DTC Claims For Diabetics and Others: Your Money is Coming

Evelyn Jacks, DFA-Tax Services Specialist, RWM

Good news! CRA is reviewing previously denied claims for the Disability Tax Credit (DTC) under expanded eligibility criteria available for the 2021 tax filing year. 

This includes claims for those who have Type 1 Diabetes, those who require other life-sustaining therapies, or who qualify for this lucrative non-refundable tax credit under an expanded list of mental functions.  The bad news:   the refunds could be delayed until December 31, 2022 or beyond.   Here’s what you need to know:

1. The Finance Department expanded the list of eligible disabilities that qualify for the DTC for the tax year 2021.  However, those who claimed the DTC under the new rules were denied the claim, awaiting passage of the enabling legislation.  
2. CRA has now promised taxpayers whose claims for the disability tax credit were denied from January 1, 2022 to June 23, 2022,  that they will not need to reapply; and that their claims will now be reviewed.
3. The reviews of these claims could take until December 31, 2022, at which time a notice of determination will be issued to inform taxpayers of the outcome:  whether a claim for the DTC will be allowed.
4. The notice of determination is an important form which should be kept in a safe place.  It tells what year the taxpayer can start making the DTC claim and no further application will be required unless CRA asks for a new one in the future.
5. For those who have not yet applied, notices of determination are expected to take 8 weeks after receipt of the DTC application on form T2201.
6. In some cases, this will take longer – if there is missing information, for example, or if CRA needs to contact the medical practitioner for more information.
7. Accepted claims will lead to a refund of taxpayers paid for some; or to additional refundable provincial tax credits for others (Manitoba has a refundable personal  tax credit for a disabled taxpayer, spouse or children, for example). In addition, those with approved DTC claims will qualify for enhanced federal benefits from:
   1. the Child Disability Benefit
   2. Canada Worker’s Benefit
   3. or for the purposes of investing in a Registered Disability Savings Plan
8. Some DTC claims could expire; in which case the CRA will provide one year’s notice for re-application.  
9. If the medical condition improves, and the disabled person no longer qualifies for the DTC, the onus is on the taxpayer to provide CRA with that updated information.

The Next Steps:   Taxpayers and their advisors are urged to connect to ensure the disability tax credit claims are properly made under the new criteria and to follow through on any additional requests for information from the CRA to make sure refunds and benefits are not further delayed.   

Additional Educational Resources: 

The Scholar Program:   Learn new verifiable workplace skills, online, one certificate course at a time. Recommended:  start with Knowledge Bureau’s Professional Income Tax Course – Entry Level features comprehensive online instruction and case studies using student versions of popular professional tax software.  Or, if you are more experienced, go straight to the advanced level.

The Designation Program:  The new DMA™ Designation is awarded to students who have taken six certificate courses leading to a specialty in personal tax services, corporate tax services, accounting services, retirement services, or small business management.  

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