Disability Tax Credit Denied? How to Object and Appeal

To qualify, a person must have a severe and prolonged impairment in physical or mental functions. Prolonged means the impairment has lasted, or is expected to last, at least 12 continuous months. A medical practitioner must certify Form T2201, the Disability Tax Credit Certificate, and the CRA decides eligibility based on that certificate and any follow-up information.

Eligibility can be based on a marked restriction in one basic activity of daily living, such as walking, speaking, hearing, dressing, feeding, eliminating, or mental functions necessary for everyday life; on significant restrictions in two or more activities that together equal a marked restriction; on vision; or on the need for life-sustaining therapy, such as insulin therapy, for at least 14 hours per week.

A marked restriction means being unable, or taking an inordinate amount of time, to perform the activity all or substantially all of the time, even with therapy and appropriate devices. Many denials happen because the medical practitioner described the diagnosis rather than the functional effect on daily activities, or did not clearly address how often and how long tasks take.

The CRA often sends follow-up questionnaires to medical practitioners. Brief or inconsistent answers can sink an otherwise valid claim. Mental function impairments, such as those associated with autism, ADHD, depression, anxiety or brain injury, are frequently misunderstood and are a common source of denials and appeals.

Approval does more than reduce income tax. It can unlock the disability supplement for children under 18, the Child Disability Benefit for families receiving the Canada Child Benefit, eligibility to open a Registered Disability Savings Plan with access to government grants and bonds, and the ability to transfer unused credits to a supporting spouse, parent or other family member.

Once approved, you can ask the CRA to reassess prior years in which the impairment existed. Requests for refunds for earlier years are generally limited to the previous 10 calendar years, so delays can permanently cost money.

A Notice of Objection lets an appeals officer independent of the original decision reconsider your claim. Strong objections include detailed medical evidence that addresses the legal test, statements from people who see your daily functioning, and, where helpful, a new or supplementary T2201.

If the objection fails, you can appeal to the Tax Court of Canada. Most DTC appeals proceed under the informal procedure, which is less formal and faster than the general procedure. The court hears evidence from you and witnesses about daily functioning, and the judge decides whether the legal test is met. Courts have often interpreted the DTC provisions with compassion, in light of their purpose.

Doctors, nurse practitioners and other medical practitioners who complete Form T2201 are often busy, and may not be familiar with how the CRA applies the legal test. Giving them a clear summary of your daily limitations, how long tasks take, and how often you need help can result in a more accurate certificate. Asking the practitioner to describe functional effects rather than only the diagnosis is especially important.