Disability Tax Credit (DTC) Part 1 of 3

First off, what is the Disability Tax Credit or DTC. It is a Canada Revenue Agency (CRA) federal tax credit that can be applied to reduce Personal Income Tax. It sits in the same area as the donation and medical expense area of the tax return. For 2020 the Disability Tax (DTC) is $8,576 ($8,662 for 2021). As well a supplement is available for persons under 18 years at the end of the year applied for. But hold on, does this mean only for taxpayers who earn income? No! dependents such as a non-earning spouse or child can also apply for the DTC. Why would a non-earning person apply for the DTC? Because this tax credit is transferable. This allows the unused portion of the DTC can be transferred to a parent or spouse for use in lowering their taxes.

As well, there is added benefits that come with being approved for the DTC, but we will get to those later in this article. Let’s talk about DTC applying and approval. Only 3-4 steps:

1. First off, get the T2201 Disability Tax Form:
   1. Click here for a downloadable PDF document which you can print and complete by pen or;
   2. Click here for PDF Form which you can complete online, save, download to email or print).
2. Complete the top of the form. Your name, social insurance number, address etc., that is all!
3. Take the DTC application form to your doctor or specialist who has the highest level of medical knowledge of your disability. This medical professional will complete the remaining portions of the form and then return it to you. Most medical professionals will charge a small fee ($10-50) but alas this is eligible as a medical expense on your upcoming tax return.
4. Upload to Canada Revenue Agency (CRA) or mail to the CRA.
   • If you have access to your online Canada Revenue Agency account, upload the form (look for T2201 or Disability Tax Form submission) or;
   • Contact your local accountant or tax provider to inquire about submission through the Represent a Client (RAC) system.
   • Click here to submit the form to Andre Choquette who will arrange to submit it to CRA (will require authorization through the use of the Represent a Client (RAC) system.
   • Mail (with tracking option) to Canada Revenue Agency at:
     • Alberta, British Columbia, London, Manitoba, Northwest Territories, Regina, Saskatoon, Thunder Bay, Windsor, or Yukon regions, send to Canada Revenue Agency – Winnipeg Tax Centre 66 Stapon Road Winnipeg MB R3C 3M2
     • Barrie, Kingston, New Brunswick, Newfoundland and Labrador, Nova Scotia, Peterborough,
       St. Catharines, Sudbury (the area of Sudbury/Nickel Belt only), Toronto Centre, Toronto East, Toronto North, or Toronto West regions, send to Canada Revenue Agency – Sudbury Tax Centre P.O. Box 20000, Station A Sudbury ON P3A 5C1
     • Laval, Montréal, Nunavut, Ottawa, Rouyn-Noranda, Sherbrooke, or Sudbury (other than the Sudbury/Nickel Belt area) regions, send to Canada Revenue Agency – Shawinigan-Sud Tax Centre 4695 Shawinigan-Sud Blvd Shawinigan QC G9P 5H9
     • Chicoutimi, Montérégie-Rive-Sud, Outaouais, Québec, Rimouski, or Trois-Rivières regions, send to Canada Revenue Agency – Jonquière Tax Centre 2251 René-Lévesque Blvd Jonquière QC G7S 5J2
     • Belleville, Hamilton, Kitchener/Waterloo, or Prince Edward Island regions, send to Canada Revenue Agency – Prince Edward Island Tax Centre 275 Pope Road Summerside PE C1N 6A2
     • International and Ottawa Tax Services Office (deemed residents, non-residents, and new or returning residents of Canada), send to Canada Revenue Agency – International and Ottawa Tax Services Office P.O. Box 9769, Station T Ottawa ON K1G 3Y4 CANADA
5. CRA will review and normally approve the T2201 Application and will send you a letter of approval which will include an effective date and possibly an expiry date. The effective date will go back to the approved date in which the disability began (as noted by your medical professional) and the expiry date is the date in which your DTC is no longer valid, however, you can reapply if your disability is still present.
6. Adjusting your previously filed tax returns to include the DTC. You can go back up to 10 years to adjust personal income tax returns. As well, if your original filed tax returns were straight forward you can even select (made in step one above) to have CRA adjust your previously filed tax returns automatically. If you require assistance in adjusting more complicated returns (such as those containing transfers to a spouse or parent etc.) either contact your accountant or tax preparer. You can also Click here to contact Andre Choquette who can arrange for this to be completed.

Then sit back and watch the refunds roll in. How much of a refund can a DTC provide? If you earn $30,000 per year in 2020 the DTC refund would be $1,773. If the DTC is for your dependent or child, the refund roughly doubles. If your DTC is for the full past 10 years, then yes you can expect substantial accumulative refunds for all the years you had taxable income.

Word of caution, simply searching the web for the DTC will result in some predatory companies which will charge a percentage or substantial fee for the DTC process. Adjusting for the DTC is no more complicated than adjusting your tax return for additional donations. If you do not feel comfortable in either having CRA adjust your returns themselves or doing it yourself then either your original tax preparer or any tax preparer can make the adjustments with ease and without the high fees these predatory DTC companies charge.

Click here for the next article, (details the wide range of disabilities covered under the DTC as well as the additional benefits also).

Andre Choquette is an accountant in public practice and an author of over 30 books through Prentice Hall and other publishers. He is also a software developer of software apps and websites. Andre resides with his wife Wanda at Christina Lake.