A Layman’s Explanation
The DTC (disability tax credit) is defined by the Canada Revenue Agency as “a non-refundable tax credit used to reduce income tax payable on the income tax and benefit return. A person with a severe and prolonged impairment in physical or mental functions may claim the disability amount once they are eligible for the DTC.” In other words, a disabled adult with a qualifying disability is required to pay less income tax because of other expenses and difficulties he or she faces on a day-to-day basis. If the disabled individual does not pay income taxes, as in the case of a child, the supporting relative may claim the tax credit. The savings are between $1100 to $1600 annually.
With a disability tax credit certificate (DTCC) in hand, there are additional programs available, both federally and provincially, programs like the registered disability savings plan, the working income tax benefit, and the child disability benefit.
A disability is defined as any impairment that “markedly restricts” an individual’s ability to perform at least one of the basic activities of daily living, due to a condition that lasts at least twelve months. The basic functions are:
- Mental functions necessary for everyday life
An individual somewhat restricted in several functions may also combine his limitations to qualify, known as cumulative effects. The condition must have a duration period of at least twelve months to qualify.
Stay tuned for more layman’s explanations–and experiences!
Notes from the Insiders
Though Form T2201 is available directly from Canada Revenue Agency, applications are often denied due to improperly filled forms. Applying for disability benefits is a bit like filing taxes. Though it may be designed to be filed by the individual, the experts do it so much more efficiently–and profitably! The experts at DFAC can access retroactive benefits, and maximize government allowances. The Disability Tax Credit application is the DFAC’s area of expertise. Free consultations are available.