468 reviews
250 Consumers Road Suite 810 Toronto, ON M2J4V6
What is Disability Tax Credit and Who is Eligible?

What is Disability Tax Credit and Who is Eligible?

Everyone with an income pays taxes, but sometimes the CRA offers assistance to those who need it, especially the disabled.

If you have a chronic illness or injury that makes it hard to do daily activities, you may qualify for the Disability Tax Credit. Millions of people that qualify don’t realize they do. Here’s everything you must know.

What is the Disability Tax Credit?

The Disability Tax Credit is a credit for the disabled to lower their tax liabilities and leave them with more money to pay for the accommodations they need in their lives. The tax is non-refundable, which means you can only take as much of the credit as you owe in taxes – you can’t take the full amount and get a refund.

The Disability Tax Credit has two components – federal and provincial. The federal credit is the same for everyone, but the provincial credit varies by province. 

Who is Eligible for the Disability Tax Credit?

To be eligible for the disability tax credit, you must have difficulties performing everyday tasks, including dressing, eating, walking, or grooming. The conditions must be debilitating and if you’re found eligible, you may be eligible for other government aid including Canada’s Workers Benefit and RDSP.

Qualifying for Disability Tax Credit

Many Canadians don’t even realize that they are eligible for this credit, leaving money on the table. To determine if you qualify, here’s what to consider.

  • Are you disabled?

To qualify as disabled, it means you cannot do the normal activities you must do daily. If you need assistance with these daily tasks, you are considered disabled.

  • Are you slowed?

This is the category most people miss. If you’re ‘slowed’ it takes you longer to do normal daily activities. For example, arthritis may make it harder to do your daily activities. In the eyes of the government, this is a disability and it may qualify you for Disability Tax Credit.

Eligibility Requirements

Of course, to get the Disability Tax Credit, you must meet certain requirements:

  • You must be a permanent Canadian citizen
  • Prove you have a disability or impairment

The second requirement is the big one. You must prove your disability interferes with your daily life. You can have a reliance on life-sustaining therapy and automatically qualify, have two or more basic restrictions, or one major restriction to qualify.

Impairment Categories

To dive into the eligibility for Disability Tax Credit a bit further, we’ll look at the impairment categories. Your impairment must fall within one of these three categories:

  • Physical
  • Mental
  • Neurological

Physical Impairments

A physical impairment itself doesn’t qualify you for Disability Tax Credit. You must prove the impairment causes psychological issues – that is when you get the credit.

For example, if your impairment causes visual issues, chronic pain, hearing issues, or diabetes, this could qualify you. It has to impair certain aspects of your life such as not being able to concentrate, make decisions, see, or hear.

Mental Impairments

Mental Impairments

Mental impairments come straight from the diagnosis since many mental health issues can make it hard to take care of yourself. Common mental health disorders that qualify for Disability Tax Credit include:

  • Anxiety
  • Eating disorders
  • PTSD
  • Addiction
  • Depression
  • Bipolar disorder

If the mental health issue makes it hard for you to take care of yourself or handle your daily activities, it could qualify you for a Disability Tax Credit.

Neurological Impairments

Neurological impairments affect the brain and how the body operates and can interfere with your daily living. Certain illnesses that qualify for Disability Tax Credit include multiple sclerosis, stroke, epilepsy, and Parkinson’s disease.

How to get the Disability Tax Credit

The Disability Tax Credit is a refund on your federal taxes. You can claim the credit if you owe federal taxes, which most Canadians that make over 20K owe taxes.

You’ll receive the Disability Tax Credit as an annual refund. Each year when you prepare your taxes, you can take the credit. However, it doesn’t last forever. You may need to reapply after a few years depending on the reason for your disability.

Retroactively Claiming the Disability Tax Credit

The Canadian government will retroactively reimburse you for the disability tax credit if you are found eligible and have been eligible for previous years but didn’t claim it.

You can get a credit for up to the last 10 years, but you’ll receive it as a one-time refund. To be eligible for a retroactive refund, the CRA will determine how long you’ve had symptoms and how long the disorder has affected your life. 

Your Disability Supporter

The CRA allows disabled persons to transfer their  Disability Tax Credit to their supporters if their disability makes it impossible to work. If you don’t work, you don’t have to pay taxes, but the person that supports you likely pays taxes and may be eligible for the credit for taking care of you.

The CRA will determine who is the disabled and who is the claimant. Understanding these terms is important.

  • Disabled – The disabled person is the person with the disability. This is the person that qualifies  for the Disability Tax Credit, whether or not you work. It’s your condition that qualifies for the credit and if you can’t work because of it, you can help your supporter by transferring the credit.
  • Claimant – The claimant is the person that supports you financially. It could be a parent, grandparent, spouse, child, or other blood relative. Your supporter doesn’t have to be a blood or marital relative either. As long as you can prove the person supports you financially and helps you with daily life, you may transfer the credit to him/her.

Final Thoughts

The Disability Tax Credit lowers your federal taxes and is based on a federal and provincial basis. If you’re eligible, take advantage of the credit and get the refund you deserve. If you weren’t aware of the credit, you could even get a retroactive refund.

Share on: