What is the DTC?
The Disability Tax Credit (DTC) is a credit available to Canadian residents with a severe and prolonged physical or mental or physical impairment. The credit must be applied for and approved by the CRA before you are able to claim it on your tax return.
Once approved any portion of the credit that the person with the DTC does not need to reduce their tax payable to zero can be transferred to a supporting family member. In order to qualify the person applying for the DTC must rely on the caregiver for at least one of the following: food, shelter, and clothing
The family member must be 1 of the following:
their spouse or common-law partner
their child or grandchild
their parent, grandparent, brother, sister, uncle, aunt, niece, or nephew
a child or grandchild of their spouse or common-law partner
a parent, grandparent, brother, sister, uncle, aunt, niece, or nephew of their spouse or common-law partner
This is a fairly large credit that increases each year with inflation. There is a federal credit as well as a provincial/territorial credit. For 2023 the DTC federal tax credit is $8,986.
If the person claiming the DTC is under the age of 18 on the last day of the year they get an additional federal amount of $5,242 for a total federal credit of $14,228.
When to Apply
If you or someone you know has a severe and prolonged physical or mental impairment I would recommend applying for this tax credit. It is a substantial credit and it's free to apply. The worst CRA can say is no, and not approve you for the credit.
How to Apply for the DTC
If you think you may qualify for the DTC you will need to fill out and submit a T2201 Disability Tax Credit Certificate. You can find a free PDF version of this form HERE.
Print the forms then fill out the first page. Your physician fills out the rest of the form. If you have multiple doctors I recommend having your physician with the most knowledge of your condition fill out the form.
If you are planning on transferring any of the unused portion of the DTC to a family caregiver you must specify this on page one of the application.
Once your doctor has filled out the rest of the pages you'll need submit the form to CRA. You can do this 1 of 2 ways.
Submit the form online. First scan the T2201 then log into your My CRA account and click 'Submit Documents'.
Mail the forms to your closest CRA tax center. On the last page of the T2201 package there is a list of the CRA tax centers, their full mailing addresses, and the corresponding area they serve. Simply select the tax center for your area and mail the forms there.
Once You're Approved
After you submit your T2201 DTC application to CRA a board will review your forms and either approve your application or reject it.
You will receive a letter from CRA called a Notice of Determination which will tell you their decision.
A few things can happen.
They can fully approve you for the DTC indefinitely, with no expiration date
They can approve you for a set number of years, after which you'll need to reapply
If the condition has been going on for a period before you applied for the DTC they can 'carry back' the credit and approve you to use it in prior years as well as in the years going forward
If you are approved for the DTC and they allow you to go back and claim it on prior tax year you will need to adjust those years to add it on to your tax return. Unfortunately CRA no longer does this for you automatically.
These adjustments are fairly straightforward and something I would be happy to help you with.
All my best,
Laura
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