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Proper Steps in Applying for the Disability Tax Credit (DTC)

Understand that no impairment, be it physical or mental, is ineligible for the DTC on the basis of diagnosis alone; it is very important for qualified persons to keep in mind that there is no disorder or mental function which renders a person categorically ineligible for the DTC. For instance, if you or a loved one have a learning disability attested to by a qualified person that created a marked restriction in mental function (the learning disability was severe enough that the person could not manage money sufficiently well to make a simple purchase or could not navigate street signs to travel to a new location), then the person should be considered eligible for the credit.

Remember that it is the severity of the disability that will be the deciding factor. Read the whole T2201 questionnaire carefully before you begin filling in any answers. You will notice the term “markedly restricted" is used throughout the application, implying that eligibility is restricted to those who cannot function properly or without supervision. The reality is that it actually means anyone who requires occasional assistance with their daily living.

Answer all questions carefully as each one is open to broad interpretation and if the forms are not filled out exactly they could be rejected. In order to be able to defend your application you must be well organized. Keep all documents relating to your disability or to your child’s disability and get access to all medical and school reports and any other notes that you may have kept over the years.

When seeking qualified persons to complete their portion of the application, make sure they know and are familiar with your situation. Some of these professionals are very reluctant to support a claim and it may be to your advantage to have a good discussion with them beforehand. Make them aware of what qualified persons need to know about attesting to eligibility.

Even though your doctor plays a vital role in the application process, organizations such ours act as a liaison between qualified persons and clients to ensure the application standards are met. lf you are not sure of anything at all, contact us immediately before you finalize the paperwork with the qualified person.

Qualified persons often do not include enough information on the form so do not be afraid to go back and ask for more detail to be added. It is their job to provide enough details for the CRA’s medical staff to draw the proper conclusion. It is not sufficient for them to simply state their client qualifies based on their professional opinion. The wording on the application is very important and should include how the disability restricts a basic activity of daily living. lt is the severity of the impairment and duration that are key issues.

If you are the person providing support for the person with the disability, it is important that you include details about the support you provide. This can be listed on page l as part of question 2. These support details could be very important and we will go over this in detail before submitting the application. In fact, some applications have been approved not on the merits of the qualified persons form but on the merits of letters submitted by parents.

It is also extremely important to have the qualified person state when the disability started and not when it was diagnosed. Learning disabilities, for instance are life-long conditions and the date of birth should be when the disability started. Many disabilities are life-long even if they weren’t diagnosed until much later. Canada Revenue Agency may require more information from your qualified person which usually happens when there is something unclear about the application. If necessary, we can work with your qualified person to make sure they understand and fill out form T2201 properly. Once completed you must let us ensure that it is filled out properly. The completed application is then mailed to the CRA.

Once approved, the CRA will send a letter outlining the specific term of the disability tax credit. Be aware that the process can take anywhere from 2 to 6 months from start to completion.

This is a “non-refundable" credit, meaning it will reduce the amount of taxes you may owe to the CRA. We can also go back l0 years and the credit is also transferable to the spouse or supporting person.

The DTC not only gives the taxpayer a good sized tax credit, it also has a positive effect on the monthly Child Tax Benefit. lf you have not already applied for the Child Tax Benefit for your child, but have already filed Form T2201, complete and mail Form RC66, Canada Child Benefits Application, to your tax centre. The CRA will determine whether or not you are eligible for the Child Tax Benefit and the Child Disability Benefit supplement.

This child disability benelit supplement only came into effect in 2003, meaning we can go back and get retroactive funds from then.