The disability tax credit is a non-refundable credit for individuals with disabilities and those supporting them. It reduces that amount of income tax the taxpayer has to pay during tax season. The intention of the tax credit is to help offset the increased disability costs that some Canadians must pay.
The disability tax credit also allows taxpayers with disabilities to take advantage of other programs like the disability amounts, supplements for those under 18, RDSP (registered disability savings plans), Canada workers benefit and the child disability benefit.
To receive the $1,299 tax credit, individual taxpayers must have Form T2201 – Disability Tax Credit Certificate filled out by a medical practitioner and approved by the CRA.
In the 2021 budget released in April, changes have been proposed in regard to eligibility under mental functions and life sustaining therapy.
What changes are being made to the tax credit?
The disability tax credit is available to taxpayers who spend an unordinary amount of time on specific tasks, at least 90% of the time. Currently eligible tasks include:
- Adaptive functioning – abilities related to self-care, health and safety, social interactions and simple transactions.
- Memory – abilities related to remembering basic instructions, personal information of information of importance.
- Problem solving, goal setting and judgement – abilities related to solving problems, setting and meeting goals, making proper decisions.
But the budget proposes to expand the mental functions eligibility to also include:
- Attention
- Concentration
- Perception of reality
- Regulation of behaviour and emotions
- Verbal and non-verbal comprehension
This expansion is being proposed to include a wider range of abilities needed for everyday life.
There are also changes proposed to Life Sustaining Therapy
Under the disability tax credit life sustaining therapy is therapy that supports vital functions and is needed at least three times a week for an average of 14 hours.
Currently the time calculations for life sustaining therapy cannot include:
- Travel time to receive the therapy
- Medical appointments
- Time spent buying medication
- Post therapy recuperation time
- Activities related to dietary or exercise restrictions or regimes
But these can be important components of life sustaining therapy. As such, the government proposes to expand the list of activities which can be included in the 14-hour calculation. The new list will include:
- Activities related to dietary or exercise restrictions or regimes so long as they are needed to determine dosage of medication that needs to be adjusted on a daily basis.
- Time spent in medical appointments to receive therapy or determine medication dosages.
- Any required recuperation after receiving the life sustaining therapy.
- Time spent determining how much medical food or formula is needed to limit a specific compound.
Where the individual cannot perform eligible activities related to therapy, the government will allow the time required by another individual to be counted towards the 14 hours.
The government also proposes to reduce the administration requirements to two times a week, instead of three.
These changes will be back dated to the beginning of 2021 and help an additional 45,000 taxpayers.
For more information on changes to the disability tax credit, please contact us today.
