If you live with a disability, you could get up to 10 years of backdated tax breaks. Here’s what you need to know.
If you live with a disability, then you're probably already familiar with the extra expenses that can arise. You may have financial support from provincial programs. Or perhaps you're paying out-of-pocket.
The good news? You might also qualify for the disability tax credit. Here’s what you need to know.
The DTC is a non-refundable tax credit that can be used to reduce the income tax you pay. It requires approval by the CRA; you can apply online or by mail .
According to the Government of Canada, you may qualify for the disability tax credit (DTC) if you have an impairment in physical or mental functions that is:
Take a look at the eligibility criteria for the DTC to see how the Canada Revenue Agency (CRA) defines these terms.
Also, if you’re a Canadian living with diabetes, there’s good news: in 2022, the DTC’s eligibility criteria were expanded to make it easier for you to qualify.
For 2024, the federal non-refundable disability amount is:
Provincial and territorial disability amounts are in addition to the federal amounts; they vary throughout the country.
As Stuart Dollar, Director of Insurance Tax Solutions for Sun Life, explains:
You can multiply the federal and provincial disability amounts by the lowest federal and provincial tax rates. This will help you figure out your total potential disability tax credit.
For example:
Note: For this example, you’ll need a tax liability of at least $1,480.80 to take full advantage of the disability amount.
You can only use a non-refundable tax credit to reduce your tax liability to zero, not below zero. (“Below zero” would mean that you pay no tax and get money from the government. Some tax credits work this way, but not the DTC.)
Also, if a child or another dependant doesn't have any taxable income, then a parent or other relative can claim the DTC under certain conditions.
(See Line 31800 - Disability amount transferred from a dependant on the CRA website for more information.)
*Please note that access to the additional supplement may be reduced as amounts paid for child- or attendant-care increase.
To qualify for the DTC, you must:
The form may appear lengthy, and possibly even intimidating. But Dollar sees no reason why DTC claimants should pay high fees for consultants to prepare their application.
"Read through it carefully," he says. "If you’re still feeling confused, there's a 1-800 number on the form to call for help."
Based on the circumstances of each case, the CRA may approve the DTC certificate indefinitely. Or your application may be approved for a shorter, specified period.
Take the case of Alan Whitton, Ottawa author of the Canadian Personal Finance Blog . He applied for the DTC on behalf of his son Rhys, who is on the autism spectrum.
"They've given us a DTC for 10 years," Whitton says. "And Rhys will have to be re-diagnosed in four or five years."
Living with diabetes can be financially challenging due to ongoing medical expenses. As a result, the Canadian government offers several tax credits for eligible Canadians with diabetes .
Most recently, in 2022, the DTC’s eligibility criteria were expanded to make it easier to apply if you have diabetes.
Many provinces and territories also offer their own tax credits or related programs. It's a good idea to talk to a tax professional, and to check official government websites for more information.
The answer is yes. Here’s what you need to know.
It’s possible to claim the credit both in the current year and going back as far as 10 years. Your eligibility depends on the onset of the disability. This may result in sizeable tax refunds.
How do you claim the DTC for previous years? File a T1-ADJ form for each previous tax year in which the disabled individual qualifies. A doctor or a health professional will need to provide information in support of this application.
In Whitton's case, they recognized his son's autism as "from birth". So he was able to get a refund back to the date when Rhys was born.
There's also another way to have this credit backdated. Section 3 of Form T2201 gives you the option to have the CRA adjust your previous applicable years' tax returns to include the disability amount.
Amending your previous tax returns may affect your ability to claim other benefits for those years. In this case, it’s a good idea to consult a tax professional.
Approval for the DTC can also open the door to other valuable federal, provincial or territorial financial assistance programs. These are beyond the tax credit itself.
"Let's say you're in a nursing home," Dollar says. “You can then claim the medical expense tax credit for the portion of the expense paid for nursing care. But that's only if you first qualify for the DTC, and you can’t claim both.”
Registered disability savings plan is a long-term savings plan designed to help Canadians with disabilities and their families save for the future.
Once approved for the DTC, individuals can open an RDSP. The government provides matching grants and bonds to help grow the savings.
The money can be used for various purposes related to the beneficiary's care and well-being. This program helps ensure financial security for people with disabilities as they age.
The CWB disability supplement is an additional amount available to low-income workers with disabilities who qualify for the DTC.
This supplement supports those who are working while living with a disability. It aims to recognize the additional costs and challenges that people with disabilities may face in their employment.
The child disability benefit is a tax-free monthly payment for families.
Specifically, it’s for Canadians who care for a child (under 18) with a severe and prolonged impairment in physical or mental functions. Eligibility for this benefit is tied to approval for the DTC.
This benefit helps parents and guardians cover costs for specialized equipment, therapies, or additional care needs. Its aim is to make a difference in the quality of life of both the child and their family.
Talk with an advisor about health insurance. This can help protect your income against unexpected medical expenses that are not covered by government plans. It can be especially impactful if you have dependents.
An advisor can look at your unique situation to help you build a customized plan that includes health insurance.
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