The following article on the disability tax credit was written by Tanya O’Connell, a former law clerk at Loukidelis Professional Corporation.
The Disability Tax Credit (DTC)
The DTC is a personal tax credit available under section 118.3 of the Income Tax Act (Canada) (the “Act”) and related provisions of provincial legislation. The credit can be claimed by a taxpayer who suffers from a “severe and prolonged” mental or physical impairment. In 2024, the full amount of the federal credit amount is $9,872 while the Ontario provincial amount is $10,017. Taken together, these amounts can reduce the tax otherwise payable by a taxpayer resident in Ontario in the year by $1,986.66.
Eligibility for the DTC can also allow a person to access other benefits under the Act. For example, a person entitled to the credit can open a “registered disability savings plan”. Contributions to such a plan are not tax deductible, but income earned in the plan is not subject to tax in the plan, and various government grants and loans are available to enhance the amounts that can be saved through the plan.
A person can claim the DTC only if a doctor or another qualified medical practitioner certifies on a prescribed form (the T2201) that the person has “one or more severe and prolonged impairments in physical or mental functions” that has “significantly restricted” the person’s ability to perform basic activities of daily living (subsection 118.3(1)). A blind person or a person confined to a wheelchair would be obvious examples of such a “severe and prolonged impairment” in a physical function.
The Act previously described mental functions necessary for everyday life to include
- memory;
- problem solving, goal-setting and judgement (taken together); and
- adaptive functioning.
The Act was amended for years after 2020 so that mental functions necessary for everyday life include
- attention,
- concentration,
- memory,
- judgement,
- perception of reality,
- problem solving,
- goal setting,
- regulation of behaviour and emotions,
- verbal and non-verbal comprehension, and
- adaptive functioning;
The CRA will consider DTC applications that might affect a taxpayer’s return for prior years but will reassess such returns for only the ten most recent years.
For more on the DTC, see Income Tax Folio S1-F1-C2 (Disability Tax Credit).
ADHD and the DTC
Case Study Aspects:
According to the 2024 annual report issued by the CRA’s Disability Advisory Committee (“DAC”), the DTC is underused: it’s likely only one-quarter of those eligible apply for the credit.
The report attributed the underuse to a complex application process and challenges with CRA processes and contact centres. In other words, it is impossible to access the specialized support needed to effectively navigate a convoluted system with its own rules and language, unless you can pay for it.
Among its 18 recommendations, the DAC suggested the CRA improve awareness of the DTC program. I agree that awareness of the DTC and its benefits are severely lacking. In fact, according to the report, of those approved for the DTC in 2022, only 64% actually claimed the credit. I would bet my boots an even lower percentage opened an RDSP. But there is also a gap in support services, including system navigation and free legal advice, for folks who know about the program and its benefits but need help with the application or appeal process.
Unlike social benefits like Ontario Works or the Ontario Disability Support Program, where publicly-funded support can be accessed to appeal a decision, an individual who wishes to appeal a decision regarding DTC eligibility must do so using a process under the Income Tax Act and will likely be doing it on their own if not with the support of a tax lawyer. It is wonder why there is no free support available for people in this situation considering how disproportionately affected by poverty disabled folks are. Although it would seem the generally held perception of folks involved in tax-law disputes is that they are not folks in need of social programs to better their lives.
Tax law disputes are perceived as an issue only experienced by the wealthy, and they mostly are, so there are no publicly funded programs or community support services offering system navigation assistance. Legal Aid does not cover tax law in any case, and the legal information available at free clinics does not address tax matters. This makes no sense when you consider how the disabled are disproportionately affected by poverty.
Before applying for the DTC, I did a lot of research and spoke with folks who had experience applying for the DTC. What I learned is that being approved is largely dependent on how supportive the doctor completing the medical practitioner’s section of the application is. In other words, if the doctor doesn’t wholly support you in your self identity as a person with a disability, you are not going to be approved by the CRA. For people with non-visible disabilities, this constitutes an additional barrier to accessing the DTC because these folks experience ableism by society and medical professionals alike. Medical professionals are not immune to the perception that if you can’t see someone’s suffering, they are probably fine and definitely not disabled.
My DTC application was based on a non-visible disability, namely, my Attention Deficit Hyperactive Disorder (ADHD), diagnosed as an adult the same year that I applied for the DTC. I was able to successfully navigate the application and appeal process associated with my DTC eligibility with the support of a specialist in ADHD diagnosis and treatment for adults, a Law Clerk diploma and free legal advice and support from a lawyer with 25+ years of tax law expertise. I am not the average DTC applicant or appellant.
The Medical Director at Adult ADHD Centre, Dr. Parhar, took a strong and clear position in his section of my DTC application that I have suffered from a disability that made me eligible for the DTC since the age of five, which would mean retroactive eligibility for tax purposes for the last 10 years. Despite his clearly articulated medical opinion about my disability, and the fact that I was diagnosed the same year that I applied for the DTC, the CRA requested “additional medical documentation” from Dr. Parhar that “reports on the limitations” of my disability for the last ten years. Dr. Parhar dutifully replied to the CRA with a questionnaire they provided and, based on a review of my entire past medical history from childhood to 2023, provided several examples of how the limitations caused by ADHD have affected every aspect of my life from childhood to present. I’m not going to divulge all the dirty details of how unmanaged and undiagnosed ADHD showed up in my life, except to say I obviously struggled, I didn’t understand why, and I blamed myself.
Seemingly ignoring Dr. Parhar’s response, the CRA ultimately determined that while I am eligible for the DTC for the year I applied plus 2 years, they “cannot determine eligibility for the DTC…” for the years prior because, “we did not receive the additional medical documentation we requested.”
Like what?
In my appeal, I reasoned my eligibility with more than one argument, which included:
- acknowledging the absence of “reports on the limitations” but arguing a determination of eligibility could be made without them because my eligibility for the year I applied plus 2 years was determined based on the limitations caused by ADHD as described in my application by Dr. Parhar, who stated I have “had significant disability since the age of 5 as a result of her Attention Deficit Hyperactivity Disorder (ADHD) condition.“ Dr.Parhar went on to state, “ADHD is a neurodevelopmental condition present from birth, but first disabling at age 5 years.” I argued my eligibility for the DTC for the years in question could be determined in the absence of reports on its limitations based on Dr. Parhar’s statements regarding the onset of ADHD limitations. I argued that the CRA cannot accept part of Dr Parhar’s medical opinion, thereby approving my eligibility for the year I applied plus 2 years, while ignoring a substantial part of his diagnosis and medical opinion regarding the onset of the limitations caused by ADHD;
- acknowledging the absence of medical reports documenting the limitations caused by ADHD but arguing they did not exist prior to the year I applied/was diagnosed. I argued that the absence of medical reports on the limitations caused by ADHD prior to my diagnosis did not equate to an absence of the limitations caused by ADHD nor their effects on my daily functioning;
- acknowledging the absence of medical reports but arguing Dr. Parhar is not a family doctor and therefore does not have records of my limitations prior to my diagnosis because I was only his patient as part of my assessment and subsequent treatment plan for ADHD; and
- arguing that the letter Dr. Parhar provided following the CRA’s request for further information should be accepted as the reports on the limitations because his intention in writing the letter was for it to be accepted as such and because it provided numerous examples of how ADHD affected my life during the years in question.
The CRA accepted my appeal in full. I will share the arguments I laid out, but to much chagrin I cannot share which argument was accepted as that was never disclosed to me.
My DTC eligibility approval meant a reassessment of all the tax years in which I paid federal tax in the last ten years, the ability to open an RDSP and acceptance to the Canada Dental Plan. But how much money did I get? The income tax refund and the RDSP government grant contributions I received for the years my income was low totalled close to fifteen-thousand dollars. So the monetary benefits are obvious. But for me, it was about more than that. For me, this process allowed me to unpack my own internalized ableism and outdated perceptions of ADHD and disability. I consider it one of the best things I’ve ever done for myself because it allowed me to unlearn that neurodivergence has nothing to do with intelligence. It validated my constant struggle in a way I did not anticipate. I only wish it were accessible for others in my position, but without the luck of my circumstances, to pursue.
