Transcript - Tax Measures for Persons with Disabilities, Segment: Disability tax credit and the disability amount

Host: Welcome to the segment called Disability tax credit and the disability amount, part of the CRA's Tax Measures for Persons with Disabilities video. The information in this segment is mainly for persons with a disability and the people who support them.

This segment mentions webpages where you can get more information. You can find links to these webpages on the Related links page for this video.

With me is Peter Cheng. Welcome, Peter.

Subject matter expert: Thank you, Kathleen.

Host: The CRA administers a number of tax deductions and credits for persons with disabilities. Peter, can you explain what the disability tax credit is?

Subject matter expert: The disability tax credit helps people who have an impairment in physical or mental functions by reducing the amount of taxes they may owe.

Host: Who is eligible for the disability tax credit?

Subject matter expert: To be eligible, a person must have a severe and prolonged impairment in physical or mental functions.

When a person is eligible for the disability tax credit, they might also be eligible for other related programs such as the child disability benefit, the working income tax benefit disability supplement, or the registered disability savings plan.

Other segments of this video touch on the related programs.

In this segment, we will focus on the disability tax credit.

Host: You mentioned two terms: severe and prolonged. First, what does the CRA mean by severe?

Subject matter expert: An impairment is severe when it causes a marked restriction in a basic activity of daily living. This is when a person cannot perform one or more of the basic activities of daily living, or when it takes them three times the normal time to complete the activity, even with the help of therapy, devices, and medication. The person must have this restriction at least 90% of the time.

Host: And what does the CRA mean by a prolonged impairment?

Subject matter expert: An impairment is prolonged if it has lasted, or is expected to last, for at least 12 months in a row.

Host: For the purposes of the disability tax credit, what are the basic activities of daily living that you mentioned?

Subject matter expert: The basic activities of daily living are: speaking, hearing, walking, eliminating—which means bowel or bladder functions—feeding, dressing, and performing the mental functions necessary for everyday life.

Host: That's a pretty long list. Are there any other categories?

Subject matter expert: Yes, other categories include vision, life-sustaining therapy, and the cumulative effects of significant restrictions.

Host: Wow! Cumulative effects of significant restrictions is quite a mouthful!

Subject matter expert: Yes it is!

Host: What does it mean?

Subject matter expert: It means that, if your ability to perform TWO or more basic activities of daily living is restricted, then the CRA can consider you to be markedly restricted. The CRA also considers you to be markedly restricted if you are significantly restricted in vision and ONE or more of the basic activities of daily living.

So, essentially, you could be eligible if you have one severe and prolonged impairment or a combination of restrictions that add up to what the CRA calls a marked restriction.

In either case, these significant restrictions have to exist together at least 90% of the time.

Host: Can you give me an example of where the cumulative effects are equal to being markedly restricted?

Subject matter expert: Okay, let's have a look at Cathy's situation. Let's say she can walk for 100 metres, but then she has to rest. Let's also say that Cathy can perform the mental functions necessary for everyday life, but she can concentrate on one topic for only a short time. These two significant restrictions, taken together, are equal to being markedly restricted in the same way Cathy would be if she could not perform one of the basic activities of daily living.

Host: Is eligibility for the disability tax credit based on the impairment of the individual or on the diagnosis?

Subject matter expert: It's not on the diagnosis, but rather the effects that the impairment has on a person.

Host: If I'm receiving disability payments from the Canada Pension Plan, the Quebec Pension Plan, or a provincial workers' compensation program, am I automatically eligible for the disability tax credit?

Subject matter expert: Not necessarily. These programs have other purposes and different rules, such as a person's inability to work. You must meet the rules set out in Form T2201, Disability Tax Credit Certificate, to be eligible for the disability tax credit.

Host: Where do I get this form?

Subject matter expert: To get a copy of the form, which is also available in other formats such as e-text, braille, and large print, go to the CRA webpage about tax credits and deductions for persons with disabilities.

Host: Once I have the form, how do I apply for the disability tax credit?

Subject matter expert: Well, there are two parts to the form that have to be filled out; Part A and Part B. You will have to fill out Part A with your basic personal information.

Host: Ok, what do I do with Part B of the form?

Subject matter expert: Ask your medical practitioner to fill out and certify Part B. Then, send the form to the CRA.

The CRA does not charge any fees to process the form. However, a qualified practitioner may charge a fee to fill out Part B of the form.

Host: Can I ask any medical practitioner to fill out the form?

Subject matter expert: Only certain medical practitioners can fill out and certify the form. For the purpose of the disability tax credit, a medical practitioner is a medical doctor, optometrist, occupational therapist, audiologist, physiotherapist, psychologist, or speech-language pathologist.

Make sure you are going to the right medical practitioner to have Part B of the form filled out. For more information, go to the CRA webpage on tax credits and deductions for persons with disabilities.

Host: Is there anything that I should do before I send the form to the CRA?

Subject matter expert: After the form has been filled out, keep a copy for yourself and then send the certified and signed form to the Disability Tax Credit Unit of your tax centre.

The address for your tax centre is on Form T2201 under the section called "Where do you send this form?" and on the CRA webpage on where to send your T1 return.

Host: What does the CRA do when they receive the form?

Subject matter expert: The CRA reviews the form to make sure you meet the eligibility requirements. If the CRA needs more information, they may contact you or your qualified practitioner directly.

Host: How long does it take for the CRA to review and process the application?

Subject matter expert: Although the CRA does its best to process forms as quickly as possible, review times vary depending on the time of the year and the number of requests the CRA has on hand. There might also be delays if the form was not filled out completely.

You can send the form to the CRA at any time during the year, you don't have to wait until you file your income tax and benefit return. Be sure that the form is filled out completed.

Host: Will the CRA tell me if I'm eligible for the disability tax credit?

Subject matter expert: Yes, the CRA will send you a letter to tell you if you're eligible and, if you're not, why your request was not accepted.

You can also find this information online by signing up for the CRA's electronic service called My Account.

Host: Do I have to send a new form every year?

Subject matter expert: No, you don't. You only need to send a new form if the CRA asks for it. You must also inform the CRA immediately if your condition improves.

Host: Okay. It's tax time and I'm filling out my income tax and benefit return. Now that I'm eligible for the disability tax credit, where do I claim the disability amount?

Subject matter expert: You can claim the disability amount on line 316 of your income tax and benefit return.

Host: And can I transfer the disability amount to my spouse or common-law partner?

Subject matter expert: Yes, the disability amount can be transferred between spouses or common-law partners on line 326 of Schedule 1 of the income tax and benefit return.

Host: Where can I get more information about transferring the disability amount?

Subject matter expert: You can find out more about transferring the disability amount and other tax credits by referring to line 326 in the General Income Tax and Benefit Guide and on the CRA webpage on tax credits and deductions for persons with disabilities.

Host: Can I make a claim for a dependant who qualifies for the disability amount?

Subject matter expert: Yes, you can make a claim for a dependant who qualifies for the disability amount on line 318 of the income tax and benefit return.

Host: And who qualifies as my dependant?

Subject matter expert: A dependant can be your or your spouse's or common-law partner's child, grandchild, brother, sister, niece, nephew, aunt, uncle, parent, or grandparent.

Host: Let's say that I recently found out that I'm eligible for the disability tax credit. Can I ask for a reassessment for previous tax years and, if so, how many years can I go back?

Subject matter expert: Yes, the CRA can look at your tax returns for the previous 10 calendar years to include the disability amount. For example, a request made in 2016 must relate to a 2006 or later tax year to be considered.

If you ticked "Yes" in Section 3 of Part A to include the disability amount for yourself or your dependant under the age of 18 on your return, the adjustments will be done automatically to all applicable years.

Host: What if I did not tick the yes box?

Subject matter expert: If you did not tick “Yes,” you can still ask for a reassessment for previous years. You can send in Form T1-ADJ T1, Adjustment to Request, or a signed letter giving details of your request along with all supporting documents to your tax centre. Or you can use My Account to ask for a change to a return.

For more information go to the CRA webpage about changing your return.

Host: Is there anything I can do if the CRA decides that I'm not eligible?

Subject matter expert: The CRA's decision is based on the information the medical practitioner provided. So, if you have more information from the medical practitioner that the CRA didn't have in their first review of the form, the CRA encourages you to write to your tax centre and ask the Disability Tax Credit Unit to review your file a second time. Include any relevant medical information that you have not already sent to the CRA, such as medical reports or a letter from a medical practitioner, describing how the impairment affects the activities of daily living.

Host: I've given all the information that I can think of, but the CRA says that I'm still not eligible for the disability tax credit. What can I do next?

Subject matter expert: You can file an objection to appeal the decision. The time limit for filing an objection is 90 days after the day the CRA sends you the letter telling you that your request was not accepted.

For more information on filing an objection, go to the CRA webpage about resolving disputes. You can also file an objection online using My Account.

Host: Where can I go to get more information on the disability tax credit and the disability amount?

Subject matter expert: You can find more information on the disability tax credit and the disability amount on the CRA webpage about tax credits and deductions for persons with disabilities.

Host: Thank you, Peter.

This concludes the segment called Disability tax credit and the disability amount, part of the CRA's Tax Measures for Persons with Disabilities video.

Thank you for watching.

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