Disability Tax Credit (DTC) in Canada

The Disability Tax Credit (DTC) is a non-refundable tax credit that provides tax relief to individuals with severe and prolonged impairments. Beyond the direct tax savings, being approved for the DTC also unlocks access to several other programs and benefits.

Eligibility Criteria

To qualify for the DTC, you must have a severe and prolonged impairment in physical or mental functions. Specifically:

• The impairment must markedly restrict your ability to perform one or more basic activities of daily living, or you must need life-sustaining therapy at least three times per week for a total of at least 14 hours per week
• The impairment must have lasted, or be expected to last, for a continuous period of at least 12 months

Basic activities of daily living include walking, speaking, hearing, feeding, dressing, mental functions necessary for everyday life, and bowel or bladder functions.

How to Apply

You apply for the DTC by submitting Form T2201, Disability Tax Credit Certificate, which must be completed in part by a qualified medical practitioner. The type of practitioner depends on the impairment (for example, an optometrist for vision, an audiologist for hearing).

The CRA reviews the application and sends a determination letter. If approved, the DTC may be applied retroactively for up to 10 years, potentially resulting in significant refunds.

2025 Credit Amounts

The federal DTC amount for 2025 is approximately:

• $9,872 base disability amount (at the 15% credit rate, this provides about $1,481 in federal tax relief)
• $5,758 supplemental amount for individuals under 18 (reduced by childcare and attendant care expenses claimed above a threshold)

Provincial DTC amounts vary and provide additional relief on top of the federal credit.

Transferring the Credit

If the person with the disability does not have enough taxable income to use the full credit, the unused portion can be transferred to a supporting spouse, parent, grandparent, or other supporting individual. This is claimed on line 31800 of the supporting person’s return.

Benefits Unlocked by DTC Approval

Being approved for the DTC opens access to:

• Registered Disability Savings Plan (RDSP): A savings plan with government matching grants (up to $3,500/year) and bonds (up to $1,000/year)
• Canada Workers Benefit disability supplement
• Higher childcare expense limits ($11,000 vs $8,000 per child)
• Extended eligibility for the child disability benefit through CCB
• RRSP withdrawals under the Home Buyers’ Plan even if not a first-time buyer

The RDSP Connection

The RDSP is only available to DTC-approved individuals. The federal government provides Canada Disability Savings Grants (matching contributions up to 300%) and Canada Disability Savings Bonds (for low-income individuals, no personal contribution required). Over a lifetime, government contributions can total up to $90,000.

If Your Application Is Denied

If the CRA denies your DTC application, you can:

1. Ask your medical practitioner to provide additional supporting information
2. File a formal objection within 90 days of the determination
3. Appeal to the Tax Court of Canada if the objection is unsuccessful

Many initially denied applications are approved on review with better documentation of functional limitations.

Sources

• CRA — Disability tax credit
• CRA — Form T2201
• CRA — Registered Disability Savings Plan