29 March 2005 Ministerial Correspondence 2005-0116551M4 - Disability Tax Credit

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.

Principal Issues: The Taxpayer requested clarification of the criteria regarding the disability tax credit. The Taxpayer is considered a disabled person for CPP disability benefits and EI medical benefits.

Position: Comments provided to the Taxpayer and requested that Form T2201 be filed.

March 29, 2005

XXXXXXXXXX

Dear XXXXXXXXXX:

The Honourable John McCallum, Minister of National Revenue, has asked me to reply to your email of February 13, 2005, regarding the term "disabled" and the disability tax credit.

The Income Tax Act allows an individual to claim a disability tax credit if he or she has a severe and prolonged mental or physical impairment such that his or her ability to perform a basic activity of daily living is markedly restricted. An impairment, as defined in the Act, is considered to be prolonged if it has lasted, or is expected to last (from the time the disability begins), for a continuous period of at least 12 months.

Moreover, the Act provides that an individual's ability to perform a basic activity of daily living is considered to be markedly restricted only if he or she is blind or is unable to perform a basic activity of daily living, all or substantially all (at least 90 per cent) of the time, even with therapy, the use of appropriate medical devices or medication. An individual's ability to perform a basic activity of daily living may also be considered to be markedly restricted when performing the basic activity of daily living requires an inordinate amount of time (significantly longer than for an average person). The basic activities of daily living are defined as:

? perceiving, thinking and remembering,
? feeding or dressing oneself,
? speaking so as to be understood, in a quiet setting, by another person familiar with the individual,
? hearing so as to understand, in a quiet setting, another person familiar with the individual,
? bowel or bladder functions, and
? walking.

Generally, disabling ailments and conditions must be considered on a case-by-case basis, since it is the effect of the impairment on the ability to perform the basic activities of daily living that determines whether an individual is eligible for the disability tax credit.

If an individual receives Canada Pension Plan (CPP) benefits, workers' compensation benefits, or other types of disability or insurance benefits, it does not necessarily mean that he or she is eligible for the disability tax credit. These programs have other purposes and different criteria. For example, an individual may apply for CPP disability benefits when he or she is diagnosed with a serious long-term or terminal medical condition that prevents him or her from working regularly. By contrast, activities such as working, housekeeping or a social or recreational activity are not considered to be basic activities of daily living for purposes of determining eligibility for the disability tax credit.

It is my understanding that you have not filed a Form T2201, Disability Tax Credit Certificate. If you feel that you meet the above criteria, you must have a qualified person (usually a medical doctor) certify on the form that your impairment is prolonged and that the effects of the impairment are such that your ability to perform a basic activity of daily living is markedly restricted. I have attached a copy of the form for your convenience. You can also obtain a copy of it from our Web Site at www.cra.gc.ca or from the Halifax Tax Services Office. The form must be filed at one of the tax centres listed on it, where it will be reviewed to determine your eligibility for the credit.

Please note that the role of the Canada Revenue Agency (CRA) is to administer and enforce the Act as passed by Parliament. The primary responsibility for tax policy and legislative changes to the Act rests with the Department of Finance. Please be assured that the Department of Finance reviews, on an on-going basis, tax assistance provided to persons with disabilities to ensure the assistance remains effective. In this regard, the Federal Budget of February 23, 2005, proposed several legislative changes, applicable to 2005 and subsequent taxation years, which will benefit persons with disabilities and those who care for them. These changes include:

? clarifying how impairments are conceptualized,
? aligning the legislative criteria for impairments in mental functions with the wording used in the administration of the provisions that relate to them, and
? extending eligibility for the disability tax credit to individuals with multiple restrictions when the cumulative effect of those restrictions is equivalent to having a single marked restriction in one basic activity of daily living.

These changes follow the release of the report by the Technical Advisory Committee on Tax Measures for Persons with Disabilities in December 2004. The Budget also confirmed the CRA's commitment to further improve the administration of disability-related tax measures through enhanced training programs and improved methods, work tools, and procedures.

I appreciate the opportunity to address your concerns.

							Yours sincerely,

							Ed Gauthier
Deputy Assistant Commissioner
Tax and Regulatory Affairs
Policy and Planning Branch

Attachment

c.c.: Minister's Office
Political Assistant

Bob Naufal
(613) 952-1506
March 2, 2005
2005-011655