Applying for the disability tax credit (DTC) can be a daunting task, as applicants must ask their medical practitioner to fill in an extensive form. Experts encourage applicants to be prepared with the right documentation, be thorough when detailing their conditions and be cautious with DTC promoters.
The DTC is a non-refundable tax credit that can help eligible adults cut their taxable income by thousands of dollars. The credit is meant to help offset the costs of physical and/or mental impairments.
Those eligible for the DTC may then be eligible for plans and programs such as the registered disability savings plan (RDSP) and the Canada disability savings grant, among other programs. The grant matches up to $70,000 in an RDSP over the beneficiary’s lifetime.
Advisors should regularly ask about a client’s family and their health to identify someone who could qualify for the DTC, said Jason Heath, managing director with Objective Financial Partners in Toronto. Clients have shared their parents’ mobility challenges, for example, and not realized those challenges were severe enough to warrant applying for the DTC.
“One of the most common mistakes that I come across is people thinking that they will not qualify,” Heath said. “It’s a very lucrative tax credit and you’re probably better off giving it a try rather than assuming that you don’t qualify.”
Applying for the DTC requires both the applicant and their doctor to fill out a 16-page form.
“If the person has the opportunity to download a blank copy of the form and look at it, [get] an idea of where they fit and jot some notes on the form and provide it to the doctor, [that might] allow them to get a start on it right there,” said Wayne MacLeod, a Nova Scotia family doctor and co-founder of Benefits2, a DTC application company based in Burlington, Ont.
The applicant should respond thoroughly to the questions asking about the cumulative effects of their impairments, not just acute or separate effects, MacLeod said. For example, someone who has both heart disease and osteoarthritis could have enough difficulty walking to qualify for the credit.
For qualifying lifelong congenital disabilities, such as autism, the CRA may provide up to 10 years of retroactive tax refunds, so applying earlier is better, Heath said.
If an applicant uses physical supports such as canes, community support such as respite care and has paid for specialist services, they should include that documentation with their application, MacLeod said.
Doctors tend to be more focused on the medical aspects of a disability and might ask about the pain instead of how it affects their mobility, MacLeod said. Patients should be ready to articulate their impairments to the medical practitioner.
“Be prepared by knowing the criteria [of the DTC] and say, ‘Yes, doctor, I’m not in as much pain, but I’m still having problems walking,’” MacLeod said. “Or, ‘I have to stop for rest because I’m having trouble breathing.’”
Some medical practitioners have a conservative view of what a qualifying disability is, so a patient should approach with an open mind and explain how the credit would help them financially. “There’s no penalty for applying,” MacLeod said. “Make it clear to the practitioner that you’re willing to pay for their time, and you only want them to answer honestly.”
Even if a medical practitioner charges fees to complete the form, it’s a small cost relative to the potential benefit, Heath said. The fee is tax deductible as an eligible medical expense, he added.
Both Heath and MacLeod warned that DTC promoters — firms that assist people with applying for the DTC — may charge hefty fees for their service.
Many promoters “don’t necessarily have significant specialized expertise,” Heath said. “You don’t need somebody to help you to apply for the disability tax credit. It is the sort of thing that you can do on your own.”
In 2021, the Supreme Court of British Columbia granted an injunction stopping the federal government from imposing a $100 fixed-fee schedule on DTC promoters. The injunction has not yet been lifted.
More tips
In a LinkedIn post, MacLeod offered more DTC application tips:
- Fill out the form based on your worst days. Don’t underestimate the degree of your impairment.
- Hearing and vision impairments have specific criteria, but hearing and visual impairments can affect daily tasks such as walking and meal preparation.
- The mental functions section involving “goals” doesn’t refer to long-term plans. Instead, it refers to daily goals like getting a shopping list together and buying groceries.