Canadian Disability Tax Credit

Finances & T1D: Tools to Help Meet the Demands

Michelle MacPhee
D-Mom, M.S. (Psychology)

The Disability Tax Credit can ease the pressure of diabetes-related expenses, helping your family save money now - and for the future. But what exactly is the DTC? Who is eligible? What is meant by "life-sustaining therapy"? How do we apply? Here we summarize the key points of the program and provide links to the relevant Government of Canada resources.

Managing a chronic illness involves extra financial obligations, both now and in the future. As parents, we worry about diabetes-related expenses: Without coverage for diabetes supplies, what are our options? How can we finance an insulin pump and supplies? Will my daughter be able to afford test strips when she is out on her own? And checking blood glucose levels, watching for trends, adjusting insulin doses, preparing and administering the insulin, counting carbs, traveling to medical appointments... it all takes time. This all amounts to time and money that you wouldn't have to spend if your child did not have Type 1 Diabetes.

In Canada we are fortunate to have access to federal programs like the Disability Tax Credit (plus the related Registered Disability Savings Plan) which can help manage diabetes expenses in the present, as well as save for your child’s future expenses.


Disability Tax Credit (Canada)

At a previous Kids ‘N Us conference in Edmonton, Alberta, accountant Rick Baumgartner presented a comprehensive yet concise look at the Disability Tax Credit (DTC).

In his presentation, Mr. Baumgartner points out that:

The Disability Tax Credit (DTC) is intended to act as a fairness measure for people with disabilities and their families. These benefits are provided under the assumption that certain conditions will require unavoidable, additional expenses that are not faced by other taxpayers – type 1 diabetes qualifies as one of those conditions.

Does my child qualify for the DTC?

In order to be eligible for the DTC, your child must require life-sustaining therapy. This includes intensive insulin programs: Basal-Bolus with Multiple Daily Injections (MDI) program; and Insulin Pump program. This life-sustaining therapy requires that you dedicate time (at least 3 times a week, for an average of at least 14 hours a week) and that time is taken away from normal, everyday activities to receive the therapy. Further, the impairment must last (or be expected to last) for at least 12 consecutive months. For those of us caring for children with type 1 diabetes, these criteria ring true.

But what counts - and doesn't count - in the 14-hour requirement?

Checking blood glucose levels, preparing and administering the insulin, calibrating necessary equipment, testing ketones, and keeping a log book of blood glucose levels are all considered eligible activities by the Canada Revenue Agency (CRA). Counting carbs, traveling to medical appointments, and activities related to exercising, however, do not count toward those 14 hours. To find out more, check the Eligibility criteria for the disability tax credit on the Government of Canada website.

Parents can claim the DTC on behalf of their dependent children.

The DTC is a non-refundable tax credit (that is, it is designed to help to reduce a person’s taxes owing). Therefore, if you don’t already owe any tax, applying for the DTC will not result in a refund being issued.

You can back-file for up to 10 years. So if you've just learned about the DTC now, you can still claim the credit now for up to 10 years since their Type 1 Diabetes diagnosis.

How do we apply for the DTC?

You can complete the form yourself, it’s not too complicated – you do NOT need to hire someone else to complete it for you, and in fact, the fees charged by some companies are quite high.

This is a two part process:

Step 1

You first have to apply for a Disability Tax Credit Certificate, by completing and sending form T2201. (This includes a sections to be completed by you, and sections to be completed by your child’s doctor.) If approved by CRA, your child will hold a valid Disability Tax Credit Certificate. (But don’t rush out for a certificate frame, don’t bother clearing a space on your wall – no actual paper certificate is issued.)

Tips from the Trenches

Why wait until you send in your return to file the T2201? It’s a good idea to send it in well before tax time (if you can), to avoid delays in processing your return.

Step 2

The next time you/your child file(s) a tax return, you can apply for the Disability Tax Credit within that return.

It’s also important to note that once your child has a Disability Tax Credit Certificate, he may be eligible for other CRA programs and benefits, such as the Child Disability Benefit, and a Registered Disability Savings Plan (RDSP).

For more information on the Disability Tax Credit, and to download the necessary forms, visit the Canada Revenue Agency website: Disability Tax Credit section.

More on Finances and Type 1 Diabetes:

Registered Disability Savings Plan (RDSP)