Tax Matters: Disability Tax Credit Certificate

Disability Tax Credit Certificate

by Michael L. Crawford, BA(Hons), CMA

In past articles in this magazine I have touched upon the disability tax credit in terms of its value and transferability. In this issue I will talk about the specifics of what the disability tax credit is and what the requirements are to qualify for it.

In order to qualify for the disability tax credit you must have a qualified practitioner complete Canada Revenue Agency form T2201Disability Tax Credit Certificate available at www.cra-arc.gc.ca/E/pbg/tf/t2201/README.html. It is important to note that the term “qualified practitioner” has a broader meaning than just “medical doctor”. Some examples of qualified practitioners are optometrists, audiologists, occupational therapists and psychologists. Qualified practitioners can only certify disabilities in their own field. For example an audiologist may certify deafness but not blindness. Medical doctors may certify any disability they feel qualified to offer a medical opinion on.

The Disability Tax Credit Certificate requires that certain conditions be met in order for a person to qualify for the Disability Tax Credit. If an individual is “markedly restricted” for a “prolonged” period of time OR requires “life sustaining therapy” they will be eligible for the Disability Tax Credit. Like most things related to tax, some explanation is required.

Markedly Restricted

The Canada Revenue Agency defines markedly restricted as “…if, all or substantially all the time, you are unable (or it takes you an inordinate amount of time [a very long time]) to perform one or more of the basic activities of daily living…even with therapy (other than life-sustaining therapy) and the use of appropriate devices and medication”. The Canada Revenue Agency defines the basic activities of daily living as: speaking, hearing, walking, elimination (bowel or bladder), feeding, dressing and performing the mental functions necessary for everyday life. Vision is also a basic activity of daily living but the definition of markedly restricted (blind) is defined as follows: “…if, even with the use of corrective lenses or medication: visual acuity in both eyes is 20/200 (6/60) or less with the Snellen Chart (or an equivalent); or the greatest diameter of the field of vision in both eyes is 20 degrees or less”.

Except for vision, which has specific criteria [guidelines], whether or not an individual is markedly restricted depends on the doctor’s or qualified practitioner’s medical opinion. Although I believe that most doctors would give an honest objective opinion about a patient there will always be an element of subjectivity [bias].

If you think you qualify you should always seek a medical opinion. A client of mine was once told by his former accountant that he wouldn’t qualify. I suggested that he get a “second” opinion. He qualified temporarily for two years thus recovering almost $2,000 in overpaid taxes. In my practice I have seen people who I thought would not be eligible for the disability tax credit receive certification. I have also seen people who in my opinion were absolutely deserving of the disability tax credit turned away by their doctor.

Prolonged

Canada Revenue Agency defines prolonged as 12 months. Period. The Disability Tax Credit can be temporary or permanent. If the Disability Tax Credit Certificate is temporary you must revisit the issue with your doctor or qualified practitioner OR simply not claim the credit. If the Disability Tax Credit Certificate is permanent then no further action is required by the individual and they claim the credit until they die; although the Canada Revenue Agency always has the right to request a review of any Disability Tax Credit.

Life Sustaining Therapy

The concept of life sustaining therapy appeared in the Income Tax Act in 2000 to cover situations where a person could accomplish all of the basic activities of daily living but still spent a lot of time in therapy in order to do so. Canada Revenue Agency states: “Life-sustaining therapy must meet the following conditions: you receive the therapy to support life, even if it alleviates the symptoms. Examples of this therapy are chest physiotherapy to facilitate breathing and kidney dialysis to filter blood. However, implanted devices such as a pacemaker, or special programs of diet, exercise, or hygiene do not qualify. You have to dedicate time for this therapy – at least 3 times a week, for an average of at least 14 hours a week (do not include time needed to recuperate after therapy, for travel, medical appointments, or shopping for medication).

Time dedicated to therapy means that you must be required to take time away from normal, everyday activities in order to receive the therapy. The time it takes for a portable or implanted device to deliver therapy is not considered to be time dedicated to therapy.”

Enough said.

Pushing the Paperwork

Once your doctor or other medical practitioner has signed off on the form you need to mail it to your local tax office where your tax return is processed. If you are not sure where that is check here: www.cra-arc.gc.ca/cntct/t1ddr-eng.html

You can mail your Disability Tax Credit Certificate any time of the year or you can mail it with your return. Keep in mind that if you mail it with your return you may not file your return electronically (E-file, Netfile or Telefile). If you file your return electronically you may not claim the Disability Tax Credit on the return. You will have to wait until Canada Revenue Agency updates your certificate on their database and requests adjustment. Once your certificate is updated on their database you may file electronically and claim the credit with no problems.

When you mail your disability tax certificate to CRA be sure to make a copy for your records. I also recommend sending it as registered mail. I am sure CRA treats all mail equally but I have had fewer issues with registered mail.

Conclusion

The Income Tax Act and other related legislation are large and complex laws that frustrate even professionals at times. This column is intended to increase your awareness of issues that affect you and encourage you to look more closely at the ones that relate directly to your situation. You are encouraged to seek professional guidance specific to your unique situation.

cnm