DEFINITION: The Canada Revenue Disability Tax Credit is a non-refundable tax credit available to individuals with disabilities in Canada. It is designed to provide financial assistance to those who have a severe and prolonged impairment that affects their ability to perform basic activities of daily living.
FAQs:
1. What is the purpose of the Disability Tax Credit?
The Disability Tax Credit aims to offset the additional costs associated with living with a disability by reducing the amount of income tax payable.
2. Who is eligible to claim the Disability Tax Credit?
Individuals who have a severe and prolonged impairment that is certified by a medical practitioner are eligible to claim the Disability Tax Credit. The impairment must affect their ability to perform basic activities of daily living, such as walking, speaking, or feeding oneself.
3. How can I apply for the Disability Tax Credit?
To apply for the Disability Tax Credit, you must complete Form T2201 – Disability Tax Credit Certificate available on the Canada Revenue Agency (CRA) website. The form must be certified by a medical practitioner and submitted to the CRA for approval.
4. Are there any restrictions on the types of impairments that qualify for the Disability Tax Credit?
No, there are no specific restrictions on the types of impairments that qualify for the Disability Tax Credit. The determination is based on the severity and prolonged effect of the impairment on the individual’s ability to perform basic activities of daily living.
5. Can I claim the Disability Tax Credit for a child or dependent?
Yes, you can claim the Disability Tax Credit for a child or dependent if they meet the eligibility criteria. The child or dependent must have a severe and prolonged impairment, and you must be able to claim them as a dependent on your income tax return.
6. How much is the Disability Tax Credit worth?
The exact value of the Disability Tax Credit depends on various factors, including the severity of the disability and the individual’s taxable income. The credit can be used to reduce the amount of federal income tax owed.
7. Can the Disability Tax Credit be transferred to a family member?
In certain cases, the Disability Tax Credit can be transferred to a supporting family member, such as a spouse or common-law partner. This transfer can help reduce the family member’s tax liability, resulting in additional tax savings.