One of the most under-claimed tax credits in Canada might be the Disability Tax Credit. We've found there is a very large variety of fees charged for this claim, and some who consider themselves Disability Tax Specialists take a fairly high percentage of your refund to help with your disability tax claims. Any reputable, experienced tax professional can help... in most cases,you just need someone who's great at doing taxes, not a “disability specialist”.

Be careful when it comes to who you choose when it comes to finding people to help with disability tax claims, and be especially wary of the internet advertisements that suggest $35,000.00 and $40,000.00 disability tax refunds are possible. It's true – some of our clients have indeed received this much. But to get this kind of refund assumes you have a disabled child and you can go back retroactively and file adjustments to your tax returns for the previous 10 years. But this isn't the norm, and they don't tell you that in their flashy advertising.

Here's a little bit of information to get you started:

The disability tax credit can be claimed by anyone who is “markedly” restricted for 12 months or more because of a mental or physical medical issue. It could be that you have issues with mobility, speaking, walking, dressing, elimination, hearing, or vision. Another way to qualify for this credit is if you have to spend more than 14 hours per week on life-sustaining therapy like dialysis or chemotherapy. Or if you have significant restrictions in more than one of these areas that might not quite qualify on their own, cumulatively they might add up to qualifying for the disability tax credit.

Don't get hung up on the name of the credit. Sometimes people let the name of the credit deter them from claiming it – but please understand there is absolutely no stigma attached to making this tax claim and even if you don't really consider yourself “disabled” you may qualify for the credit, depending on your condition. A tax industry professional at an industry seminar once said, “I think it should be called the 'Restricted Living' tax credit.” He thought fewer people would shy away from this credit if it were named differently.

It's not easy to qualify for this tax credit, and it's the only tax credit in Canada that you must pre-qualify for prior to claiming it. Normally, we make claims on our tax returns and support them later if reviewed or audited. But with this credit you have to ask permission up-front, and get CRA's approval in order to claim the Disability Amount.

Fortunately, there is an easy way to find out if you qualify.

The application form for the Disability Tax Credit is called form T2201, and you can find it at the following link: http://www.cra-arc.gc.ca/E/pbg/tf/t2201/

By reviewing this form, you can see the exact criteria required to meet the qualifications. Even if you're not 100% sure if you'll qualify, we recommend printing the T2201 form and taking it to your doctor to ask what he/she thinks. If you don't have access to a printer, drop in to your local Liberty Tax Service office and we'll get you a copy of the application form. There might be a small fee for your doctor to complete the form, but it's worth it.

There is one page of the form that you must complete yourself – but mostly it's done by your doctor. Then after your doctor has signed it and you've filled out your part, your T2201 form gets mailed off to CRA for approval.

After reviewing your case, and speaking with your doctor, CRA will send you a letter either approving your claim, or explaining why they feel you don't qualify. If approved, CRA will send you a letter explaining which years you qualify to claim this tax credit. And this is the letter you bring in to your local tax office so adjustments can be made to your tax return(s).

It's important to know that you can go back up to 10 years if the Canada Revenue Agency accepts your disability tax claim retroactively. If you think you should have been approved for this credit a long time ago, please make sure your doctor fills out the year your condition began, so you can then file adjustments to your tax returns to get extra money back for past years.

Any good tax preparer will also look for other credits that might be applicable after you've qualified for the disability amount. So we feel it's best to have your adjustments done by a tax professional, rather than trying to do it yourself. It's actually pretty easy to ask CRA to adjust to include the Disability Amount on your tax return each year – but if you don't specifically ask for other items to be adjusted you might be costing yourself money. Any accountant or certified tax preparer with a little bit of experience can help.

For example, a disabled child involved in sports is entitled to claim an additional $500.00 credit on the Children's Fitness amount. But if you don't ask CRA to include this extra claim when you file your disability tax adjustment, then you aren't likely going to get it. And if you can't use the entire “disability tax credit” yourself, any unused portion of the credit can be transferred to someone who is supporting you in one of the three basic human needs: food, shelter, and clothing. Usually this is a family member with whom you're living – but not necessarily. There's also something called the “Family Caregiver Amount” which may be applicable for some families. So while it's easy to file an adjustment to ask CRA to claim the Disability Tax Credit – most people don't know enough about all the other tax claims that might also be impacted.

A qualified tax professional will understand how much you should be getting back each year, and if you're not able to use the maximum allowable credit yourself, a tax-pro will know the rules about when amounts can be transferred and to whom, and what other tax credits might increase now that you've recently qualified for the Disability Tax Credit. If you have a child with a disability, your monthly Canada Child Benefit will also increase. Usually CRA will do this automatically, but it's sometimes necessary to send a written request to the Canada Child Benefit department to ensure you're getting the extra Child Benefits you're entitled to after your child has been accepted for the Disability Tax Credit.

So while we don't recommend trying to do the Disability Tax Credit adjustments yourself, we do recommend being very careful who you choose to help with these credits. Ask how much it's going to cost up-front and compare fees. And don't forget to get a quote from your friendly Liberty Tax Service office!

One last bit of information: when it comes to the Disability Tax Credit, CRA will accept people for a certain number of years into the future, so you don't need to get the T2201 form completed by your doctor every single year.


– Wayne Blackmere, Liberty Tax Franchisee