Proposed Disability Tax Credit Fee Limits

The federal government proposes to limit the fee that a service provider (other than a doctor or other medical practitioner) can charge for helping a taxpayer apply for a disability tax credit (DTC) or in claiming disability tax credit deductions on an individual income tax return.

Under proposed regulations, the fee limit will be as follows.

(a)        A limit of $100 for assistance in submitting Form T2201 (the application form for the disability tax credit).

(b)        An annual limit of $100 for claiming the disability tax credit on an income tax return.

The Canada Revenue Agency is concerned that some service providers approach families with a disabled individual and offer to assist in filing Form T2201 and claiming the disability tax credit. These service providers often claim that the application process is very difficult and charge a contingency fee of between 15% and 40% of the resulting income tax refund. This reduces the refund amount that can be used for the benefit of the disabled family member.

Claiming the disability tax credit is not overly complex. Simply download Form T2201 from the CRA website (click here for the form). Complete Part A of the form. Part A consists of a single page that requests basic identification information. When filling in Part A, check the Yes box in Section 3 of Part A (toward the bottom of the page, just above the signature line). If you check this box and the claim is successful, the CRA will automatically adjust up to nine prior income tax returns in order to allow the claim in those prior years. This can result in a significant tax refund.

After filling in Part A of the form, have a medical practitioner complete Part B. This is the more detailed portion of the form and includes all the medical information. As noted, the medical practitioner is not subject to any fee limit for filling in Part B.

Then submit the completed and signed form to the CRA.

The CRA will review the submitted form in order to determine if the person meets the eligibility requirements. This will be based on the information provided by the medical practitioner. If the claim is successful and you checked the Yes box in Section 3 of Part A, the CRA will automatically adjust up to nine prior income tax returns in order to allow the claim for those prior years.

Once the Form T2201 has been approved, that means that the DTC can be claimed unless and until the CRA requests that you complete a new Form T2201. You do not have to submit a new Form T2201 every year.

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