Estimated reading time: 8 minutes
There is a tax credit program for disabled people called the Canadian Disability Tax Credit (DTC), but knowing where to look and how to apply takes time.
Today, I’ll share the application process, the costs involved, and what not to do, and include a sample letter.
Table of contents
- Money Might Be Waiting With Disability Tax Credits
- Understanding Disability Tax Credits
- Over-Priced Government Form-Filling Services
- Save Your Money And DIY
- How To Apply For Disability Tax Credit Canada
- 2019 Update
- Claiming Disability Tax Credit In Canada
- Sample Disability Tax Credit Letter
- Maximum Disability Tax Amounts
- Approved For Final Two Years
- Costs To Apply For Disability Tax Credits
- Subscribe To Canadian Budget Binder
Money Might Be Waiting With Disability Tax Credits
Applying for the Revenue Canada disability tax credit certificate was something I did to help our friends’ parents, who originally paid a company more than they needed to.
Often you hear stories about how people were taken advantage of or paid too much for a service they could have quickly done themselves.
In my opinion, getting approved for the disability tax credit is simply a pen-and-paper process.
Being eligible for the DTC can open the door to other federal, provincial, or territorial programs such as the registered disability savings plan, the working income tax benefit, and the child disability benefit.
Understanding Disability Tax Credits
What is the disability tax credit?
It is a non-refundable credit that helps persons with disabilities or their supporting persons lower the income tax they pay each year.
A doctor must outline how the disability disrupts day to day life of the person with the affliction. It must outline what the disability IS, and how the person’s life is changed.– Alan- Big Cajun Man
The purpose of this tax credit program is to assist with financial relief for those with disabilities who have extra costs that average taxpayers do not have to face.
Over-Priced Government Form-Filling Services
My friends’ mother had not realized that she could claim the tax credit until it was mentioned to her by her daughter.
She wanted to claim 10 years retroactively to recoup some of the money she had over-paid the government while working and looking after her ill husband.
Her mother had already tried accessing the disability tax credit through an online advertising company that charged her a fortune.
It reminded me of when my wife and I filled out immigration forms to become permanent residents in Canada.
I could have hired a representative to complete the tedious forms, but it was so easy we did them ourselves.
Too many online services make form-filling a difficult task, and Canadians believe they need professional help.
All they do is fill out the forms and read the instructions, so if you can use a pen, use a computer, and print, you can do it yourself.
Save Your Money And DIY
It’s the same with the disability tax credit application process, which means you don’t have to waste your money.
People get too overwhelmed with government forms, but they are pretty straightforward.
Through research and applying for the tax credits, Revenue Canada tells you what they want for information, and you give it to them.
A company she hired charged her to retroactively fill out representative forms and the T2201 form for the ten years and billed her $1300.
All money they billed her for came was retrieved from the disability tax credit before they released it to her.
The bill was ridiculous, given the work completed, but it did meet the process even at an excessive amount.
Some unscrupulous companies and individuals are lurking, ready to whisk your hard-earned money away.
Then again, they are there to make money, so if you don’t research, be prepared to pay for something you can do for the cost of one Canadian stamp.
Her next port of call was a much more established tax centre that talked her through the disability tax credit process and filled out the remainder of the forms.
This service cost her an additional $329, but this time the disability tax credits were applied to her taxes for the remainder of the years missed by the first company.
Sometimes just representing yourself is the cheapest option, or seeking assistance from professionals face to face is far more accessible.
How To Apply For Disability Tax Credit Canada
I was asked to go through this process because it was time for her mother to re-apply for her husband’s final two years’ worth of credits.
I’m not a tax professional, and I’m not writing this post to say this is how it’s done as a rule, but I did learn quite a bit.
This is how we executed the disability tax credit application process with little guidance and research, and as you’ll see, it’s easy.
I helped them because I was curious about the program and wanted to learn about it.
I taught them how to save money in their budget instead of spending more all over again.
The principal applicant would be her husband, whose tax credits would be applied to any income he has.
If there is no income to apply for the tax credits against, the remaining tax credits will go to the wife.
I understand she can receive the tax credits because she is a caregiver to her husband, who can’t work.
However, I did not see the original T2201 form, so I cannot confirm or deny that this is the reason for her tax credits.
Only the doctor and the government would know what was filled out on that disability tax credit application.
You can now send Form T2201, Disability Tax Credit Certificate, and any supporting documents using the secure online tool “Submit Documents” in My Account or Represent a Client – a quick way to send your form and get confirmation that the CRA has received your documents.
Claiming Disability Tax Credit In Canada
So, the disability tax credit eligibility process goes like this:
- You must print off or fill in form T2201 from the Canadian Revenue Agency. Fill in your details and any other information that it requires from you.
- Take the form to your doctor, who will then fill in the appropriate parts that they need.
- Send the form to your tax office that deals with disability tax credits. In our case, her mother had to post hers to Winnipeg. You are currently applying for the disability tax credit certificate, which you will then use to apply the credits to your taxes.
- Wait, they will send you a notification whether the disability tax credit certificate is successful or not.
- If successful, you can then apply to get the disability tax credits applied to your current taxes or back taxes. As far as I know, you can go back up to 10 years and apply the disability tax credits to taxes filed then.
- To apply for disability tax credits, you must write a letter or fill in the T1 Adjustment forms for each tax year. I went down the letter-writing route as suggested by the lovely lady I spoke to from Revenue Canada. I was told to be repetitive and redundant in writing the letter to eliminate misunderstandings between what we had been told and what the person receiving the letter read. They will tell you anything you don’t understand if you make a simple phone call.
Sample Disability Tax Credit Letter
Here is a sample letter for applying for your disability tax credit:
Address line 1
Address line 2
Address line 1
Address line 2
I (Name) (Social Insurance Number) would like to apply my approved disability tax credits towards my (Year) taxes.
If I cannot make maximum use of the disability tax credits on my taxes, can you please apply them to my (husband or wife) (Name) (Social Insurance Number) taxes for the same year(s)?
Name (First and Last)
I wrote the letter according to the rules given to me over the phone by the Canada Revenue Agency (CRA).
List each year separately, which sounds monotonous; however, it seemed to work.
There was no possibility of reading the instructions incorrectly as they were straightforward.
Maximum Disability Tax Amounts
Updated: April 2023
|Year||Maximum disability amount||Maximum supplement for persons under 18|
The above chart from Canada.ca abbreviates the maximum disability tax credits up to 2018 of $8,235, and for those under 18, $4,804.
If the disability tax credits are to be applied against several years because you are claiming for previous years, you could abbreviate the years to 2005 – 2018.
Approved For Final Two Years
My understanding of the application process led to her receiving her disability tax credits with no issue.
I didn’t think that was too bad, considering all I did was make a phone call and do a bit of investigating.
Take your time and phone the CRA; they were a great help and are there to answer your questions.
When you receive the disability tax credit cheque in the post, some paperwork will accompany it.
Hang On To Your Paperwork
Don’t throw your disability tax credit paperwork away thinking you are all finished.
A line on the paperwork will state how much interest you earned over the period if you applied for previous tax years to be re-calculated.
This interest is considered taxable income and will need to be entered in on your income tax return for the year it states in the sentence.
She was so happy, and we will apply again for next year’s disability tax credits similarly.
This time, however, I will review what they do since she knows how to apply for the disability tax credits independently.
Costs To Apply For Disability Tax Credits
The total for me to apply for her was the cost of a Canadian permanent stamp, an envelope, and a sheet of paper.
Suppose you complete the disability tax credit application for the first time.
In that case, you will likely get charged $20 – $40 from your doctor to fill out the T2201 form needed for the disability tax credit certificate.
I would be wary of those companies advertising promising that they can get you up to $40,000 in disability tax credits as they will charge you an extortionate rate.
If you feel that your situation is too complex, call the CRA, talk to them, and let them know your situation.
They will walk you through the process as they did when I made the phone call to learn about applying for the disability tax credit.
In Summary, before you hire someone to fill out the application, please find out how easy it is and save yourself some money.
Discussion: Have you ever applied for the DTC program, and what were your results?
Share your story in the comments below.
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