Disability Tax Credit – What’s Current, What’s New and When

Walter Harder

Taxpayers in Canada who have a severe and prolonged impairment of physical or mental function will qualify for the disability amount if they get their doctor (or nurse practitioner) to attest to that on Form T2201 Disability Tax Credit Certificate, sent the completed form to CRA and CRA approves the claim based on the T2201. The April 2022 Federal Budget introduced a number of changes to the criteria for eligibility for the credit, but these will only be available once the legislation (included in Bill C-19) receives Royal Assent. This is imminent at the time of writing. Here are the details:

The Disability Tax Credit (DTC) is a non-refundable federal equal to 15% of the disability amount ($8,870 for 2022). For qualifying children under 18, a supplemental amount ($5,174 for 2022, reduced by any child or attendant care expenses over $3,030). In addition, each province has a provincial disability amount that can be used to reduce provincial taxes.

Examples of qualifying disabilities include:

• Blindness at any time in the year
• Inability to feed or dress oneself (or situations in which this is possible but only after taking an inordinately long period of time to do so)
• Inability to perform basic functions, even with therapy or the use of devices and medication. These can include:

• Perceiving, thinking, remembering or other cognitive functions
• Speaking to be understood by a familiar person in a quiet setting
• Hearing to understand a familiar person in a quiet setting
• Controlling bowel and/or bladder functions

The budget expanded the list of mental functions that, if impaired, would allow the person to qualify for the disability amount. The budget also expanded the list of activities that qualify for time spent on life-sustaining therapy. To qualify for the credit on the basis of life-sustaining therapy, the patient must require such therapy for a minimum of 14 hours per week. The budget also proposed to reduce the frequency requirement for life-sustaining therapy to two times per week rather than three.

In a surprise move, members of the Federal Government’s Standing Committee on Finance (FINA) amended the Bill to deem that patients who are diagnosed with Type 1 diabetes will be deemed to spend at least 14 hours per week on life-sustaining therapy. The revised Bill passed third reading in the House of Commons on June 9, so this change will, in all likelihood, be included in the Bill when it receives Royal Assent. This means that all patients diagnosed with Type 1 diabetes will automatically qualify for the DTC (when they submit the certified T2201 forms).

Tax professionals are reminded that the T2201 form should be completed and submitted as soon as possible, as claims for the disability amount will not be processed until the T2201 form is approved.

Additional educational resources: Help Canadians access tax benefits and programs that aid in their financial security. Earn new specialized credentials as a DFA-Personal Tax Services Specialist.