The disability tax credit is a non-refundable federal and Ontario credit for a severe and prolonged impairment. It can be backdated up to ten years, transferred to a supporting family member, and it opens the RDSP and the child disability benefit. Refusals are common, and appealable.
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Eligibility is about function, not diagnosis. The CRA does not approve or refuse based on the condition named on the form; it asks what the person cannot do. The impairment must be prolonged, meaning it has lasted or is expected to last a continuous period of at least 12 months, and severe in one of the ways the Income Tax Act defines.
The first route is a marked restriction in one of the basic activities of daily living: walking, speaking, hearing, feeding, dressing, eliminating, vision, or the mental functions necessary for everyday life. Markedly restricted means that even with appropriate therapy, medication and devices, the person is unable to perform the activity, or takes an inordinate amount of time to do it, all or substantially all of the time. The CRA reads all or substantially all as a high proportion of the time, not merely often.
The second route is the cumulative effect of significant restrictions in two or more categories which, taken together, are equivalent to a marked restriction in one. The third is life-sustaining therapy: therapy that supports a vital function, needed at least twice a week and averaging at least 14 hours a week. For 2021 and later years the frequency requirement dropped from three times a week to two, which brought a large number of people with type 1 diabetes into eligibility.
Almost every refusal traces back to Part B of Form T2201. A physician who knows the patient well but does not know the statutory test writes a clinically accurate description that says nothing about time taken, frequency, or proportion of days affected — then ticks the box saying the restriction is not marked. The CRA assesses what is on the form. It does not infer.
The first move after a refusal is often not an appeal but better evidence. The CRA will send a clarification letter to the medical practitioner, and you can supply a fuller letter describing what the person cannot do, how long routine tasks take, how many hours a week therapy consumes, and how often the restriction applies. A second review costs nothing and resolves a large share of denials.
If that fails, the formal route is a Notice of Objection filed within 90 days of the notice of determination. Miss the 90 days and you can apply for an extension, but only within a limited further window and only on grounds the CRA or the Tax Court accepts. After the objection, the appeal is to the Tax Court of Canada, where the informal procedure is designed to be usable without a lawyer, though the medical evidence still has to be organised properly to win.
The credit itself is a non-refundable federal amount, with a supplement for a person under 18, plus a parallel Ontario credit. If the person with the disability does not have enough tax payable to use it, the unused portion can generally be transferred to a supporting spouse, common-law partner or parent. Because it is non-refundable, it produces no refund on its own for someone with no taxable income — the value is in the transfer and in what else it unlocks.
Approval can be backdated. If the impairment existed in earlier years, ask the CRA to adjust prior returns — up to ten years back — using a T1 adjustment request. For a family that has been supporting a disabled adult child for a decade, the retroactive amounts across the person's own returns and the supporting relative's returns can be substantial.
The knock-on entitlements often matter more than the credit. DTC approval is a precondition for opening a registered disability savings plan, which attracts federal grants and bonds, and for the child disability benefit. It supports the Canada caregiver credit, the home accessibility tax credit, a tax-deferred rollover of RRSP or RRIF proceeds to an RDSP on a parent's death, qualified disability trust status for a testamentary trust, and the newer federal disability benefit for working-age adults.
No. There is no list of qualifying conditions. Two people with the same diagnosis can get opposite answers because the credit measures functional restriction, not the condition itself. This is why the wording of Part B is decisive: a form that names a serious illness but says nothing about the time the person takes to dress, walk, or manage everyday mental functions will usually be refused, and a form describing an apparently less serious condition with precise functional detail will usually be approved.
Generally up to ten prior tax years, using a T1 adjustment request for each year, provided the medical practitioner certifies the year the impairment began on Form T2201. The CRA will often reassess several years at once after approving an application that specifies an earlier onset date. Ask the practitioner to state the onset year explicitly — if Part B is silent on when the impairment started, the CRA typically approves from the year of application only, and the retroactive amounts are lost.
Be careful. Federal legislation restricts what promoters may charge for helping with a disability tax credit request, and any arrangement taking a large percentage of a multi-year retroactive refund should be checked against that limit before you sign. There is also nothing a consultant can do that a properly instructed physician and a clear supporting letter cannot. If the file has already been refused, the issue is legal and evidentiary — an objection with a filing deadline — not sales.
It depends on the certification. The CRA may approve eligibility indefinitely, or for a set number of years where the impairment could improve, and it will write to you before the approval expires so a new Form T2201 can be filed. Keep that letter. People routinely lose the credit not because they stopped being eligible but because the renewal notice went unanswered, and the resulting gap can also interrupt RDSP contributions and grant entitlement, which is far harder to repair than the credit itself.
Open your file tonight — a licensed Ontario lawyer will confirm everything with you by tomorrow.