COVID-19 and the Disability Tax Credit – Beyond a $600 Payment

September 3, 2020

 

Cynthia Minh, Disability Alliance BC

*Please note that this blog post was last updated on November 3rd, 2020. Any updates made after this date may not be immediately reflected in this article. For up-to-date information, see our FAQ page here.

As Canadians are asked to readjust their daily lives in response to COVID-19, we’ve seen how health and social inequities disproportionately impact different communities. For many people with disabilities who already face exorbitant medical expenses, these unprecedented circumstances are adding to existing financial strain. In this article, we discuss how the Disability Tax Credit (DTC) can provide some financial relief during the health pandemic, and why it is considered one of the principal federal disability supports for individuals and families.   

The Disability Tax Credit (DTC)

The DTC was designed in recognition of the higher costs of living that many Canadians with disabilities face. As a non-refundable tax credit, it reduces the amount of taxes that working individuals or their caregivers owe. Over the years, new legislation and changes in policy have connected the DTC to additional benefits that can help support even those without a taxable income.

Most recently, as part of its COVID-19 relief plan, the Federal Government announced that it will provide a one-time payment of up to $600 to people with disabilities who have the DTC or other federal disability supports. This announcement highlights the DTC as one of the primary ways the Federal Government recognizes disabled populations in Canada. However, for many in the disability community, this announcement is the first time they are hearing about the credit.

The continued lack of awareness about the DTC and its benefits is due, in part, to the shortcomings of its design. Eligibility for the credit does not adequately capture all Canadians with disabilities who need support. For those relying on provincial disability supports including PWD, AISH, or ODSP, the non-refundable nature of the credit does little to defray extraordinary costs.

Benefits of the DTC

But while the DTC has its limitations, there are reasons why those eligible for the credit should apply. Not only is the DTC a qualifier for the new payment, it is a gateway to other federal benefits such as the Home Accessibility Tax Credit, Home Buyer’s Amount, Caregiver’s Credit, and more. DTC holders receive an additional disability supplement for benefits including the Canada Workers Benefit (CWB) or Child Disability Benefit (CDB). With the DTC, those who require attendant care services at home can claim costs on their taxes as medical expenses.

Perhaps the most significant benefit that DTC holders can access is the ability to open a Registered Disability Savings Plan (RDSP)—a long-term savings plan designed to help those with disabilities save for their future. Lower income individuals who may not benefit from a tax credit could still find the RDSP worthwhile. Those under 49 can access up to $90,000 is government grants and bonds. Find more information about the RDSP at RDSP.com.

Applying for the DTC

To qualify for the $600 payment, the federal government is accepting new DTC applications until December 31, 2020. Those who apply after the deadline can still benefit from the DTC but will not receive the payment.

Individuals experiencing restrictions in vision, speaking, hearing, walking, feeding, dressing, eating or preparing food, toileting, mental functioning, or those who require life sustaining therapy, can apply by filling out the Disability Tax Certificate (form T2201) with the help of a qualified health professional. Applications can be received by mail or online through a taxpayer’s MyAccount.

Some tips on applying:

  • Doctors are not the only medical professionals that can help with the application. Choose a health practitioner than knows your restrictions well.
  • Eligibility is not based on diagnosis but on how you are restricted in performing basic activities. Write thorough notes about your restrictions in each of the eligible categories you want to apply for and to take these to a qualified health professional. Compare yourself to another person your age who doesn’t live with your restrictions. Be specific.
  • Postal services may be disrupted due to COVID. If you have access to the internet, set up your MyAccount to ensure your application reaches the CRA by the December 31, deadline.

Undoubtedly, circumstances around COVID-19 have made an already arduous application process even more difficult. Individuals and families have had to adapt to changing services and supports. People have less access to regular appointments with health professionals. When people are feeling a heightened sense of isolation and collective anxiety, applications like the DTC can feel overwhelming, and are often left on the back burner. Some people may be needing support through this application process.

When looking for support, however, people should be wary of scams or companies that abuse the system. While the credibility of the services third-party companies offer can vary widely, some charge between 15 – 40 percent of their client’s DTC returns or RDSP earnings. Recently proposed Disability Tax Credit Promoters Restrictions Regulations will cap fees associated with help with the DTC. But these regulations, alongside other DTC reform initiatives, have been stalled amid the need to divert resources towards other COVID-19 related benefits.

While low-income individuals are experiencing added financial strain, fees associated with the application can be another barrier to accessing the DTC. To lessen these barriers, some non-profit organizations and advocacy groups provide direct service with the DTC application, renewal, and denial process, free of charge.

As we continue to feel the effects of the pandemic, we know that there will continue to be people left in the margins of any relief plan. The DTC is not an effective nor sufficient measure of Canadians with disabilities in need of financial relief. We continue to advocate for policy changes that address gaps in existing support packages. But for now, we also provide DTC support for those that need.

 

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This article was written by Disability Alliance BC, a non-profit based in Vancouver.

Disability Alliance BC is a provincial, cross-disability voice in British Columbia that champions issues impacting the lives of people with disabilities through our direct services, community partnerships, advocacy, research and publications. DABC is also part of Access RDSP; a partnership program with BCANDS and Plan Institute, that provides support to Canadians wanting to open an RDSP. To learn more go to rdsp.com/access-rdsp