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In light of recent changes to the tax treatment of testamentary trusts, it is important for those planning for the future care of individuals with disabilities to understand the rules for Disability Tax Credit eligibility. Due to these taxation changes, only Qualifying Disability Trusts will have access to the graduated tax rates previously afforded to all testamentary trusts. All other testamentary trusts will be taxed at the highest rate.

Eligibility for the DTC is also necessary for the following:

  • To open a Registered Disability Savings Plan;
  • If the applicant is under age 18, they will also obtain the child disability benefit;
  • If the applicant has working income, they may be eligible for the working income tax benefit disability supplement.

The Disability Tax Credit

The Disability Tax Credit (DTC) is a non-refundable tax credit used to reduce income tax. In order to be eligible for the DTC, form T2201 must be completed and must be approved by the Canadian Revenue Agency (CRA). In order to complete the form, a qualified practitioner must certify that the individual has a severe and prolonged impairment in physical or mental functions. This can include impairments that require life-sustaining therapy, or that cause the individual to be markedly restricted all or substantially all of the time in one or more basic activities of daily living.

It can take up to six to eight weeks for the CRA to determine eligibility once the form is submitted. If the request is rejected, the CRA will advise of the reason for the rejection. A formal objection to the rejection can be raised, or a new form completed by a different qualified practitioner can be submitted.

How to Apply

Complete Part A of Form T2201 and have a qualified practitioner certify the sections that apply. When the qualified practitioner has completed and signed Part B of Form T2201, submit the form to the CRA by sending it to your tax centre.

Qualified PractitionerCan Certify:
Medical DoctorAll impairments
OptometristVision
AudiologistHearing
Occupational TherapistWalking, feeding, dressing and the cumulative effect for these activities
PhysiotherapistWalking
PsychologistPerforming the mental functions for everyday life
Speech-Language PathologistSpeaking
Source: Canada Revenue Agency

At Siskinds we understand the intricacies of applying and qualifying for the Disability Tax Credit. If you have any questions please contact Laura Geddes at laura.geddes@siskinds.com or 877.672.2121.

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