The federal government has announced several new measures to simplify the disability tax credit (DTC) application process for eligible Canadians. The improvements were included in the spring economic update, which notes that "barriers in navigating the application process remain for many" despite growing year-over-year access to the credit.
The DTC is a non-refundable tax credit that reduces the amount of income tax paid by individuals with physical or mental disabilities, or their supporting family members. Eligibility for the credit is a key requirement to qualify for other federal benefits, including the Canada Disability Benefit, the Child Disability Benefit, the Registered Disability Savings Plan, and the Canada Disability Savings Grant and Bond.
Currently, applicants must have a medical practitioner certify the effects of their impairment, a requirement the government says "does add to their administrative burden". Individuals may qualify if they have a marked restriction in at least one category: walking, mental functions, dressing, feeding, eliminating (bowel or bladder functions), hearing, speaking, vision, or if they require life-sustaining therapy.
The government proposes three new measures to improve the application process and reduce paperwork for medical practitioners. The first measure streamlines the application process for individuals with a formal diagnosis of certain long-lasting medical conditions that have been identified by the Canada Revenue Agency (CRA) as satisfying the disability impact criteria for the credit. The government emphasised that this proposal will not change the disability criteria to qualify for the tax credit, and the CRA will continue to have authority to request additional information to verify eligibility. This measure will take effect in 2027 for the 2026 and subsequent taxation years.
The government also plans to expand the list of medical practitioners who can certify eligibility as part of the broader effort to streamline access.
