Update: On June 23 2022, new legislation was introduced changing the requirements to Life Sustaining Therapy, and automatically qualifying all type 1 diabetics (from 2021 forward). For more information on the legislative changes and how it affects Type 1 Diabetics, click here.

If you are an insulin dependent diabetic or require dialysis, you may qualify for the Disability Tax Credit. How? Under the basic activity of daily living (BADL), Life Sustaining Therapy.

The Disability Tax Credit is a non-refundable tax credit (meaning your refund is based on your taxable income). It is unique in the sense that it is also retroactive up to 10 taxation years. The DTC is used to reduce the amount of income tax you owe and offset the costs of living with an impairment that affects you on a daily basis. The credit ranges from approx. $1,500-$2,500 per year depending on your province (as there is a federal amount as well as a provincial amount), as well as the amount of income tax you have paid.

When approved retroactively up to 10 years, again depending on a number of factors – this can result in a refund in the range of approx. $15,000 – $25,000 from the Canada Revenue Agency (CRA) paid directly to you. The refund you receive is not taxable as it is not income. It is a refund of taxes you have overpaid once the disability amount has been applied to your tax returns.

How do I qualify?

It is important to note that there is no master A-Z list of conditions that qualify for the credit. Eligibility is dependent upon how you are affected on a daily basis. In the case of Life Sustaining Therapy, the requirements are as follows:

1) The impairment must have lasted, OR is expected to last for a continuous period of at least 12 months.
2) The therapy is used to support a vital function.
3) The therapy is administered a min. of 2x per week.
4) The therapy on average takes 14 hours per week to administer.

Insulin Dependent Diabetics – What Qualifies?

Let’s break down the requirements for an insulin dependent diabetic:

1) The therapy is used to support a vital function. Insulin is used to sustain life. This requirement is being met by all insulin dependent diabetics.

2) The therapy is administered a min. of 2x per week. Insulin injections are done a minimum of 1x daily. This requirement is being met by all insulin dependent diabetics. In the cases where an insulin pump is being used, again – this is being used many times throughout the day.

3) The therapy on average takes 14 hours per week to administer. What goes into being an insulin dependent diabetic? This time is not just based on injecting insulin, rather – many activities that must be done on a daily basis. Testing glucose levels, logging blood sugars, treating highs/lows, preparing insulin and injection sites are all activities that contribute towards the requirements. – As of June 23 2022, all Type 1 Diabetics were deemed to automatically be meeting this requirement.

Insulin Dependent Diabetics – What Does Not Qualify?

For years 2020 and prior, carbohydrate counting would not contribute towards the requirements. However as of June 23 2022, carb counting can now be used (on years 2021 and forward). Exercise and doctor appointments cannot contribute towards the 14 hour per week requirement. If any of these activities are listed on your application, you will be denied.

Is this only for Type 1 Diabetics? I am a type 2 but I take insulin…

You do not have to be a type 1 diabetic to qualify. Though as of June 23 2022, a Type 1 automatically qualifies, a type 2 diabetic that is administering insulin is doing so for a specific reason – it is a requirement to regulate glucose levels. So long as the requirements above are being met, then the individual administering insulin would qualify regardless of being a type 1 or type 2 diabetic.

Dialysis – What qualifies?

Like an insulin dependent diabetic, those that require dialysis are having this therapy to stay alive. Generally speaking, Dialysis can take anywhere from 4-5 hours to have administered and is typically done 3x per week.

I think I am eligible…what do I do?

Talk to your physician. In order to qualify for the credit, have your physician complete Form T2201.

Your physician’s role in this process is simply to provide factual medical information. The Canada Revenue Agency (CRA) will ultimately determine your eligibility. It does not have to be your general practitioner that completes your application. When qualifying under Life Sustaining Therapy, any medical doctor, or nurse practitioner, can sign your application form.

Are there other benefits that are available?

Yes! Once qualified, the Disability Tax Credit can act as a gateway to open up several other support programs such as the Working Income Tax Benefit (WITB), Child Disability Benefit (CDB) as well as the Registered Disability Savings Plan (RDSP).

To learn more about the Disability Tax Credit, how it works and the eligibility requirements – you can review our page on the Disability Tax Credit.

What is the Registered Disability Savings Plan (RDSP)?

An RDSP is a one of a kind registered savings plan meant to help those living with disabilities plan for their financial future.

Account holders of an RDSP may be eligible for up to $70,000 in Grants and $20,000 in Bonds. This is over the lifetime of their RDSP account. Grants and bonds are dependent upon family net income. In many cases, it is possible to see thousands of dollars in bonds without having to make a single contribution to your RDSP account. At the very least, regardless of how much an individuals income may be – it possible to see 1:1 matching in grants vs contributions, so effectively 100% ROI, plus growth!

Contributions to the plan are not tax deductible, but the earnings grow tax free while held in the plan.

Are you eligible to claim the Disability Tax Credit? If so, open your Registered Disability Savings Pan today!