The disability tax credit is a non-refundable tax credit that helps people with a disability or supporting family members reduce the amount of income tax they may have to pay. For our clients that qualify for the disability tax credit, they may also be able to access other disability benefits and programs, such as the Child Disability Benefit and the Registered Disability Savings Plan (RDSP).
We explain to our clients that they may be eligible for the disability tax credit if they have a severe and prolonged impairment in one or more categories, including: vision, hearing, eliminating (bowel or bladder functions), dressing, speaking, walking, feeding, and mental functions necessary for everyday life.
Digital form for disability tax credit applications
When we meet with our clients, they often tell us about the health issues that they are facing. When we talk about this further, we ask them whether they are aware of the disability tax credit. Historically, we have always printed off form T2201, explained the form, and encouraged them to bring the form to their doctor the next time they have an appointment to discuss it.
When we have given the form to clients, we have encouraged them to get the doctor to date the form for when the disability first began. It may take a bit of time to get processed, but in most cases, the outcome has worked out well for clients. When the doctor puts the date when the disability began, Canada Revenue Agency (CRA) will reassess all the impacted years, and our clients will receive a refund for each year that is reassessed.
Historically, the disability tax credit form was all paper based. Recently, CRA has launched a digital process for applying for the disability tax credit (DTC). The digital application is intended to simplify and speed up the application process. This new digital form can help save time by ensuring it’s complete with all of the required information. The CRA said it aims to process DTC applications and mail a notice of determination within eight weeks of receiving them.
One of the areas that have caused delays in the processing of the DTC applications is the completion of the form itself. Our clients must book an appointment with the physician to have it completed. Physicians are extremely busy, and dedicating the time to thoroughly complete the DTC application is the first hurdle for our clients to overcome. The second hurdle is to make sure the application is completed accurately, with no errors, to ensure clients have the most successful outcome. In our opinion, we feel the digital DTC application is a huge improvement by CRA. This process should help our clients with a disability have better access to the disability tax credit (DTC).
CRA My Account
When we begin working with new clients, we request that they obtain access to the CRA’s My Account. We then request that they appoint us as a representative. We wrote an article about the many benefits of this service, called Sharing Tax Information with your Portfolio Manager. One benefit that was not on the list is that with the CRA’s new digital form, applicants can complete Part A online through the CRA’s My Account platform. Our clients’ applicants’ portion of the form is pre-populated with information that CRA has on file. This eliminates the need for them to complete a hard copy of the DTC application form to provide to their medical practitioner.
Once our client completes Part A of the digital form, they receive a reference number to give to their medical practitioner who will use it to complete Part B. Using the applicant’s reference number, medical practitioners can complete Part B through a digital application, with the disability tax credit app guiding the practitioner through the process of filling out the form. Once completed, the form is automatically submitted to the CRA. To be considered valid, Part B of the digital application must be certified and submitted by the medical practitioner.
This is a great option for clients who have the ability to use technology or have someone they trust assist them with completing Part A through My Account.
Application by phone
For disability tax credit applicants who don’t have digital access, or prefer not to submit an application online, an application process by phone is also available. Applicants will receive either the support of a telephone agent or an automated voice service.
Application by mail
The traditional hard copy application form of the disability tax credit form will also continue to be available. This process has worked fine for many clients since the process began. One of the challenges we have encountered is individuals not knowing about the tax credit. In other cases, the disability itself has resulted in their inability to process the application. We have printed many of these forms and told our clients to talk to their family and their doctor about it. When we have done that, most times, the client has come back and thanked us for telling them about this. In many cases, the disability tax credit is provided for an indefinite period. In other situations, the tax credit is for a designated time up to a specific date, if the disability is for a shorter time period.
All too often, we see individuals who are eligible for this tax credit, but they are not in a position to advocate for themselves as a result of their condition. We encourage the loved ones or friends of these individuals to have a discussion and help guide them in the direction of applying for the disability tax credit – whether done by paper or the new digital submission method.
Kevin Greenard CPA CA FMA CFP CIM is a Senior Wealth Advisor and Portfolio Manager, Wealth Management with The Greenard Group at Scotia Wealth Management in Victoria. His column appears every week at timescolonist.com. Call 250.389.2138, email [email protected], or visit greenardgroup.com.
