A famous hockey player once said, "You miss 100 percent of the shots you don't take." When you see an opportunity, on or off the ice, it's worth remembering that nothing ventured means nothing gained.
This quote came to mind as I reflected on a staggering statistic about the Canadian Disability Tax Credit (DTC). According to the 2024 annual report of the Canada Revenue Agency's disability advisory committee, only one in four people with disabilities who are likely eligible to receive the DTC certificate have submitted a complete application - yet 96.6 percent of all completed applications are approved.
Why would so many people not be taking what is undeniably a sure shot to save money and take advantage of the many additional benefits of this program?
In this blog post, I outline what the DTC is, explain why it is a significantly underused benefit, and offer suggestions for how you or a loved one can take advantage of it.
What Is The Canadian Disability Tax Credit (DTC)?
The DTC is a non-refundable tax credit designed to offset some of the extra costs that are related to a severe and prolonged impairment. The credit can be applied to reduce the amount of income tax a person with a disability (or their supporting family member) has to pay.
To receive the credit, a person must be certified as having an eligible impairment by a medical practitioner. There are two ways for a person to reach the threshold for an eligible impairment:
- A medical practitioner certifies you have a severe and prolonged impairment in one of the following categories: walking, mental functions, dressing, feeding, eliminating (bowel or bladder functions), hearing, speaking, vision, life-sustaining therapy.
- A medical practitioner certifies you have cumulative, significant limitations in two or more of the above categories (excluding life-sustaining therapy), or you receive therapy to support a vital function.
If there is little or no likelihood that your impairment will improve, the CRA may approve an indefinite DTC certificate. Otherwise, they are usually approved for periods of up to four to six years before requiring renewal.
What Is The Benefit Of The DTC?
When applied on your tax return, the DTC reduces the amount of tax owing. As a non-refundable tax credit, if you don't owe any income tax, or if the amount of the credit is more than what you owe, you will not be paid out the balance of the tax credit. However, even if you don't think it would be worthwhile to apply for it based on your expected income tax return, you may be surprised to learn of the added benefit of securing a DTC certificate:
- In a given year, any unused amount of the DTC can be transferred to a supporting family member.
- A person who would have qualified for the DTC in past tax years can claim it for up to the past 10 years by adjusting your past returns.
- If a medical practitioner charged a fee for completing the DTC application or for providing information, you may be able to claim the fee as medical expense on your tax return.
- Once approved for the DTC, you will be permitted to open a Registered Disability Savings Plan (RDSP). Contributions made to RDSPs grow tax-deferred.
- Moreover, certain people with RDSPs may be eligible for additional government grants (Canada Disability Savings Grant) and bonds (Canada Disability Savings Bond). The lifetime limit for these two grants/bonds is $90,000.
- Caregivers of dependents who are eligible for the DTC may qualify for the non-refundable Canada Caregiver Credit. If the dependent is under the age of 18, they may also qualify for the Child Disability Benefit, a tax-free monthly benefit added to the regular Canada Child Benefit for eligible families.
- The DTC recipient or their caregiver may also potentially claim a refundable Canada Workers Benefit designed to encourage people to stay in the workforce.
- Holding a DTC certificate may also allow a person or their caregiver to claim home accessibility expenses or additional medical expenses on their taxes.
In short, filing taxes that include the DTC, even if you do not have taxable income, is an important gateway to other programs and benefits.
Why Is the DTC Underused?
Unfortunately, many eligible people do not apply for the DTC, and many others abandon their applications part way through the process. Why?
According to Inclusion Canada, the main impediments are:
- A complicated application process
- The need for a doctor or other medical practitioner to fill out parts of the application
- Medical exam fees
- The definition of 'disability' is not inclusive
Applying for the DTC, particularly if an applicant has intellectual disabilities, can feel intimidating, even if representatives from the CRA try to explain the application process and eligibility criteria.
While a prospective applicant may turn to a medical practitioner for assistance or advice, many practitioners may also be unsure about specific requirements. People without a family doctor may also be deterred by the search for a medical practitioner to assess them. Moreover, even though medical exam fees incurred in the application process may be claimed as medical expenses, having to pay up front can certainly deter a would-be applicant.
Application Assistance.
While there are "DTC promoters" who offer their services to assist with these applications, they "may charge hefty fees for their service," and their staff may not actually have any significant specialized expertise.
Before contacting a for-profit business to help you with your DTC application, take some time to explore alternatives.
If your disability is the result of an accident or illness that necessitates legal action (a personal injury tort claim or negotiations with an insurer), the lawyer or law firm you contact may advise applying for the DTC. As a part of our commitment to full circle client care, Gluckstein Lawyers assists our clients with DTC applications.
Non-profit organizations that support people with disabilities may also have resources or staff who can offer help. For example, the BC-based Plan Institute holds webinars which allow individuals to ask questions to an RDSP expert, including questions about the DTC.
Even without the help of experts, you or a family member or friend can likely fill out a lot of the information required on the application on your own. Fill out an application to the best of your ability, and make notes if you are unsure about certain questions or sections.
Don't be deterred if you still have difficulty understanding what is required - you can contact the Canada Revenue Agency directly to communicate with a representative, along with a friend or family member to assist. You might also consider contacting your Member of Parliament's constituency office for assistance.
Worth The Effort.
Many disability advocates have criticized the complexity of the DTC certificate application process, and the CRA has made some improvements over the years. However, even if you find it immensely frustrating, applying for the DTC is well worth the effort.
Life with a disability can be challenging. Take advantage of government programs that recognize the costs associated with these challenges and provide benefits to compensate.
If you or a loved one has sustained a serious debilitating injury and you would like to know more about your rights, options, and resources, contact Gluckstein Lawyers for a no cost, no obligation initial consultation.