The federal budget for 2021 proposes several changes that will ease access to the Disability Tax Credit (“DTC”).

To be eligible for the DTC, an individual must have a certificate confirming they have a severe and prolonged impairment in physical or mental functions. The effects of the impairment must be such that, even with appropriate devices, medication, and therapy, the individual is blind or is:

• markedly restricted in their ability to perform a basic activity of daily living or would be so restricted were it not for certain therapy (“extensive life-sustaining therapy”); or

• significantly restricted in their ability to perform more than one basic activity of daily living where the cumulative effect of those restrictions is comparable to being markedly restricted in a basic activity of daily living.

The Income Tax Act recognizes mental functions necessary for everyday life as one of the basic activities of daily living. Under current rules, these include:

• memory;

• problem-solving, goal-setting, and judgement; and

• adaptive functioning.

Budget 2021 proposes that “mental functions necessary for everyday life” be expanded to include:

• attention;

• concentration;

• memory;

• judgement;

• perception of reality;

• problem-solving;

• goal-setting;

• regulation of behaviour and emotions;

• verbal and non-verbal comprehension; and

• adaptive functioning.

Under the current rules, “extensive life-sustaining therapy” is therapy that:

• is essential to sustain a vital function;

• is required to be administered at least three times each week for a total duration averaging not less than 14 hours a week; and

• cannot reasonably be expected to be of significant benefit to an individual who does not have a severe and prolonged impairment in physical or mental functions.

Proposed changes aim to:

• allow reasonable time spent determining dietary intake and/or physical exertion to be considered part of the therapy where this information is essential to and is undertaken for the purpose of determining the dosage of medication that must be adjusted daily;

• clarify that the exclusion of time for medical appointments does not apply to appointments to receive therapy or determine the daily dosage of medication;

• provide that the exclusion of time for recuperation after therapy does not apply to medically required recuperation; and

• in the case of therapy that requires the daily consumption of a medical food or formula to limit intake of a particular compound to levels required for the proper development or functioning of the body, allow reasonable time spent on activities directly related to the determination of the amount of the compound that can be safely consumed to be considered part of the therapy.

The budget also proposes to count the time reasonably required by another person to assist an individual in performing and supervising the therapy, where the individual is incapable of performing their therapy on their own due to the impacts of their disability.

The budget further proposes to reduce the required number of therapy sessions per week from three to two (however, the 14 hour per week requirement would remain unchanged).

The information presented is only of a general nature, may omit many details and special rules, is current only as of its published date, and accordingly cannot be regarded as legal or tax advice. Please contact our office for more information on this subject and how it pertains to your specific tax or financial situation.