Disability and the Tax Return

By Geoff Sgarbossa, CD, CFP, RIS, Financial Planner 

There is a whole layer of credits and deductions available to a person living with a disability and to the people supporting them, and almost all of it must be asked for. None of it arrives on its own. This discussion is focused on the tax return and is meant as an introduction to know that a thing exists. Not to list all the eligibility criteria, planning considerations, and admin processing of the thing.

The Federal Disability Tax Credit (DTC)

This is the tax credit that seems to be the most recognized. It is also a pre-requisite for many other disability-related benefits and programs, so this is generally a very good place to start. A medical practitioner certifies the effect of the impairment rather than a specific diagnosis, and the Canada Revenue Agency decides whether it meets eligibility thresholds. What is being measured is how different impairments affect Activities of Daily Living (ADL), including walking, dressing, feeding, eliminating, mental functions, hearing, speaking, and vision. Eligibility criteria typically require an inability to do an activity at all, or it takes roughly three times as long to complete as someone of similar age without the impairment. Life-sustaining therapy can also lead to approval if time commitments and other criteria are met.

It may be approved retroactively for past years, which sometimes produces a refund nobody was expecting. Where the person cannot use it, the unused portion may be transferred to a supporting relative. And there is an extra supplement for a person under 18, if not reduced by childcare and attendant care expenses claimed for the same child.

What the Person May Claim on their Federal Return

The disability supports deduction, it covers expenses paid so the person could work, attend school, or carry out research under a grant. Attendant care, sign language interpreting, tutoring, and reading software are typical examples, and the eligible list is long and has been growing to include practical items such as an ergonomic work chair. If an expense was needed in order to earn the income or attend the classes, it is worth asking about. Only the person with the disability may claim it, and it must be claimed in the year paid, with nothing carried forward. Being a deduction rather than a credit, it lowers net income, which can quietly improve income-tested benefits as well.

Medical expenses may be claimed for any twelve-month period ending in the year, reduced by the lesser of three percent of net income and an indexed ceiling. Because of that reduction, the claim is usually pooled on one return, and the family should test which spouse produces the better result rather than assuming it is the lower earner. Expenses paid for a dependant may be included. There is also a separate refundable supplement for people with modest working income and high medical costs, which pays out even where no tax is owed.

Attendant care is where the trap lives. Claiming fees for full-time care in a nursing home as a medical expense may reduce or eliminate the ability to claim a disability amount for that person that year. It is one or the other. Run both versions of the return before deciding, because in high-cost years the medical expense route wins, and in other years it may not.

Home accessibility expenses cover renovation costs that make a home safer or easier to get around in, for someone approved for the disability tax credit or aged 65 and over. There is an annual limit per dwelling, and the claim may be split among the family members who paid. Starting with the 2026 tax year, an expense claimed as a medical expense may no longer be claimed here, so those two need to be coordinated rather than stacked. And two easy ones to miss. The home buyers' amount is available to a person eligible for the disability tax credit even where the home is not their first, provided the move improves accessibility or suitability, and the Canada workers benefit carries a refundable disability supplement for workers approved for the credit.

What the Family May Claim on their Federal Return

The Canada caregiver credit is for supporting a spouse, a minor child, an eligible dependant, or another dependent relative who has a mental or physical infirmity. The dependant does not have to live with the caregiver. There is no claim for supporting a healthy senior, because infirmity is the whole test.

Childcare expenses carry a higher annual limit for a child who qualifies for the disability tax credit, and that limit applies at any age rather than stopping at the usual cut-off, though remember the interaction with the DTC child supplement mentioned earlier.

Transfers are the other family lever. Where the person cannot use their own credits, the unused disability amount may move to a supporting relative, and unused tuition amounts may move to a parent, grandparent, or spouse. A spouse or common-law partner amount, or an eligible dependant amount, may also be available, and each of those is topped up by the caregiver amount.

On documentation, the Canada Revenue Agency may ask for a signed statement from a medical practitioner describing the infirmity, and no further statement is needed where an approved disability tax credit certificate is already on file. This is one more reason to get the certificate done first and get it done properly.

Ontario Claims

Ontario, as well as most other provinces and territories, runs the same ideas through their own provincial forms. The disability amount, the transfer of that amount from a dependant, the caregiver amount for an adult relative with an impairment, and medical expenses all appear again on the Ontario side. They generally follow automatically once the federal claim is made rather than needing a separate application.

Ontario then adds two of its own that pay even where no tax is owed. The seniors care at home credit is a refundable credit that covers a share of the same medical expenses where the person or their spouse turned 70 or older in the year, it is income tested, and it may be claimed on top of the medical expense credits rather than instead of them. The Ontario childcare credit pays a share of childcare expenses on top of the federal deduction, with a higher limit for a child with a severe disability. Do not assume every federal claim has an Ontario twin, though. The home accessibility credit does not, and Ontario has let earlier renovation credits expire.

Who should File

Who must file, and who should file, were covered in Serious Money Discussion: Personal Income Taxes, so I will not belabour the point here. But there is one situation that comes up constantly in families supporting a child with a disability. Have the child start filing a return in the year they turn 18, whether there is income to report or not. 

While the child is a minor, income-tested amounts such as the disability grant and bond entitlements are calculated using the parent or guardian's family net income. In the year the beneficiary turns 19, those entitlements are calculated using the beneficiary's own net income, whether they are still living at home or not. Where no return was filed the previous year, there is no filing data to use, and minimum entitlements are assumed.

Conclusion

The tax return is the one place where a disability shows up as a refund rather than a cost, and it is also the place where families leave the most money behind. Apply for the disability tax credit and keep it current. Then file every single year, because that return is what many income-tested entitlements are based on. Living with a disability, or supporting someone who is, often makes it difficult to earn enough to make ends meet. But there is a great deal available to both sides of that arrangement, so speak to one of our Wealth Advisors at Keill & Associates to make sure your family is benefiting from all of it.

Disclaimer and Notice to Reader: This Serious Money Paper should not be construed as financial, legal, or tax advice. It is intended only as a general statement and explanation of the topic matter. Tax rules and program amounts can change, and individual circumstances matter. Professional financial, tax, and legal advice should be obtained for the reader's own personal situation. For more information on this topic or how it applies to your family, please contact our Wealth Advisory Team.

Posted September 2026