Disability Tax Credit

February 12, 2021 | Mike Biette

Simplified Summary:

The disability tax credit is easy to apply for and more people may qualify than realize. Plus it can save you up to $2,256 off your taxes per year.

Detailed Summary:

Many individuals who may qualify for the disability tax credit never apply simply because they are unaware of the credit or believe it doesn’t apply to their situation. The disability tax credit can reduce income taxes or increase refunds by up to $2,256 per year. This credit can also be retroactively approved to a maximum of ten previous years, if the condition existed prior, for a potential lump sum refund of up to $20,000.

This is a non-refundable tax credit – meaning it will only reduce your taxes payable and cannot generate a refund by itself.

This credit can also be claimed by individuals supporting a person with a disability.

In order to qualify, you must have a medical practitioner complete form T2201 Disability Tax Credit Certificate, submit it to CRA (Canada Revenue Agency) and receive an approval letter. Approvals are typically granted for several years, so there is usually no need to apply every year.

To be approved, you must need life-sustaining therapy, or be markedly restricted in at least one (or significantly restricted in two or more) of the basic activities of daily living. These include vision, speaking, hearing, walking, bladder functions, feeding, dressing, and mental functions necessary for everyday life. These impairments must be prolonged (12 months or more), and be present at least 90% of the time.

Still not sure if you qualify? Ask your medical practitioner if they will complete this form for you – it may be well worth your time!

Applying for the disability tax credit is a straightforward process and all the application forms are available online, at your local tax accountant or doctors office. You should have your own medical practitioner complete the application form as they understand your medical condition the best. You DO NOT need to pay a percentage of your refund to take advantage of this tax credit.

A tax professional at TaxTeam can discuss this and other credits and deductions that may affect your taxes. Call 306-694-4829 or visit www.taxteam.ca