Between doctors, accountants and the Canada Revenue Agency, who does what in the Disability Tax Credit process?
Where do you go to for personal finance tips and advice? What about disability-related finance tips?
Most Canadians start with their family and friends – and advocacy groups can provide some information about relevant benefits. But when you have limited time and resources, it can be challenging to sift for the information most important and relevant to you.
With the Disability Tax Credit process, there are 3 main actors involved:
• the Canada Revenue Agency (CRA)
• the qualified medical practitioner (doctor) and
• the tax specialist
Consider there are many misunderstandings about how the Disability Tax Credit works and what each actor’s role entails.
The Canada Revenue Agency
Doctors, tax professionals, disability advocates and regular Canadians alike, commonly mistaken the doctor to be the one to answer, “Does my disability qualify me for the Disability Tax Credit?”
Actually, the CRA decides if someone’s condition qualifies them for the tax credit, based on how a medical practitioner completes the T2201 (Disability Tax Credit certificate or application) form.
This is how the CRA’s role looks:
• they create and enforce the Disability Tax Credit program guidelines (including eligibility and amounts claimable)
• based on a medical practitioner’s responses on the DTC certificate, the CRA determines if someone’s condition qualifies as a “disability” (we use quotes here because the CRA isn’t looking for the word “disability” – the CRA is really looking for “is this person markedly restricted?”
• they reassess your tax returns, upon request, to disburse any credits or refunds
The medical practitioner
When it comes to the DTC process, many disabled Canadians tend to first wonder, “Am I disabled enough to qualify”? That’s simply not the right question to ask – and not one that the medical practitioner answers.
The CRA entrusts the medical practitioner to indicate on the DTC certificate if a patient has a marked restriction that is severe and prolonged. These terms are observational – not medical – and definitely not based on any particular beliefs or opinions of what “disability” looks or acts like.
After all, there is no such thing as a medical diagnosis for “disability” and considering how many disability benefit programs are out there, the varying guidelines and eligibility requirements can get confusing.
The tax specialist
Once the CRA approves someone’s Disability Tax Credit certificate, it’s time to claim the actual credit. This can result in a refund on retroactive credits and/or a reduction in tax payable for current or future tax returns.
Most tax specialists, like accountants, use tax software that automatically applies any available tax credits. Some more knowledgeable tax specialists might know that you can transfer any remainder disability tax credits to a supporting family member – which is itself a separate process.
The disability tax benefit service providers
With so many disability benefit programs available across Canada, disability tax benefit service providers are experts of the technical elements involved in these programs. They’re familiar with all the guidelines, restrictions and nuanced details or government changes to these programs, and apply their expertise to your unique situation.
Some people qualify for more than one disability benefit program – and wouldn’t know that the programs’ may conflict with others. For example, the Ontario Disability Support Program (ODSP) is meant to support disabled Ontarians, but places limitations on the amount of assets one can own to remain eligible for the program. Disability tax benefit service providers will account for these types of special-knowledge rules to avoid unfair penalties to their clients.
There are so many disability benefits out there – each with their own set of guidelines and procedures to follow. This means doctors are often asked by their patients to complete forms for multiple programs with similar-sounding eligibility requirements.
Disability tax benefit professionals spend a lot of time educating doctors about the different programs and helping them to interpret the guidelines to complete the necessary forms accurately.
When it comes to claiming the Disability Tax Credit, DTC professionals use their expertise to maximize claims and refunds. They do this by training their tax specialists to apply special knowledge of how the program works, all relevant federal and provincial tax rules, and unique information about their clients.
Our role
To summarize above, there are 2 parts to the Disability Tax Credit program:
1) The CRA must approve your Disability Tax Credit certificate (a medical practitioner is necessary here)
2) You must claim the Disability Tax Credit (a tax specialist is usually necessary here)
Companies like ours’ bridge the gap between all parties involved and work on your behalf to maximize your refund. We look beyond simply the numbers in your tax return, and consider all the external variables that are simultaneously impacted.
Because we take the time to know our clients – their unique family, living and financial situation – we know how the DTC can impact your tuition, pension, ODSP, potential Alternative Minimum Taxes, Working Income Tax Benefit program, medical expense claims and many more disability benefit programs. We account for anything that can go wrong and maximize your DTC claim when we work for you.
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