The Disability Tax Credit (DTC) is an important tax credit that provides financial support for persons with disabilities or their supporting persons. Before anyone can claim the DTC, they must first apply for the DTC with Canada Revenue Agency to determine their eligibility. The application process can be long and complex.
A person may be eligible for the DTC if one of the following situations applies: be blind, be marketly restricted in speaking, hearing, walking, eliminating (bowel or bladder functions), feeding, dressing, or mental functions necessary for everyday life, or require life sustaining therapy.
If you think you, or someone you know, may be eligible for the DTC, you must first complete an application form. The form is called T2201 Disability Tax Credit Certificate. It is completed by the person with the disability or their legal representative and a medical practitioner. A medical practitioner can include a medical doctor, nurse practitioner, optometrist, audiologist, occupational therapist, physiotherapist, psychologist or a speech-language pathologist.
Once completed, the original form is submitted to Canada Revenue Agency where they will review the application and either approve or deny the application. CRA will mail a Notice of Determination informing you of their decision. CRA's service standard for this application process is eight weeks, however, it usually takes longer.
If the DTC application is approved, we request to have the tax returns amended for the applicable years to include the Disability Tax Credit. In Manitoba, the DTC credit is worth almost $2,000 in tax savings per year as well as opening up other tax advantages such as the ability to claim certain medical expenses and the ability to open a Registered Disability Savings Plan (RDSP).
If the DTC application is denied by CRA, they will explain why in the Notice of Determination. If you disagree with the decision, you have the option of discussing it with CRA, submitting additional information that may be relevant, requesting a review of the application or filing a formal objection. The formal objection has to be filed within 90 days.
Every year, we help our clients through this process. We charge $175 plus tax to discuss eligibility with our clients or their representatives, help with completing the form, reviewing the application and submitting to CRA, and amending the returns upon approval. This is a far better value for clients than those firms that work on contingency, which may cost up to $5,000 for the same work.
So, if you think that you or a family member, or someone you know, may qualify for the Disability Tax Credit, please discuss it with them or us or their accountant or tax preparer. It is a very important tax advantage.