DEFINITION:Disability Tax Credit (DTC) in Canada is a non-refundable tax credit designed to provide financial support to individuals with severe and prolonged impairments in physical or mental functioning. It aims to assist them in the additional expenses they may incur due to their disability.
1. What qualifies as a severe and prolonged impairment?
To qualify for the Disability Tax Credit, your impairment must be both severe and prolonged. Severe means that it markedly restricts your ability to perform one or more basic activities of daily living. Prolonged refers to an impairment that has lasted, or is expected to last, for a continuous period of at least 12 months.
2. Are all disabilities eligible for the Disability Tax Credit?
No, not all disabilities automatically qualify. The impairment must meet the criteria of being both severe and prolonged. Additionally, it should be noted that each case is evaluated on an individual basis, so it is important to consult with a qualified healthcare professional and adhere to the guidelines set by the Canada Revenue Agency (CRA).
3. What basic activities of daily living does the CRA consider?
The CRA recognizes several basic activities of daily living, including speaking, hearing, walking, feeding oneself, dressing, mental functions necessary for everyday life, eliminating (bowel or bladder functions), and life-sustaining therapy.
4. Can mental health conditions qualify for the Disability Tax Credit?
Yes, mental health conditions can qualify for the Disability Tax Credit if they meet the criteria of being severe and prolonged. This includes conditions such as major depressive disorder, anxiety disorders, bipolar disorder, and others that significantly impact daily functioning.
5. Can children with disabilities be eligible for the Disability Tax Credit?
Absolutely, children with severe and prolonged impairments can be eligible for the Disability Tax Credit. Parents or guardians can claim the credit on their child’s behalf, provided they meet the eligibility requirements set by the CRA.
6. Does the Disability Tax Credit provide retroactive benefits?
Yes, if you meet the eligibility criteria but have not claimed the Disability Tax Credit for previous years, it is possible to apply for retroactive benefits. This allows you to claim the credit for up to 10 years prior to the current tax year.
7. Can the Disability Tax Credit be transferred to a family member?
In certain situations, individuals with disabilities who are unable to fully utilize their Disability Tax Credit can transfer it to a supporting family member. This may be a spouse, common-law partner, or another supporting individual. The process can be initiated by completing the appropriate section of the T2201 form provided by the CRA.