Health Changes This Year? You May Qualify for the Disability Tax Credit Even If You Work or Live Independently
Changes in physical or mental health can affect more than your day-to-day routine. They may also change your eligibility for the Disability Tax Credit (DTC).
Many people assume the credit is available only in very limited circumstances. In reality, eligibility depends on how an impairment affects daily functioning and whether the applicable requirements are met.
When should you reconsider eligibility?
If your health or a family member’s health has changed, it may be worth reviewing DTC eligibility.
Changes that could warrant another look include a new diagnosis, progression of an existing condition, or greater difficulty performing activities of daily living.
The diagnosis itself isn’t the only consideration. How the impairment affects everyday functioning is an important part of the application.
How does the application work?
The Canada Revenue Agency (CRA) reviews DTC applications based on the information provided about the impairment and its effects.
A medical practitioner completes part of the application, making clear and complete medical information particularly important.
If your circumstances have changed, don’t assume that being able to work, attend school, or live independently automatically determines whether you qualify. Eligibility should be considered against the applicable DTC criteria.
What can the DTC provide?
The DTC is a non-refundable tax credit that can reduce income tax otherwise payable when the requirements are met.
Depending on the circumstances, eligibility may also have implications for previous tax years.
DTC eligibility is also connected to certain other programs, including the Registered Disability Savings Plan (RDSP), which has its own eligibility and age-related rules.
Health changes are worth reviewing
If you or a family member has experienced a significant change in health or daily functioning, it may be worth reassessing DTC eligibility rather than assuming the previous answer still applies.
Davidson can help you understand the tax aspects of the Disability Tax Credit and what information may be relevant to your application.
This article is provided for general information only and should not be considered accounting, legal, medical, or tax advice. Your individual circumstances may differ. Contact your trusted advisor for guidance specific to your needs.
