To support people living with a disability, the Canadian government offers some monetary support initiatives. The popular among them are the Disability Tax Credit (DTC) and the Registered Disability Savings Plan (RDSP).
Children with disabilities are not left out; they are eligible for the child disability benefit. To qualify for any of these programs, you must prove to the Canadian government that you have a severe or persistent disability.
This is where the Form T2201 comes in. To prove your disability, your medical practitioner must fill the form T2201, and the government must approve it. This article is a simple guide on how T2201 works in Canada.
What is Form T2201?
The form T2201 is the application required of you and your doctor to fill. The form is used to determine your eligibility for any disability support programs. The Canadian government offers several tax benefits to people with disabilities. These benefits are provided with the notion that people living with disabilities will have inevitable and additional expenses not encountered by other taxpayers.
Hence the creation of the Disability Tax Credit (DTC). The disability tax credit aims to serve as a check and balance for people with disabilities and their families. It is created to balance any additional expenses linked with having any severe and persistent impairment in physical or mental functions that hinders a person’s ability to carry out at least one essential activity of daily living.
A person can claim the disability tax credit for themselves, a child, spouse or common-law partner. Anyone applying for the Disability Tax Credit must submit details relating to their disabilities to be reviewed by the Canada Revenue Agency via the T2201 form.
The form T2201 is also known as the Disability Tax Credit Certificate, contains a self-assessment questionnaire. The questionnaire will aid the person in proceeding with the application.
Note that the T2201 is a requirement for participation in the Registered Disability Savings Plans (RDSPs). So, even if a person does not need the Disability Tax Credit may be due to income levels, there is still a significant benefit in qualifying for it.
How to fill out Form T2201
The T2201 application form is to be filled in two parts. The person with the disability or their representative must complete part A.
Part A outlines details on the person with the disability, like their:
- Social insurance Number (SIN)
- Date Of Birth (DOB)
In the case of a DTC transfer to a supporting person, the person’s details must also be included. The information of the person needed include:
- Relationship to the person with the disability
- Social insurance Number (SIN)
The T2201 form also gathers information on the person’s financial relationship with the disability and claiming the disability credit. That is if the person claiming the DTC is not the person with the disability.
Significantly, the person claiming the DTC must have a financial link to the essentials like food, shelter, and clothing. The person with a disability does not have to live with the person claiming the DTC.
Once part A of the T2201 form is completed, the whole document is sent to your medical practitioner handling your disability. Your medical practitioner will fill the Part B section of the form. Depending on your disability, a medical practitioner can include the following:[table “120” not found /]
Your medical practitioner will review the form once received to determine the right categories to be filled regarding your disability. Your practitioner will also determine the severity of your disability and indicate the date on which the marked restriction began. The CRA uses this date as the date upon which a person becomes eligible for the DTC if they get approval.
The eligibility process for T2201 is quite strict as even after qualifying; the approval can be time-limited, expire or withdrawn. Most times, medical practitioners get stuck on how to fill out the form, hence making the eligibility procedure varies.
Currently, the requirement CRA is using to review applications and methods is unknown. Generally, to be eligible, you must be a Canadian citizen. You must be “markedly restricted” in at least one of the necessary activities of daily living like having the severe effects from impairments including:
- Eating disorders
- Trauma-related disorders
- Neurological impairments that may be eligible include:
- Mood and psychotic disorders like depression, bipolar disorder, and schizophrenia)
- Hearing disabilities
- Multiple sclerosis
- Elimination disabilities
- Substance abuse disorders
- Alzheimer’s disease
- Chronic pain
- Visual disabilities
- Personality disorders
- Parkinson’s disease
- Anxiety disorders
Form T2201 Review Process
After both part A and B of your Form T2201 have been filled, you can send the form and any relevant document electronically via your CRA “My Account” section or mail. It is advisable to send the form before filing your annual tax return. Ensure to keep a copy for reference purposes.
After submitting, the review process can take an average of three months to one year to get feedback. During this period, the CRA will review your application and may request some follow-up details. Once the evaluation of your application is completed, the CRA will send an approval or denial letter.
If you get an approval letter, it may be approved indefinitely or has an expiry date. With the approval, you are now eligible for the DTC and RDSP and any other disability programs the government offers.
However, if your application was denied, you can contact the CRA to discuss the way forward. You can request a review of your application with new or updated information and file an appeal within 90 days of getting the rejection letter. You can check the T2201 form to get instructions relating to the formal objection process.
Once you get approval, the first thing to do is to apply for a DTC. A DTC is a non-refundable federal tax credit that allows people with disabilities to receive money from the Canadian government.
When applying for federal tax, apply based on your tax bracket and subtract it from your total tax payable. If you’re claiming DTC for a child(ren), you can claim about $4,909 supplemental DTC until the child(ren) gets to age 18. Depending on how long you’ve been living with a disability, you can claim backdated tax breaks for up to 10 years prior.
Once your DTC is set up, you can then open an RDSP. Registered Disability Savings Plans (RDSP) is a tax shelter to help people with disabilities save for retirement. It is advisable to open this account even if you are unable to save, as it will, in the long run, ensure financial security.
In Ottawa, the provincial government deposit about $20,000 to low income families with no contributions and match donations up to $3,500 yearly up to a lifetime limit of $70,000.
How to Claim DTC for Previous Years
If, after evaluation by the CRA, and it is found that you should have been eligible for DTC in the previous tax years, you can file for this credit
If the CRA determines you should have been eligible for the DTC in previous tax years, you can file for this credit subsequently. To process this payment, you must file Form T1-ADJ either through mail or your CRA My Account. You can file for every tax return you need to be amended for up to ten years past.
After submitting your request, the CRA will review your adjustment requests and send any refunds you are eligible for.
Claiming a DTC for Yourself
After qualifying for a DTC, you can claim about $8,416 for the disability amount on line 31600 of your Schedule 1. If you are below 18, you may qualify for extra credit of about $4,909 or a total credit of about $13,325.
To qualify for any of these additional credits, ensure that no one has claimed child care or attendant care expenses for you. Note that if you have claimed attendant care expenses on your return, the amount of your extra credit may lessen.
Claiming a DTC for a Dependent
You can claim all or part of a DTC of a dependent who is not your spouse or common-law partner. The dependent must be the child, parent, grandparent, grandchild, brother, sister, aunt, uncle, niece or nephew of either yourself or your spouse or common-law partner to qualify for this claim.
In a case where you are supporting a dependent who does not fall under any of the categories mentioned above, you may be able to claim only a portion of their DTC.
Note that your eligibility claim to their DTC depends on if you claimed a dependent amount for the person on line 305. Or if you claimed that amount in place of a spouse or common-law partner if you don’t have one.
How to Claim a Dependent’s DTC
To claim all or part of an eligible dependent’s DTC, input the amount not claimed by the dependent on line 31800 on your Schedule 1. Remember to note the dependent’s name, social insurance number and relationship to you. These details will aid the CRA in referencing both returns.
In the same light, if your spouse or common-law partner qualifies for DTC but does not need all of the credit, you can have the remaining credit transferred to you. Ensure to note these credits on line 32600 with any other transfers from your spouse or common-law partner.
Conclusively, it is crucial for a person with a disability to get their T2201 approved. It is an entry to qualify for other benefits offered by the government to people with disabilities.