DEFINITION:
Disability Tax Credit: The Disability Tax Credit (DTC) is a tax credit available to individuals with a disability in Canada. It is designed to provide financial assistance to individuals who have a severe and prolonged impairment that restricts their ability to perform daily activities.
FAQs:
1. What is the purpose of the Disability Tax Credit?
The purpose of the Disability Tax Credit is to help individuals with disabilities offset some of the costs associated with their disability. It aims to provide financial support to individuals who face additional expenses due to their disability.
2. Who is eligible for the Disability Tax Credit?
To be eligible for the Disability Tax Credit, an individual must have a severe and prolonged impairment that significantly restricts their ability to perform one or more activities of daily living. The impairment must have lasted or be expected to last for a continuous period of at least 12 months.
3. How much is the Disability Tax Credit worth in Canada?
The amount of the Disability Tax Credit can vary depending on the individual’s circumstances. In general, the credit can result in tax savings of up to several thousand dollars per year. The exact amount will depend on factors such as the individual’s income level, the severity of their disability, and other applicable tax credits and deductions.
4. How do I apply for the Disability Tax Credit?
To apply for the Disability Tax Credit, you need to complete and submit Form T2201, “Disability Tax Credit Certificate,” to the Canada Revenue Agency (CRA). This form requires medical certification from a qualified healthcare professional, who will assess whether you meet the eligibility criteria for the credit. Once approved, the credit can be claimed on your income tax return.
5. Is the Disability Tax Credit retroactive?
In certain cases, the Disability Tax Credit can be applied retroactively. If you were eligible for the credit in previous years but did not claim it, you may be able to request a reassessment of your past tax returns to include the credit. The CRA has specific guidelines and time limits for retroactive claims, so it is advisable to consult with a tax professional for assistance.
6. Can I transfer the Disability Tax Credit to a family member?
In some situations, it is possible to transfer the unused portion of the Disability Tax Credit to a supporting family member. This transfer is typically allowed if the person with the disability does not have sufficient taxable income to fully benefit from the credit. Specific rules and conditions apply, so it is recommended to seek guidance from the CRA or a tax professional.
7. Can individuals receiving government benefits still claim the Disability Tax Credit?
Yes, individuals receiving government benefits can still claim the Disability Tax Credit. The tax credit does not affect eligibility for other government benefits, and it is not considered taxable income. However, it is essential to review the specific rules and regulations related to the benefits you receive to ensure there are no conflicts or complications.