Does mental illness qualify for the Disability Tax Credit? The short answer to this question is yes; mental illness can qualify for a Disability Tax Credit. However, to make sure you fit all of the criteria required for a successful application, we have compiled a handy go-to list that answers all of your questions about the process.
What is a Disability Tax Credit?
The Disability Tax Credit is a non-refundable tax credit that reduces the amount of income taxes you have to pay each year. It is based on how your health condition impacts your basic activities of daily living (walking, dressing, etc.). For every year that you paid income taxes while you were impaired, you might be eligible to receive a retroactive return from the CRA.
It was devised by the Canadian Government and Canadian Revenue Agency (CRA) to reduce the amount of income tax for Canadian Citizens. More specifically, for Canadian Citizens with disabilities and/or the family members who assist those with disabilities and suffer financially.
The Disability Tax Credit operates on both the federal level and provincial levels. The provincial portion of the Disability Tax Credit granted varies from province to province, but the federal portion of the Disability Tax Credit given remains the same across the country.
Mental Illness – Eligibility Criteria to Receive a Disability Tax Credit
Base requirements state that
- You must be a Canadian citizen
- Suffer from prolonged or permanent restrictive impairment to your capacity to perform activities of daily living (ADL).
What is Considered a Mental Illness?
According to the CRA (Canada Revenue Agency), you must meet both the following criteria for your mental illness to be counted for Disability Tax Credits;
- Unable or take an unreasonable time to complete normal functions for everyday life without assistance due to your condition.
- This must be true all of the time (or a minimum of 90% of the time).
- Functions for everyday life include adaptive functioning (self-care, social interactions, simple transactions, etc.), memory functions (remembering instructions, basic instructions, etc.) and judgment, problem-solving, and goal setting.
The following mental illness conditions are deemed potentially eligible to receive the Disability Tax Credit;
- Psychotic conditions (for example, schizophrenia)
- Mood disorders (bipolar disorder or depression, for example)
- Anxiety conditions
- Substance abuse disorders
- Personality disorders
- Trauma-related disorders (for example, post-traumatic stress disorder)
Click here for a complete list of conditions that may qualify for the Disability Tax Credit.
Where Do You Apply?
There are two routes people may take to apply;
- Complete the application through a Disability Tax Credit firm that specializes in the process (like Swift)
- Complete the application by yourself
Swift understands how to get you approved. We handle every aspect of your application. We work with you, your doctor, and the CRA to ensure that your application has the best chance of success.
The process goes like this:
- The first step is a free assessment with us over the phone to check if you qualify and meet the CRA’s eligibility requirements.
- We send you a few documents over email to be signed electronically if you qualify.
- We perform a tax assessment on your behalf to give you an estimate of your return.
- Our team will then complete all the forms for you and your doctor, using the correct vocabulary for CRA approval, and fax them to your doctor. Finally, you book an appointment (it can be over the phone) with your doctor to go over the information.
- You return the forms to us, make sure everything is correct, and then submit the documents to the CRA.
- We follow up with the CRA on your application every 2-3 days to check for approval.
- If the application has not been approved, we follow up on the reason and appeal the decision.
Another way you can apply for the Disability Tax Credit is by completing the forms yourself. The form can be found on the CRA website. Although, this way can be difficult and time-consuming.
How long does an assessment take?
Generally, it takes between 3-9 months to complete the assessment of the application. However, this can significantly differ due to the multiple factors influencing the evaluation, such as the processing center location, time of year, and the complexity of your impairment or application.
Common Reasons For a Denied Application
Missing information on the application form.
Medical Practitioner Error
Some small family practitioners may not be familiar with the Disability Tax Credit eligibility criteria and how decisions are made through CRA definitions of disabilities.
Make sure this isn’t the case with your practitioner.
Your impairment Doesn’t Qualify
The CRA assesses your condition on how your “activities to daily living” (ADL) are impeded, NOT the diagnoses of your disability. Therefore, make sure this is highlighted in your application.
Duration of Impairment Didn’t Qualify
If you have suffered from the impairment for less than 12 months OR if the impairment affects you less than 90% of the time, you will not qualify.
Supporting Medical Documents Omitted
Make sure to include all supporting documents or reports that are noteworthy to the application.
*The information in this article is based on the latest eligibility definitions and criteria, direct from official Canadian government sources.