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Line 31600 Disability Tax Credit (DTC)

Note: Before tax year 2019, line 31600 was line 316.

Income Tax Act s. 118.3

Eligibility Criteria Expanded for DTC

For more information on the expanded criteria see the September 2022 Life in the Tax Lane from Video Tax News, as well as the pdf of the CRA announcement about the major changes to eligibility.

Major changes include: people with Type 1 diabetes are now automatically deemed to meet the requirements for life-sustaining therapy, effective January 1, 2021.

New Application Form, Online Application for Medical Practitioners

To qualify for this non-refundable tax credit, a form T2201 Disability Tax Credit Certificate must be completed, certified and submitted. The form has been redone and is now 16 pages long, but there is now a digital application process so that medical practitioners can do the application online. See Disability Tax Credit - digital application for medical practitioners on the Canada Revenue Agency (CRA) website. It appears that the digital application is much easier than completing the 16 page form, and it's recommended that all practitioners use the online form. Once the online application is completed, it is printed and given to the patient to complete their identification/claim section and file with CRA. We've taken some screenshots of parts of the online application so you can check it out without having to go through it - it has bookmarks to make it easier to find the category you want. The responses to certain questions determine which parts of the application will have to be completed.

This form has sections on various types of physical or mental impairments. Each section asks for the year in which the impairment began. However, in order to have the disability tax credit applied retroactively, a form T1Adj must be filed for each previous tax year in which the person qualifies. See our article on changing your tax return for how to do this, and the time periods for which it can be done.

The T2201 can be submitted to CRA separately from a tax return, and CRA recommends filing these in advance to avoid assessment delays.

Who Can Certify Eligibility?

A medical doctor and, effective March 22, 2017 as per the 2017 Federal Budget, a nurse practitioner can certify eligibility for the disability tax credit for all types of impairments. Other medical practitioners that can certify certain impairments in their respective fields are:

	audiologists
	occupational therapists
	optometrists
	physiotherapists
	psychologists
	speech-language pathologists

How Much Is The Disability Tax Credit?

The amount of this federal tax credit is $8,870 for 2022 ($8,662 for 2021), with a supplement of $5,174 for 2022 ($5,053 for 2021) for taxpayers under 18 years of age. The supplement is reduced when total child care and attendant care expenses claimed for the taxpayer under 18 exceed a threshold of $3,030 for 2022 ($2,959 for 2021), and eliminated completely when those expenses exceed $8,204 for 2022 ($8,012 for 2021). See the tables of non-refundable tax credits for the provincial amounts and tax rates of this tax credit.

How Is The Disability Tax Credit Claimed?

The disability amount tax credit is claimed by completing the federal worksheet included in the personal income tax return, and entering the resulting amount on line 31600 of the tax return (line 316 of Schedule 1 prior to 2019).

If part or all of the disability amount tax credit cannot be used by the taxpayer, it can be transferred to a spouse, common-law partner, or other supporting taxpayer (e.g. parent, child). See the Canada Revenue Agency (CRA) topic Line 31800 (line 318 prior to 2019) - Disability amount transferred from a dependent. A supporting taxpayer may also be able to claim the Canada caregiver amount (caregiver amount tax credit prior to 2017).

The transfer of the disability tax credit to a spouse or common-law partner is done on Schedule 2 of the federal tax return. The transfer to another supporting taxpayer is done on the federal worksheet.

If a qualified person (usually a medical doctor, but see above) certifies that you have a severe and prolonged mental or physical impairment which markedly restricts the ability to perform a basic activity of daily living, then a disability amount may be claimed. For 2005 and later years, eligibility for the disability amount tax credit includes persons with a severe and prolonged mental or physical impairment which significantly restricts the ability to perform more than one basic activity of daily living, including

	vision
	speaking
	hearing
	walking
	elimination (bowel or bladder functions)
	feeding
	dressing, or
	performing the mental functions necessary for everyday life - the list of necessary mental functions was expanded in June 2022
	a condition that requires life-sustaining therapy

Budget 2021 proposed an expansion of the definition of mental functions necessary for everyday life.

If the cumulative effect of the restrictions in performing activities is equivalent to having a single marked restriction in one activity, then the person will be eligible for the disability tax credit.

The term "markedly restricted" as defined by the Income Tax Act s. 118.4(1)(b):

"an individual's ability to perform a basic activity of daily living is markedly restricted only where all or substantially all of the time, even with therapy and the use of appropriate devices and medication, the individual is blind or is unable (or requires an inordinate amount of time) to perform a basic activity of daily living"

Disability Supplement for Taxpayers Under 18

If you are under 18, an additional amount may be claimed. This may be reduced by any child care or attendant care expenses that were claimed by you or a supporting person. See the tables of non-refundable tax credits for tax credit amounts and income limitations, federally, and for each province and territory.

Disability Supports Deduction

If you have incurred expenses in order to earn income, attend an educational institution, or do research for which a grant was received, you may be able to claim a disability supports deduction.

Life-Sustaining Therapy

Effective January 1, 2021, people with Type 1 diabetes are now deemed to meet the requirements for life-sustaining therapy.

Individuals receiving extensive therapy are eligible for the disability tax credit (DTC) if their therapy meets 3 conditions:

it is essential to sustain a vital function of the individual,
it is required to be administered at least 2 times each week (June 2022 changed from 3x each week) for a total duration averaging not less than 14 hours a week, and
it cannot reasonably be expected to be of significant benefit to persons who are not so impaired.

See the Budget 2021 proposals re changes in relation to life-sustaining therapy to better recognize certain aspects of therapy for the purposes of calculating time spent on therapy.

The following changes were made for 2005 and later years, to better define activities that are considered therapy, and will be considered as time spent receiving therapy:

	Where the therapy has been determined to require a regular dosage of medication that needs to be adjusted on a daily basis, the activities directly involved in determining the appropriate dosage will be considered part of the therapy.
	Therapy does not include activities such as following a dietary restriction or regime, exercise, travel time, medical appointments, shopping for medication or recuperation after therapy.
	The time it takes to administer the therapy must be time dedicated to the therapy—that is, the individual has to take time away from normal, everyday activities in order to receive the therapy. Further, in the case of a child who is unable to perform the activities related to the therapy as a result of his or her age, the time spent by the child’s primary caregivers (i.e. parents) performing and supervising these activities for the child can be considered time dedicated to the therapy.

As of January 2021, those with Type I diabetes are automatically eligible for the DTC.

COVID-19 Relief Payments

Canadians who are certificate holders of the Disability Tax Credit (DTC) as of June 1, 2020 received a one-time tax-free payment of up to $600. The payment was reduced by the one-time tax-free payments for seniors eligible for OAS and GIS. See Canada's COVID-19 Economic Response Plan, and scroll down to People with disabilities. In July 2020, eligibility for the above one-time payment was expanded to include Canadians with disabilities who are recipients of any of the following programs or benefits:

	a disability tax credit certificate provided by CRA;
	Canada Pension Plan disability benefit or Quebec Pension Plan disability benefit; and
	disability supports provided by Veterans Affairs Canada

Canadians with disabilities who are eligible for the disability tax credit but had not yet applied, were given until September 25, 2020 to apply for the disability tax credit. There may have been many people who had not yet applied for this credit, because their income is low enough that the non-refundable credit would not provide them any benefit.

See all COVID-19 Financial Relief information.

Disability Tax Credit Promoters Restrictions Act

Don't be misled by some companies which seem to indicate almost anyone is eligible for the disability tax credit. If you do decide to use a paid service to help you get the credit, make sure you ask them what happens if you are subsequently audited and have to repay the refund you received. Make sure you get the answer in writing.

On May 29, 2014, Bill C-462 was passed and the Disability Tax Credit Promoters Restrictions Act was created. This Act restricts the fees charged by promoters of the disability tax credit. Promoters that accept or charge a fee exceeding the maximum fee will be charged penalties. The Act and Regulations were scheduled to come into force on November 15, 2021, but this will not happen.

Injunction Granted Stopping Implementation of Fee Cap

An injunction was granted by the BC Supreme Court on November 4, 2021, in True North Disability Services Ltd. v. Canada (National Revenue), 2021 BCSC 2142, stopping implementation of the fee cap until a determination can be made as to its constitutionality.

It's very enlightening to read the decision and learn how harmful this cap could be to those trying to get the disability tax credit, as well as to companies who are trying to provide a valuable service to these people.

Disability Tax Credit Promoters Restrictions Regulations

Proposed Disability Tax Credit Promoters Restrictions Regulations were published in Part 1 of the Canada Gazette on June 1, 2019, setting a maximum fee of $100 for submitting an application for the disability tax credit.

Revised regulations were published in the April 14, 2021 Canada Gazette, also starting at page 14 in the pdf version of the Canada Gazette Part II, Vol. 155, No. 8.

The $100 fee will be adjusted for inflation every 5 years, with the first "inflationary adjusted year" to be 2025. As noted above, an injunction was granted preventing the implementation of this fee cap.

What is a "promoter"? The Act defines a promoter as "a person who, directly or indirectly, accepts or charges a fee in respect of a disability tax credit request".

As noted in the Gazette, "This definition includes tax preparers, tax consultants, financial services providers, accountants and lawyers, or any other person who charges a fee to assist a taxpayer to submit form T2201, DTC Certificate (DTC Certificate), or claim or transfer the disability-related tax deductions on their T1, Individual Income Tax and Benefits Return. Medical practitioners whose only role is to certify the extent of a patient's medical condition for the purposes of a DTC request are not considered “promoters” under the Act."

However, the wording of the Act does not exclude medical practitioners from the definition of "promoter".

From John F. Oakey, CPA, CA, TEP, CC of Baker Tilly Canada: Open letter to CRA regarding Disability Tax Credit Promoters Restrictions Act

From CRA:

Disability Tax Credit Public Consultations - Synopsis of public consultation input

Questions and answers to the proposed Disability Tax Credit Promoters Restrictions Regulations.

CBC news article: Tax Season 2015: The disability tax credit and the push for fee limits for more information.