How Seniors Can Benefit from the Disability Tax Credit
Jun 13, 2023
The disability tax credit (DTC) can be a powerful benefit for Canadians who qualify. It allows an individual with an impairment or supporting family member to reduce the amount of income tax they pay.
As we age, most of us value our independence and would not want to think of ourselves as disabled. However, according to Statistics Canada, nearly 40% of Canadians aged 65 and over have a disability. This figure increases to almost 50% among persons aged 75 and older. Not all of these Canadians are eligible for the DTC, but there are many individuals who are missing out on significant tax savings.
The eligibility for the DTC is somewhat complex. Ultimately, a medical practitioner will need to certify that you have a “severe and prolonged impairment” in one of the following categories or “significant limitations” in two or more of these categories:
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The process of applying for the DTC involves submitting a Disability Tax Credit Certificate (T2201). A medical practitioner (either a medical doctor or a specialist in the field of the specific impairment) must certify the application.
The impact of this tax credit varies by province, but if you are a resident of British Columbia it could equate to nearly $1,900 of tax savings per year. In addition, if you were eligible for the DTC in past years but did not claim it, you can apply retroactively going back up to 10 years.
Being approved for the DTC allows seniors who live in a retirement facility to claim a portion of their eligible expenses as medical expenses, which results in additional tax credits. It can also be used to claim the Home Accessibility Tax Credit if you have renovated your home.
Case Study Our client’s mother wore hearing aids in both ears for many years to deal with her partial hearing loss and moved into a retirement home in 2022. At this time, our client asked her mother’s doctor about what was required to ensure a portion of the living expenses could be used for the medical expense tax credit. The doctor certified that her mother was eligible for the disability tax credit due to her hearing loss and her application was approved by the CRA. Along with the tax savings related to her retirement home costs, her mother also received an immediate tax refund of more than $13,000 because the disability was backdated to 2013 and she refiled previous tax returns. |
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This article focuses primarily on key benefits that seniors may realize from the disability tax credit. However, at any age, being eligible for the DTC results in numerous possible tax savings. A discussion with your medical practitioner can help you learn more about whether you or a family member might qualify for it. Furthermore, your Financial Advisor can help you adjust your financial plan to incorporate the potential benefits of the disability tax credit.
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