The federal government has recently taken steps to make applying for the Disability Tax Credit (DTC) easier, as well as expand eligibility for the DTC to provide access to more taxpayers with certain severe and prolonged impairments.
On October 4, 2021, the Canada Revenue Agency introduced a new Disability Tax Credit - Digital Application for Medical Practitioners. This new application can be found on the Canada Revenue Agency website and is intended to guide medical practitioners through the completion of the detailed “Part B” of Form 2201, which asks for the taxpayer’s medical practitioner to certify specific information relating to the nature of the taxpayer’s impairment.
If you feel that you may qualify for the Disability Tax Credit, contact your doctor and discuss how they can assist you with this application process.
Additional information on the eligibility requirements for the DTC can also be found on the Canada Revenue Agency’s dedicated Disability Tax Credit information page. Generally, an individual is eligible for the disability tax credit for a tax year where the following requirements are met:
- the individual has one or more severe and prolonged impairments in physical or mental functions;
- the effects of the impairment or impairments are such that the individual is either:
- markedly restricted in the ability to perform a basic activity of daily living or would be markedly restricted but for life-sustaining therapy; or
- significantly restricted in the ability to perform more than one basic activity of daily living and the cumulative effect of the significant restrictions is equivalent to being markedly restricted in the ability to perform a basic activity of daily living; and
- a medical practitioner certifies that the individual meets the requirements under (a) and one of the requirements under (b).
As part of the federal governments 2021 budget, released on April 19, 2021, the Department of Finance has also proposed the following changes to the DTC eligibility criteria which, if passed into law, would allow additional taxpayers to qualify for the DTC:
- The definition of “mental functions necessary for every day life”, under the current rules includes memory; adaptive functioning; and problem solving, goal setting, and judgement. The government proposes to expand this list to include attention, concentration, perception of reality, regulation of behavior and emotions, and verbal and non -verbal comprehension.
- The definition of “extensive, life-sustaining therapy”, under the current rules requires therapy to be administered at least three times each week for an average of not less than 14 hours per week. The current rules allow for activities that require an individual to take time away from normal, everyday activities in order to receive therapy or determine the appropriate dosage of medicine that needs to be adjusted on a regular basis in determining the amount of time spent on therapy. The government proposes to expand these eligible activities to allow reasonable time spent determining dietary intake and/or physical exertion when determining dosage to be considered part of the therapy, as well as allow time spent for medical appointments, recuperation, and monitoring of intake of compounds in certain cases.
NOTE – As of date of publishing on October 26, 2021, these budget proposals have not yet been enacted into law.
The maximum value of the Disability Tax Credit amount for 2021 is $1,299 (credit of $8,662 x 15% multiplier), which can be claimed as a non-refundable tax credit to reduce taxes otherwise owing for the year.
The information in this publication is current as of October 26, 2021.
This publication has been carefully prepared, but it has been written in general terms and should be seen as broad guidance only. The publication cannot be relied upon to cover specific situations and you should not act, or refrain from acting, upon the information contained therein without obtaining specific professional advice. Please contact Gregory, Harriman & Associates LLP to discuss these matters in the context of your particular circumstances. Gregory, Harriman & Associates LLP, its partners, employees and agents do not accept or assume any liability or duty of care for any loss arising from any action taken or not taken by anyone in reliance on the information in this publication or for any decision based on it.