The costs associated with supporting a disabled family member can be overwhelming, and being approved for the Disability tax credit (DTC) helps offset these expenses. However, because it is a non-refundable credit, its value depends on the claimant’s taxable income, which is often zero for persons who receive provincial disability supports. If the qualified DTC individual has little to no taxable income, the credit can be transferred to a supporting caregiver.
Who is eligible to receive the DTC transfer?
To qualify for the DTC transfer, the caregiver must be a Canadian resident who provides the disabled individual with basic necessities, such as food, shelter, or clothing. Eligible recipients include a spouse or common-law partner, as well as parents, grandparents, children, grandchildren, siblings, aunts, uncles, nieces, or nephews, including those related through the spouse or partner.
Retroactive claims
If a caregiver has missed out on previous years, the DTC transfer can be applied retroactively. If the DTC recipient was eligible in the past, the CRA can go back as far as 10 years to claim the tax credit transfers and potentially award a large refunds for incomes taxes overpaid.
How to claim the DTC transfer?
Line 32600 on the T1 for spouses and common law partners, and Schedule 2 must also be completed.
Use Line 31800 on the T1 for other family members. (Schedule 2 does not need to be completed for other family members)
Note: In addition to the DTC transfer, the Canada Caregiver Credit (CCC) can also be claimed by caregivers. Both credits can be claimed at the same time.
Note 2: If the dependent is already approved for the DTC, an additional medical note is not necessary to claim the CCC as the Canada Revenue Agency (CRA) accepts the DTC approval as proof of impairment.