Disability Tax Credit – What is it and how can I apply?

October 9, 2015
by Jared Cross, C.P.A, C.G.A
The Disability Tax Credit is a non-refundable credit (only reduces your taxes payable – it does not create a tax refund) available to persons with “prolonged impairment in physical or mental functions”.  The amount changes from year to year ($7,766 in 2014 federally) and is indexed for cost of living increases.  If you are under 18, or claiming for someone under 18, there is an additional credit available of $4,530 (total credit of $12,296).  There are corresponding provincial credits also available, depending on which province you reside.
 
How do you claim it?
 
In order to claim it, you must take a tax form (T2201 – Disability Tax Credit Certificate) to your doctor and they determine where you have difficulties in your living and for how long.  This guides your accounting professional in preparing your taxes or amending prior year returns (up to 10 years back).
 
Did you receive a letter in the mail stating that you can get up to $15,000?
 
Companies are contacting taxpayers to claim the tax credit back the 10 years (the maximum back you can claim) for a fee of upwards of 30% of the refund.  This can cost you up to $4,500, which they take from the refund, versus paying a fee to your accounting professional to file 10 years’ worth of personal tax adjustments, which is generally lower.
 
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