Frequently Asked Questions

Q:   What is the Disability Tax Credit?

A:   The Disability Tax Credit is a non-refundable tax credit offered by the Canada Revenue Agency (CRA).  Under CRA guidelines, individuals who require ‘Life-Sustaining Therapy’ can be considered for the tax credit.   Individuals living with Type 1 diabetes need daily infusions of insulin in order to stay alive.

Q:   What is the difference between Type 1  and Type 2 Diabetes?

A:   Type 1 Diabetes: Type 1 diabetes occurs when the pancreas does not produce any insulin.  Insulin is a hormone that regulates the level of glucose (sugar) in your blood. Without insulin, glucose builds up in your blood instead of being used for energy.  Without insulin,  an individual with Type 1 diabetes will die.  Consequently,  insulin is life-sustaining therapy.

The cause of Type 1 diabetes remains unknown. It is not caused by eating too much sugar and is not preventable. The current thought is that Type 1 diabetes occurs when the body’s immune system destroys the cells that make insulin. There is no cure.

Type 2 Diabetes: Type 2 diabetes occurs when the pancreas does not produce enough insulin, or your body does not properly use the insulin it makes.  As a result, glucose (sugar) builds up in your blood instead of being used for energy.

Many individuals with Type 2 diabetes control their blood sugar with pills. Some take insulin. Typically,  individuals with Type 2 diabetes will not qualify for ‘Life-Sustaining Therapy’ under previous or current CRA guidelines.

Q:   What is a tax credit?

A:   A tax credit is an amount that you can use to reduce your taxable income when you file your taxes.  If you are paying little or no income tax,  the credit can be transferred to a spouse, common-law partner, parent or another family member you rely on for the basic necessities of life (food, shelter or clothing).

Q:   My child has Type 1 diabetes.   Can I apply for the tax credit?

A:   Yes you can.  The credit can be transferred to a parent who is paying income tax.  Parents of a child who is approved for the DTC may also be eligible for Caregiver.  In addition,  Parents may be eligible for Child Disability Benefits.  This credit is retroactive and is issued monthly until the child turns 18 years old.   In addition,  the CRA offers Registered Disability Plans (bonds and grants) to individuals who are approved for the DTC.   The programs are especially beneficial for children and low-income individuals.  Please review  New DTC Rules.

Q:   I have been diagnosed with Type 1 Diabetes.  I take insulin.  Does that mean I automatically qualify for the tax credit?

A:   Recently,  the Canada Revenue Agency changed the requirements to qualify for the Disability Tax Credit. Please Review New DTC Rules.

         o  For individuals diagnosed or renewing an existing DTC in 2021 or later,  approval is automatic. 

         o  For individuals diagnosed in 2020 or previously,  the previous rules must be satisfied to get approval for years prior to 2021.   

The Disability Tax Credit is retroactive for 10 years.  To achieve full tax credit benefits,  you need to apply under both previous and current guidelines.  This can be done in one application.

Q:   I’m not sure I spend 14 hrs. a week managing my diabetes.

A:   Diabetes management varies from one individual to another.  Time varies based on the equipment used to infuse insulin and monitor glucose results.  As a person who has lived long-term with T1D,  I will work with you to identify your day-to-day activities and the time you spend on them. Most individuals with T1D  ‘forget’ about things they do every day to manage their disease.  This ‘time spent’ assessment is one of the key elements of the service I provide.

Q:   Who will I be dealing with at your company?

A:   You will work with Brenda McCormick only.  After almost 50 years as  T1D,  I’m an expert!

Q:   Why didn’t my Doctor or Accountant mention this tax credit to me?

A:   A Doctor’s first concern is your health, not your taxes.  Filling out government forms is labour intensive and takes time away from their practice.  While an accountant is knowledgeable about taxes, they cannot provide the medical details required to complete the Disability Tax Credit form.

Q:   My diabetic supplies are covered by a medical plan.  Can I still apply?

A:   Yes you can.

Q:   If I get a tax credit refund,  do I have to pay taxes on that money?

A:   No, you will not have to pay taxes on the money you receive.  However, the CRA will give you interest on the refunds they pay to you.  You must claim this interest in next year’s income tax.

Q:   If I get approved for the tax credit, who will receive my refund?

A:   You will receive your refund directly (cheque or direct deposit).

Q:   How long does it take for the CRA to approve my application and issue refunds?

A:   Based on my experience, the entire process (approval and subsequent refunds) takes from  4 to 5 months.   However, it can be much longer depending on CRA  backlogs and requests for additional information.