So, What Exactly is a Disability Tax Credit and Why Should I Care?

I have a sister who has a disability and recently I came across a program that was implemented to help Canadians with disabilities save a bit of money on their taxes. I decided to share my experience on how to apply for this program. 

A Disability Tax Credit (DTC) is a program that was implemented in the early 90's to help Canadians with disabilities mitigate some of the costs of managing their disability by reducing income tax payable for them or their family members. 

This program is currently administered by Canada Revenue Agency (CRA) and has undergone several revisions lately to make it more accessible to Canadians. 

In essence, it is a tax credit. Once eligible, you will be able to reduce your taxable income by a certain amount for each calendar year that you have a registered disability. 

Aside from the tax credit or refund, once you are eligible for the DTC, you will be able to register an RDSP (Registered Disability Savings Plan) and the RDSP grant. 

Who can qualify for DTC? 

In order to be eligible for the disability tax credit, the following must be true:

  1. you are a Canadian resident
  2. your disability has lasted or is expected to last for at least 12 months.

I found that in order to make your application process as seamless as possible, you should have the following:

  1. Must be a Canadian Resident for the time period you are applying for
  2. Must have a physical or mental disability that meets the criteria 
  3. Your disability must have lasted or is expected to last for at least 12 months. 
  4. Must have a medical doctor who will be able to confirm your disability and the degree of your disability.

How do I start my Application Process? 

In order to start your application process for DTC, you need to download and print the special set of forms from Canada Revenue Agency Website.

The application form is 9 pages long. Page 1 is for you to complete and the rest of  the pages are for you to complete together with your doctor. 

Not all nine pages need to be filled out. Certain pages may not even apply to you at all, but you have to include them together with the relevant pages for completeness purposes.

Make sure your doctor indicated properly the year when your disability started. This is important, because the start date of your disability and the diagnosis date are sometimes different. 

In order to take full advantage of this program, your doctor needs to indicate the earliest date your disability became severe enough to meet the program requirements. 

Please make sure that your doctor completes page 9 properly, because it requires very specific comments and effects of impairment of your disability. If you doctor leaves page 9 blank, CRA will have no way of determining if you are eligible and may reject your application outright. 

After you are satisfied that the form has been completed properly, mail it to Canada Revenue Agency address that is closest to you. I found this handy table on Canada Revenue Website, it was a bit tricky to find, so here it is:

dtc addressesCredit: government of canada - cra website

How do I find out if I am Accepted for DTC? 

You need to let Canada Revenue Agency do its review for at least two months. After that time has passed, you can contact canada revenue agency at 1-800-959-8281 in order to follow up on the status of your application. 

Alternatively, you can also check your progress online through your Canada revenue agency online account. 

What to do after my application has been accepted?

Once your application is accepted, CRA will send you a letter advising you of this in writing. They will also indicate for which years your application is accepted. Take this letter to your accountant and ask him to prepare a T1 Adjustment for the years you have been accepted for Disability Tax Credit. 

Once the accountant prepares the tax adjustments, he or she will be able to tell you how much money you will be receiving back in tax refunds. 

In conclusion, I would like to add that the agents at Canada Revenue Agency are EXTREMELY helpful and will assist and answer any questions you may have. My sister's application was finalized in 4 short months and I am very happy with the results! If you are a Canadian resident living with a disability the this program is a must. 

Relevant Books

Make Sure It's Deductible: Little-Known Tax Tips for Your Canadian Small Business
Amazon Price: $18.25 Buy Now
(price as of Aug 20, 2016)
While not exactly on the topic of personal tax preparation, I have grown to respect this author's knowledge and expertize. I have also seen this book - really worn - at my accountant's office! It is pricy, but well worth the read. I use it as a reference, which appears to be its intended use.

More affordable titles

Moving into Work: A Disabled Person's Guide to the Benefits, Tax Credits and Other Help Available When Considering Any Kind of Work
Amazon Price: Buy Now
(price as of Aug 20, 2016)
Not as well written as Evelyn's book, but it is very practical and focused around disability issues and taxation. It also covers Disability Tax Credit in great detail.