The Canadian government offers monetary support to those living with a disability. The primary program it offers is the Disability Tax Credit (DTC), a nonrefundable tax credit of $9,872. If eligible for the DTC, you then qualify for other programs such as the Registered Disability Savings Plan (RDSP), worth up to $200,000 over your lifetime. Families with a child or children eligible for the Disability Tax Credit and the Canada Child Benefit are also eligible for the Child Disability Benefit (CDB), worth up to $3,322 annually. Eligibility requirements for other programs such as the Lifelong Learning Plan or Home Buyers’ Plan change once you can claim the DTC. Other credits such as the Home Accessibility tax credit become available and supplements are added to some credits, such as the Canada Workers Benefit disability supplement once you can claim the DTC.
In order to qualify for the DTC, you must prove to the government you have a serious and persistent disability. This is accomplished through Form T2201, which is filled out by you or your legal representative and your medical practitioner and approved by the government.
What is Form T2201?
Form T2201 is the application you and your health professional must fill out to determine your eligibility for the DTC.
DTC eligibility
An individual may be eligible if they have an impairment in physical or mental functions in one of the following categories. The effects of the impairment must meet specific criteria for each impairment.
Vision
Speaking
Hearing
Walking
Eliminating (bowel and bladder functions)
Feeding
Dressing
Mental functions necessary for everyday life
Cumulative effect of significant limitations
Life-sustaining therapy
Simply having an impairment will not render you eligible. Rather, it’s if the effects of the impairment are severe and prolonged, resulting in a marked restriction. In general, to qualify, a person must be “markedly” restricted in at least one of the basic activities of daily living, the impairment must last for at least one year, continuously, and it must be present at least 90% of the time.
If an impairment doesn’t meet these criteria, it may still qualify under the cumulative effect of significant limitations. Essentially, if you have two or more impairments combined, they mean you meet the criteria, and it may qualify.
How to fill out Form T2201
You fill out any applicable lines in Part A and a relevant medical practitioner fills out Part B.
Part A – Section 1
This is where you enter the first and last name, mailing address, and social insurance number (SIN) of the person being assessed.
Part A – Section 2
If the person with the disability is claiming the credit, you do not have to fill out this section. If someone else other than the person with the disability will be claiming the credit by way of the DTC transfer, such as when a parent claims the transferred credit from their child, they will fill out this section. To be able to claim the DTC transfer, you have to provide your name, SIN, and relationship, as well as information on what sort of support and the number of years you’ve provided that support for.
Part A – Section 3
If you didn't claim the DTC on tax returns for prior years because you didn’t have an approved T2201 on file with the Canada Revenue Agency (CRA) (a requirement before you can claim the DTC on your tax return), the CRA will go back and reassess tax return for whichever year your T2201 approves and will include the DTC claim. This most often results in an increased refund amount and, therefore, outstanding money owed to you.
Part A – Section 4
This is where you or the legal representative sign off that the information you’ve provided is correct and give permission to your medical practitioner to provide medical info to the CRA so they can determine your eligibility for the DTC.
Part B
This part is to be filled out by your medical practitioner. They will fill out the sections specific to your impairment, as well as information such as how long you’ve been their patient, do they have information on file for all the years, what type of medical practitioner they are, and, of course, their signature.
Depending on your disability, a medical practitioner can include:
Health professional | What they can certify |
|---|---|
| Medical doctor | All section |
| Nurse practitioner | All sections |
| Optometrist | Vision |
| Audiologist | Hearing |
| Occupational therapist | Walking, feeding, dressing, and the cumulative effect for these activities |
| Physiotherapist | Walking |
| Psychologist | Performing the mental functions necessary for everyday life |
| Speech language pathologist | Speaking |
Where to send in Form T2201
You can send in the form and any supporting documents electronically through the “Submit documents" feature in your CRA “My Account” or mail it in. Keep a copy for your records, in the unlikely event the CRA loses your application.
You can send the form at any time of the year, but it’s best to send it well before you file your yearly tax return because it can take a while to receive approval. If you claim the credit without having an approved T2201 on file, the CRA will most likely reject the claim.
What happens after you send in Form T2201?
The CRA will review your application and may ask for some follow-up information. Once it is satisfied, the CRA will review the information and send you either an approval or denial letter. If approved, you may be approved indefinitely, or your approval may have an expiry date. In this case, you are now eligible to claim the DTC on your tax return, as well as any other credits you may qualify for and can participate in programs such as the RDSP, and any other disability programs the government offers.
If your situation improves to the point where you no longer meet the criteria your were approved under, then you should let the CRA know.
If your application was denied and you disagree, then you can call the CRA to discuss the decision. You can also contact the CRA in writing to request a review of your application with new or updated information and file an appeal within 90 days of getting the rejection letter.
What happens once your T2201 is approved?
Claim the DTC and other eligible tax credits
Once your T2201 is approved, you can now collect money from the government. The first step is to apply for the DTC, which is a nonrefundable federal tax credit. Non-refundable tax credits reduce your tax payable — the amount of tax that you have to pay based on your net income income amount.
For example, let’s say you made $40,000 and would, therefore, pay 15% federal tax on that income, for a total of $6,000. If you qualify for the DTC, you can claim 15% of $9,972, or $1,480.80. The tax you owe is now reduced to $4,519.20 ($6,000 minus $1,480.80).
You can also claim a supplemental DTC amount for your children until 18 years old, worth about $5,500.
You also may be able to claim backdated DTC claims on prior years' returns depending on how long your T2201 indicates you’ve been living with the disability. If you requested the CRA to adjust previous tax returns, this will be done automatically. If not, you can submit an updated return either using ReFILE (if still available for the tax year you’re changing), using the CRA’s “Change my return service” or by filing a paper T1ADJ form. You can request an amendment on returns from the 10 previous calendar years.
You may also be able to claim various other credits, based on your particular situation. The list is many!
Open an RDSP
The next step is to open an RDSP, which is a tax shelter to help people with disabilities save for retirement. Do this even if you can’t save anything: Ottawa will deposit up to $20,000 to low-income families with no contribution necessary under the Canada disability savings bond and match contributions up to $3,500 annually up to a lifetime maximum of $70,000 under the Canada disability savings grant. This will go a long way to ensuring financial security.
Bottom line: it’s valuable for a person with a disability to have their T2201 approved. It’s the gateway form to qualify for a whole host of measures meant to provide people with disabilities a measure of financial security.
