husband, their accountant recommended that they request their doctor to complete a T2201 form to apply for the DTC based on the wife’s deteriorating condition due to dementia/Alzheimers. The husband was reluctant due to the fact that his wife was in denial about the severity of her impairment. The application was approved retroactive to 2004. After adjustments, the couple received over $7,000 in refunds.
  • A couple with young children have been challenged by the wife’s cancer diagnosis. Her condition requires ongoing travel for treatment at Princess Margaret Hospital. Her application was approved and her taxes were reduced by $1,700 in 2007. In addition, she applied for credits for travel and meals for the trips into Toronto for the treatment.
  • A gentleman experienced a rapid decline after being diagnosed with pancreatic cancer, passing away within four months of the diagnosis. We processed a DTC application after his death and were able to adjust the return for the year he died.  And a portion of the credit was transferred to his common law partner.

If you think you may qualify for the Disability Tax Credit, here are the steps you need to follow?

  1. Download the T2201 form from the CRA website.  There is also a fillable version of the form.
  2. Have your doctor complete the form. Most family doctors are familiar it. They may charge you a small fee for completing the form.
  3. Send the form into the CRA and wait.  And wait.  And wait.  Your application is reviewed to ensure that you meet the criteria.

Once you are approved, you will receive a letter indicating to which years any retroactive approval is available. The letter will also indicate how long you may claim the deduction without having to reapply.

For retroactive years, you can download an adjustment form or request that your tax preparer complete the form for you. Send the form in and wait. And wait. And wait!  These adjustments often take 6 – 8 weeks to process.

If you or your spouse will be claiming this credit, you should update your withholding information at your workplace by completing a new TD1 form. This will reduce the tax withheld on each pay, putting the money into your hands sooner rather than waiting for your tax return to be assessed.

Remember, once you are eligible for the DTC, you are automatically qualified for the Registered Disability Savings Account including all the grants and bonds.

FYI: I’ve had to go in and delete some of the comments to make room for new posts… you guys are the first to top out a comments section. I deleted a lot of “thank you”s and some stuff that was repeated often to leave the comments with the most info for new arrivals.

2,137 Responses to “The Disability Tax Credit”

  1. Leah,
    I am in Ontario. I did it online November 13 and todayy account is showing the first 2 years I requested have been reassessed, and says it will be available to view on December 4. Super quick considering the 25 week we were originally told!

  2. So I received an acknowledgement letter with regards to my taxes but it doesn’t say when they will be done. When did you get one of those chel?

  3. .

  4. Those of you that submitted the letter for back pay…how long did it take to process?

  5. I mean the CDB

  6. @key did u receive ur first payment? Mine updated 4 dec 13

  7. @Leah mine updated as well, but I sent in a letter for the remaining years.
    I was just wondering how long it takes once they receive the letter

  8. I’m still waiting. I uploaded my letter to my account about a month ago.

  9. @Shannon it most likely will update by Feb

  10. @shannon
    i received the t1 adjustments notice sept 26..

  11. Is the t1 adjustments the letter of acknowledgement? Just saying they received your request to amend your taxes? Because 2 months later your still waiting for them right?

  12. avatar lAURA Koester Says:
    November 25, 2017 at 9:46 pm

    @Paula

    congrats on the win!! we were in the same boat approved in August but only for 2017-2022
    however she should have been approved for 2009-2016
    we had the Dr write a letter to CRA for review for those past years and we sent this in September we were approved
    on Monday for all the years!!

  13. okay
    so since we are approved what is my first step
    does the CRA automatically go back 2 years on taxes
    then we do T1 Adjustment for the previous year and then do also write CCBa letter.

  14. My son was approved back to 2012 ..we went to our accountant who submitted request for reassessment. Back 5 years this was done on Sept 12 . There is an acknowledgment letter on my husbands account. My son is now 19 and did file taxes for last year as he was receiving the odsp. He still attends school as it is taking him longer to get his diploma and we take care of him. Our accountant assures us all is well. I went on my sons online account and saw they had reassessed his taxes and also stated they could not go further back as he had not filed income tax..(of course he was a minor)..So I thought they applied to our sons in error..our accountant says they apply it to him first then pass it to my husband and no need to call CRA…. IS this correct information?? Also the cdc we received one year and she also told us we did not need to send letter as they would automatically back date the cdc for pervious years once my hubby was reassessed. I did send letter anyway. Any thoughts on this is this correct?? She’s a chartered accountant but it alarms me when I see it was applied to son already.

  15. avatar Katiedees79 Says:
    November 27, 2017 at 6:34 pm

    This whole DTC is a joke. I am so done with the CRA. This has been a year process for us and it never ends. I had to resubmit MORE information a month ago… and the reason… you ready, he is the kicker. I had originally submitted in Nov 2016 and I had included my sons PE assessment that was 25 pages long. They had given the run around requesting more information which I did and then this last time I submitted documents as requested in June and my file wasn’t even assigned to an agent until the end of August and come October I received another letter saying they needed more information…. How much more do you need??? seriously. So I got on the phone and was very frustrated to learn that the Dr that signed the forms and the Dr that did the PE assessment are not the same person therefore the Dr that filled out the forms needs to agree with what is in the PE Assessment. So back to the Dr’s we go and I got her to agree with the assessment and send for the 3rd time and do nothing more than wait yet again for another 1000 years. This whole thing has me on edge and it should not be this difficult.

  16. @shannon
    Yeah,you’re right the adjustment aknowledgement is what I received on Sept 26.Accdng to the letter they’ll notify me when they’re done with the reassessment.

  17. Update – I was approved November 15th, sent in my letter requesting CDB adjustment via registered mail November 15th, they received the 16th, and on the 21st my online account showed my CDB had been adjusted for the past 10 years and amount showing to be deposited on December 14th. After waiting over 6 months for a decision, they were incredibly quick adjusting my CDB benefits.
    Question – my ex and I separated 3 years ago. Am I able to transfer any remaining tax credit to him for the 7 years he lived with our daughter? I feel that he should be entitled if there is any remaining balance. – but wasn’t sure?
    Also – could someone please clarify exactly what this DTC is applied to? I see that people have commented that they don’t have to pay income tax, so they wouldn’t be entitled to any benefits. I work full time and pay taxes all year, i have additional taxes taken off of my pay so that at income tax time i am entitled to a refund. Does this mean that I will not qualify for a tax rebate when they assess my taxes for the past 10 years because i get a refund yearly and do not have to pay at income tax time?

  18. @AmyB,
    It’s all so individual, as everyone’s tax situation is different. But if you, like me, paid a mitload of taxes, this will LIKELY mean you, when reassessed, will get a cheque for the ten years backdated. Likely. One shouldn’t hold one’s breath.

    I am learning patience.

  19. @amy it shows the full 10 years? I was approved nov 9th and i sent a request for backpay nov 9th as well thru my cra account and it updated but only 4 the past 2.5 years for payment dec 13th. I called to inquire about the other 7.5 and they said it could take up tp 11 weeks but most likely will be jan. Did u complwte ur tax reassessments? Im nervous to do it b4 the dec deposit just in case it holds it up

  20. @Lea – yes they went back the full ten years, within a day of receiving my registered mail. There is a substantial deposit listed for the December 13th payment, and when I looked into the details they listed the amount credited for each month all the way back to July 2008.

  21. @Lea – Sorry forgot to answer your second question. No I did not reassess my taxes online myself. I was concerned that I would mess it up somehow and delay everything further. Being as I will be receiving the CCB in December, I am fine waiting for them to reassess my taxes.

  22. @katiedees79 hang in there. I know it can get frustrating. Do you mind me asking what you are claiming for your son? If it helps, I took notes of all of the things that I wanted to add to what the doctor submitted as I encountered them, in preparation to appeal a negative decision. As I was concerned we would be turned down the first time. Don’t give up!

  23. @amy thats great! Im only seeing 2 and half years for dec 13th. I requested the request via my account but they said it should be for jan. What tax ctr r u with

  24. @Lea I am with the Winnipeg Tax Centre

  25. avatar Katiedees79 Says:
    December 4, 2017 at 5:58 pm

    @Lauren My son has ADHD, learning disability and ODD…. Super fun times. This is something that just adds to the stress. I have him in tutoring and he does go to therapy but this is costing a fortune but it needs to be done. He would be loooooost without the supports in place. I have him in sports as well to keep him busy and out of trouble. They have never outright denied him they send very generic letters requesting more information which I have done 3 times. You would think that they will let you know what information they are looking for??? nope, its a constant guessing game and I ready to throw in the towel and just keep on going as normal as I can. I guess we will wait and see. I sent the information for the 3rd time Oct 25th so I do not anticipate a response until Feb at the earliest. Last time I submitted in June and it wasn’t assigned to anyone until the end of August with a response at the beginning of October.. So we wait AGAIN.

  26. @katiedees79

    I’m sorry it’s been such a slog. It seems like everything at cra is crazy at the moment.

    I was denied in October but have reapplied, with assistance.

    Hopefully you hear sooner, rather than later.

  27. @Katiedees79

    I hope the experience gets better for you. Keep holding strong!

    @Doodle

    I am sitting with my POM POMS ready to J-U-M-P! When you get approved!

    I meet with my MD two days earlier (tomorrow) without my son to do the questionnaire.

  28. @keeks, only in week 2 of the.waiting.period.

    No pom-poms at this point yet. Someone posted that they got approval in FIVE weeks. Can you imagine?!?!? Wow! And people who are altering their taxes online, are getting the back instalments within a few weeks, instead of months!!

    They found a “smoking gun” of an email re: T1D ….while the minister said, continually, “status quo”. She was caught red-handed, lying, multiple times.

  29. @keeks, sry, forgot to ask…is that questionnaire the supplementary set of questions that gets sent after the initial app is sent in? Good luck with it!

  30. @Doodle

    I heard about that 5 weeks!!! I also heard about 2 months!! I believe in being informed, because it gives us more power. I have always believed that important information is withheld from the public and it makes me sad.

    They have taken advantage of what they think is our ‘ignorance’ and clearly see that they have fueled a passion that is yielding results and showing us that we have more power than they make us think!

    Yes the questionnaire are the supplementary questions regarding my sons mental issues and vision. The “more info needed” questions that need to explain how the diagnosis affects him.

    I hope for you that they don’t need that as I believe you mentioned you received the assistance to get it all in one shot!

    *still waiting to celebrate for you*

  31. @keeks, thanks. Time will tell right? I have an image of you with those pompoms!!! Lol

    There has been an explosion of new info coming down the pipe at cra. Join the fb group if people here are interested in reading about it.

  32. @doodle LOL!!

    Yes I’m in the FB group. Booming information for sure. Talk about a movement that rattled the cage!!!

  33. @Doodle & @Keeks – What fb page are you referring to?

  34. @Amy B. “Disabilty Tax Credit and RDSP(Canadians Only)”. Should pop up right away.

    @Keeks: Pompoms please!!! Record time too!!!’ 2 weeks for approval.

  35. @doodle im confused r u saying u were approved?!?!

  36. @keeks

    Yes!!!!!!!!!!!!!!!!!

  37. @doodle congrats!!!

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