CC: Hi, I’m CC, the host of Taxology, the official podcast of the Canada Revenue Agency. On this episode, we’re going in-depth about the disability tax credit, also known as the DTC.

The disability tax credit helps people with disabilities but also helps the family members who support them to reduce the amount that they might have to pay at tax time.

Those who may be eligible for the credit might not know all the steps to apply for it. Or they may be slightly intimidated or have some misconceptions about the application steps.

But we’re here to help! Today, we’re meeting with Marie, a CRA expert to explain the credit, clear up any misconceptions and go over the application process.

Welcome to the show Marie!

Welcome, Marie. Thanks for coming today.

Marie: Thank you for having me.

CC: What is the disability tax credit?

Marie: So the disability tax credit is a nonrefundable tax credit.

So what that means is that you need to pay taxes, so have tax owing, for it to really give you an advantage there.

So what the credit does: it lowers the amount of taxes that you owe. Um, so to be able to have access to this credit, um, you need to apply for it.

So everybody up front needs to apply for it. Um, there is a form that is available to be completed. That ones called the Form T2201 – Disability tax credit certificate.

Um, sounds nice and fancy! It's a little bit, a little bit of a daunting form when you look at it. Um, there is 16 pages related to this form. But it looks a little bit scarier than it is to get it completed.

CC: Okay.

Marie: Really like what it is, is this form, it really allows a medical practitioner to enter information on what your limitations are regarding your everyday activity. And then from there we take it, we do a review, and then we'll let you know if you have access to this tax credit. So you can then apply it on your taxes.

One thing that's nice with the disability tax credit is that it's a credit that you can transfer.

So let's say if you don't have any tax owing, you don't really benefit from the credit, but you have somebody in your life like a family member that provides you support.

They could transfer that credit onto their tax returns and then they can get the benefit from it. So they can lower their tax owing from that credit.

CC: What kind of disabilities are eligible under this credit?

Marie: So for the disability tax credit, we really look at the effect of an impairment. So it's not diagnosis based.

A lot of people think that we look at the diagnosis, but really it's how a…somebody's disability effects them in their daily life.

So if you take a look at the application form, you'll see that there are different categories in there. And those categories are in fact those basic activities that you do in your daily life.

So we look into limitations when it comes to walking, feeding yourself, dressing yourself. There's another category that talks about vision, and another category that talks about life sustaining therapy.

So there's no one diagnosis, not one disability, that we are necessarily pinpointing. It's really what the effects of that impairment is, and that's what we really look at to see if you're eligible for the disability tax credit.

CC: How can someone apply for the disability tax credit?

Marie: So for the disability tax credit and the application is actually fairly easy. Like I said, the form looks a little daunting, but applying is actually not that hard. So there's really only like 3 steps.

So you have your first step, that is filling out what we call the part A.

So first part of the form is part A and that is all your kind of basic information that you would put in normally in a form.

So you put your name, your address, your social insurance number. And then you have another section, um, that you can put in information about that family member that provides you support.

So how I was talking earlier that you could transfer that credit. You can enter the information of that person in that section.

And then the third section we want to make it easier for taxpayers to get the benefit of the disability tax credit.

So we have this section where they can just check off a box that says “yes, I would like you to do the reassessments of my tax returns to apply the credit”.

One thing that's nice about the disability tax credit is that it's a retroactive credit. You can go back 10 years…

CC: Oh wow.

Marie: …and apply that on your last 10 tax years.

And so in that section, you can indicate to the Canada Revenue Agency that you want those reassessments to be done on your past tax returns. Of course, if you're eligible for it.

But that is there for you to indicate if you want it or not.

And then of course, the last section on that part A is pretty much an authorization. You pretty much sign your life away, you put in the signature there that authorizes all these actions, and that's really the biggest part that the taxpayer has to fill out.

So the next section that needs to be filled out is the Part B. That section is filled out by the medical practitioner. They're the ones that are providing us this medical information that we need to see if you meet the criteria for the disability tax credit.

So they are the ones that's going to write the limitations that are related to those categories that are on the form and those activities of daily living that affect that, that limitation affects you, so they're going to write in that information there.

They pretty much end up filling out that part by adding in their information and your contact information, and then they certify it by signing it, and there we go, Part B’s completed.

Now, some people like having discussions with their medical practitioners to get that Part B filled out, which is a good idea. You know, making sure that you know, all the information that you think should be added on the form that is entered there. So that's always a good thing, a good idea to have that conversation with your medical practitioner, but Part B is only filled out by the medical practitioner.

Now we do know that access to medical practitioners can be tricky for some individuals, and that's why the disability tax credit form can be filled out by different types of medical practitioners.

So we're not just talking medical doctors. It, it can be a nurse practitioner that also can fill out the whole form, and then we also have a short list of medical practitioners that can fill out certain parts of that Part B.

So quick example, an optometrist can fill out the section for vision because they have a speciality in that.

CC: OK. Yeah.

Marie: Yeah. So that kind of helps that little bit of that burden on trying to find a medical practitioner that knows you to fill out that form.

So essentially the…once the Part B is filled out, that form is being sent to the Canada Revenue Agency and the Canada Revenue Agency does the rest!

So they will take a look at the information on the form. They will make a determination if you're eligible or not, and they will send you a letter on the outcome. And then on that letter you'll have, you know, the next steps that you should take.

So essentially that, this is the application for the disability tax credit.

CC: Do I have to apply by paper or can I do it online?

Marie: You can actually do both now.

CC: Nice.

Marie: We now have, yeah. So you know you can do the good old, you know, pen to paper, mail it into the Canada Revenue Agency. That option is still there, but now we have a fully digital application process that you can use. So that means that everything is done online.

That's been up and running for almost two years now, and the way it works, is that you go on to your My account portal, and you essentially fill out that part A. So you know your information and all that fun stuff. You enter that through your My Account portal.

Once that's done, you know you click that OK button and then you get information that you're going to pass on to your medical practitioner.

And part of that information is going to be like this, this access code, this reference code that you're going to give to your medical practitioner and then they will use that information, they will go online and they will fill out their Part B.

Once they're done with their Part B, they hit submit and that's automatically being sent to the Canada Revenue Agency.

CC: Perfect.

Marie: Yeah. And what's really nice with this option is that, the questions are dynamic! So that it'll be a little bit more of a tailored experience when you answer the questions, because the next question is going to be based on your previous answer that you gave.

So it's a little bit more tailored. So it makes filling out the form easier, especially for those medical practitioners.

CC: What happens if I apply and the CRA decides that I'm not eligible, but I think I'm eligible. Then what?

Marie: So you do have options. So like I was mentioning earlier the Canada Revenue Agency will send you a letter with the outcome of that determination, and you will be given a reason why your application was rejected.

It will tell you either that certain criteria were not met and all that. Then it will give you the options that you do have that are available to you. One of the best options is asking for a second review.

So essentially that's quite easy. All you have to do is, you know, send in a letter to the Canada Revenue Agency and say, “Hey, I would like a second review done on my file, and I have additional information that I think may be useful for us”.

So when you ask for that second review, you need to kind of provide us with more information, right?

Because obviously when we did that first review with the information we had, it led to us rejecting the application. So if you have anything that you think that would be helpful for us, so medical reports, a letter from your medical practitioner, that's something you can submit and then ask for that second review.

Now the other option is, and this is an option that is available for you know, all things Canada Revenue Agency, is you can ask for an appeal. You have a right to appeal that determination, so that decision. So you can, you know send in a request to have an appeal.

CC: What are some common misconceptions about the disability tax credit?

Marie: One of the most popular misconceptions is that it's difficult to apply for disability tax credit. Like I explained earlier, the steps are actually quite simple.

So you know, like I said, don't get too scared by that lengthy looking form. It's actually not that difficult to apply for your disability tax credit. The CRA has that responsibility to do a review and make that determination.

Another misconception that people have, or maybe a hurdle. I should call it more of a hurdle, is that some medical practitioners charge a fee to get these forms filled out.

Now they are allowed to do so. You know they need to be, you know it's, it's their time that they're taking out of their busy day to fill out these forms. So it is normal that a medical practitioner asks for a fee to fill out this form.

There is an option that is available for taxpayers where they can put that fee that they paid onto their medical expenses. So that's a tax credit that you can claim on your tax return. So that could maybe provide a little bit of relief there by adding that fee as a medical expense.

CC: What are some examples of non-compliance that you've seen that might affect the eligibility of someone claiming the disability tax credit?

Marie: So things that we see compliance-wise for the disability tax credit, is what we call misrepresentation on the application form.

So in other words, there's information that was put on the form that are necessarily either exaggerated or just simply not true.

Now for the most part, taxpayers are honest people and we don't see a lot of non-compliance. But just like you know, any environment, any program, there is some bad actors out there and there are some people who try to take advantage of the program.

There is a money incentive for a positive disability tax credit determination. So certain people may take advantage of it, especially since we’re dealing with a vulnerable population.

So for example, we've gotten feedback from a medical practitioner that there may have been some undue pressure to put certain information on the form, or to change or exaggerate the limitations.

So you know, if you or somebody does any sort of misrepresentation on your behalf, you're going to be responsible for it. And that's the one thing that we're seeing is that, there are some people that are there selling something that is almost too good to be true. And then they end up, you know, profiting from it and the taxpayer’s being left on the hook.

But to go back to your questions about the compliance concerns that we see in the disability tax credit, what is worrisome is when we get false information, we make a determination with that information. So this means that people could be receiving a credit that they’re technically not entitled to.

So that's probably one of the main compliance issues that we're seeing in our disability tax credit program.

CC: Yeah, as you're speaking. Um, I'm reminded sometimes when I'm on social media, sometimes people reach out and they say, hey, like I can help you fill out your DTC form. Is that legit? Is it a scam?

Marie: Yeah. Like it's hard to tell sometimes, right? And it's not every person, and every company out there that are bad actors that they have, you know, malicious intentions, right?

It's really asking yourself, you know the questions of “Is this too good to be true?”

And then you know, being involved and asking questions, right? You know, you have the Canada Revenue Agency that is available to you to answer your questions. You can phone in, you have websites that you can consult. There are guides out there. There are tax clinics that are being put on.

So you can always, you know, ask questions. You know, you hear it from the horse’s mouth, right?

So just like any sort of, you know, bad actors out there. If something seems almost too good to be true. You should maybe ask yourselves a little bit of questions there and kind of look into it.

You know the main message here is really to be aware on what is going on, on your behalf, on your account, what are the actions? You can always ask, you know, a copy of what is being submitted and just informing yourself of what exactly are you doing on my behalf.

And that way you are aware and what's going on. So if you know something that is not quite good happens, then at least you'll be aware of it, and you'll be able to stop it before anything happens.

CC: If I have questions about the disability tax credit, where can I find more information?

Marie: Online is always a good resource. The Canada Revenue Agency has web pages about the disability tax credit, so you can go ahead and consult all the information that is there.

There's also webinars that are available to view on those web pages. And there's guides that are available, and like I mentioned earlier, there are tax clinics too that you can always ask and go, you know, go there and ask basic questions.

So there are quite a bit of resources out there where you can find information about the disability tax credit.

CC: And fun fact, you can find our webinars saved on our YouTube channel @CanRevAgency!

Marie: Wonderful!

CC: Well, thanks so much for coming today, Marie. I loved learning about the disability tax credit and everything that's involved in it.

Marie: That's great. Thank you for having me.

CC: Thanks to our guest Marie for being on the show. We hope you’ve learned some great information about the disability tax credit and can use it, or share it with someone who can.

If you’d like to learn more, go to canada.ca/disability-tax-credit, and follow us on Facebook, X, or Instagram @CanRevAgency to stay informed on all things taxes.

I’m your host CC, and thanks for listening! Until next time, stay safe and do your taxes.