DISABILITY TAX CREDIT
The Disability Tax Credit (DTC) is a federal non-refundable tax credit specifically for people with disabilities and serious medical conditions. It can be claimed by the qualifying person, or a family member, to reduce the amount of taxes he/she has to pay. This means you get to keep more of the money you earn.
You also need the DTC to open a Registered Disability Savings Plan and qualify for up to $90,000 in federal government contributions. In addition to the DTC, there are many other valuable benefits and tax credits available to people with disabilities, mental or physical impairments, or those whom have serious medical conditions. Many Canadians are unaware of the tax benefits that they are entitled to or are unable to navigate through complicated applications and filings.
People of any age may qualify for the DTC. People with a visual impairments or who are on life-sustaining therapies qualify. Otherwise, people must have a mental or physical condition (including a medical condition) that affects one or more of the basic activities of daily living listed here:
Speaking Dressing Elimination (bowel or bladder functions)
Hearing Feeding Walking
Performing the mental functions necessary for everyday life
In addition, the condition must have lasted or be expected to last for at least 12 months.
Examples of disabilities and conditions that may qualify for the DTC are listed below. Please remember that people with many other disabilities and conditions may also be eligible.
Bipolar Disorder Diabetic Fibromyalgia
Brain Damage/Injury Arthritis Learning Disability
Depression/Anxiety Down Syndrome/Autism Multiple Sclerosis
Benefits of the Disability Tax Credit
Some of the benefits of qualifying for the DTC include:
- Reduce your tax payable – The DTC was established to reduce the amount of tax you must pay to compensate for some of the additional expenses people with disabilities face.
- Transfer credits to eligible family members – If you do not pay taxes (e.g. you have no employment income), the DTC may be transferred to an eligible family member (e.g. a parent or a spouse) who does pay taxes.
- Make Retroactive Claims – Once you have been approved for the DTC, retroactive claims may be submitted for the past ten years to offset previously paid taxes.
- Make Future Claims – Once approved, you will be able to claim the DTC in the future to reduce your future taxes.
- Claim Additional Credits/Enhancements – Once approved, you are eligible for additional credits
- Become eligible to open an RDSP – You must be eligible for the DTC to be able to open a Registered Disability Savings Plan. The RDSP is a powerful savings tool. The federal government will contribute as much as $90,000 to your RDSP.