Learn about the Disability Tax Credit for Children

Finding the proper care and assistance for children living with disabilities can be daunting. When you add up expenses of specialised day cares, schools, or treatments, it can become costly and a financial burden.

Some children with disabilities may qualify for the Disability Tax Credit (DTC) – a non-refundable tax credit meant to assist those living with physical or mental restrictions. When claimed, the DTC can result in a significant tax refund. Not to mention that once your child is approved for the Children’s Disability Tax Credit, you can receive an additional monthly tax-free income supplement called the Child Disability Benefit.

What is the Disability Tax Credit worth for families with children?

The Disability Tax Credit amount your child is entitled to may vary based on a combination of factors. For example, some factors considered are: the income tax paid by the family member claiming the DTC, your province of residence, when your child was diagnosed, years that you’re approved for, or your participation in certain financial government programs.

However the factors work out, the maximum a child may be entitled to is $50,000 – when we claim retroactively on the guardian’s past income taxes paid (up to 10 years). 

One important thing to note is that more than one income earner can claim the Disability Tax Credit for their child. In fact, any number of eligible family members can claim the DTC for supporting their loved one.

How can a child qualify for the Disability Tax Credit?

Your first question shouldn’t be, “my child has [insert mental or physical restriction here] do they qualify?”

Canada Revenue Agency (CRA) is the governing authority that determines who qualifies for the DTC. There’s really no such thing as a medical diagnosis for “disability”, and so the eligibility requirements for the Disability Tax Credit are as follows:

• Does your child have a restriction in a basic activity of daily living (BADL) – either walking, feeding, mental functions, vision, dressing, hearing, eliminating or bowel/bladder functions, or requiring life-sustaining therapy
• Is this restriction marked or significant – either the restriction lasts for at least 12 months continuously and takes at least 3 times longer than normal to perform the BADL, or there are more than 1 restricted BADLs that are affected 90% of the time

Those requirements open up room for interpretation – and sometimes misinterpretation – by all parties involved in the DTC process. Oftentimes, a doctor’s own definition of what a “disability” looks like affects their judgement when completing the Disability Tax Credit form. For example, someone with irritable bowel syndrome (IBS) isn’t typically considered to be “disabled”, but depending on the nature of the condition, someone with IBS can qualify for the disability tax credit if they fit the requirements above.

That’s why the most important thing in getting accepted for the Disability Tax Credit is to openly communicate CRA’s eligibility requirements with your medical or nurse practitioner. Once they are aware, they can support your claim and help detail the effects of your child’s restrictions for a successful DTC application.

Brought to you by The National Benefit Authority.

If you find yourself looking for more information, check out informative blogs at The National Benefit Authority. They are Canada’s largest disability benefit service provider and have helped over 40,000 Canadians living with disabilities and their families successfully apply for and claim the Disability Tax Credit.  For more information, call 416-572-3790 or 1-844-207-7410.