Planning for the future with a disability can be challenging. The Disability Tax Credit (DTC) and the Registered Disability Savings Plan (RDSP) provide important tax relief and long-term savings opportunities.
Disability Tax Credit (DTC)
The DTC is a non-refundable tax credit that reduces the income tax owed by a person with a disability or their supporting family member.
Eligibility for the DTC depends on how the disability affects daily life, not on the medical diagnosis. To qualify, the condition must cause significant and lasting limitations in basic activities like walking, feeding, or mental functions, and a medical practitioner must certify it. If the person with the disability can’t fully use the credit, it may be transferred to a supporting family member.
Applying for the Disability Tax Credit (DTC)
Applications are made through Form T2201, which includes two parts:
- Part A: Completed by the applicant with basic personal details and the option to apply the credit retroactively for up to 10 years.
- Part B: This section confirms the individual’s limitations and is completed by a medical practitioner (doctor, nurse practitioner, or specialist, depending on the impairment).
The form can be submitted by mail or through CRA’s My Account portal, which also allows medical practitioners to submit their portion online. If an application is denied, it can be reviewed again or appealed.
Registered Disability Savings Plans
Qualifying for the DTC also makes you eligible for an RDSP, which is designed to help people with disabilities save for the future. While contributions are not tax-deductible, the growth inside the plan is tax-deferred, and there are valuable government incentives:
- Government Grants: Contributions can be matched by up to 300%, depending on family income.
- Government Bonds: Provides savings support of up to $1,000 per year for low- and modest-income individuals, even without personal contributions.
- Tax-deferred growth: Investments grow tax-free until withdrawn.
Accounting and Advisory Support for You
The DTC and RDSP are valuable tools, but they’re just one part of your financial picture. At KWB, we help business owners make the most of all available programs and opportunities that you qualify for. Book an introductory meeting here to learn more about becoming a KWB client today.