Overview

The federal Disability Tax Credit (DTC) is a modest tax credit that means a great deal to people with mental and physical impairments to assist with additional costs of disability. The DTC has taken on greater significance in recent years since it opens the door to a number of federal income support programs including the Registered Disability Savings Plan (RDSP), the Child Disability Benefit, the Working Income Tax Benefit, Qualified Disability Trust Benefit.

Eligibility criteria

The eligibility criteria for an individual whose severe and prolonged impairment has lasted or is expected to last, for a continuous period of at least 12 months, all or substantially all of the time, are:

• legally blind; or
• receiving life-sustaining therapy; or
• markedly restricted or unable or it takes an inordinate amount of time to perform one or more of the basic activities of daily living including speaking, hearing, feeding, dressing, walking, eliminating, or mental functions even with appropriate therapy, medication and devices; or
• significantly restricted or unable or it takes an inordinate amount of time to perform two or more of the basic activities of daily living even with appropriate therapy, medication and devices.

90% rule is not a legal test

CRA defines "all or substantially all of the time" as being "at least 90% of the time" even though such an inflexible and narrow interpretation of the law is not supported by any of the following:

• Income Tax Act, or
• Tax Court of Canada rulings, or
• CRA's own policies.

In fact, CRA concedes that “all or substantially all” may mean less than 90% of the time according to the Income Tax Folio S1-F1-C2, Disability Tax Credit.

We have also been advised by the legislative branch of the CRA that something less than 90% could still meet the ‘substantially all’ requirement.”

 “While the words ‘substantially all’ cannot be rigidly interpreted as referring to a specific percentage in all cases, the CRA will consider that the test is met if the 90% threshold is reached.  This position does not rule out the possibility that in a particular case, depending on the facts and circumstances, a level of something less than 90% could still meet the ‘substantially all’ requirement.”

Note: The 90% rule discriminates against individuals living with severe mental impairments and other chronic diseases with recurring manifestations of disability even though the external signs and symptoms may be intermittent. The Tax Court of Canada has routinely ruled that an applicant for the DTC meets the eligibility criteria of “all or substantially all of the time” if the effects of the impairment can be triggered at any time without warning even though the external signs and symptoms may be perceived to be intermittent.