Policy Brief – Why is Uptake of the Disability Tax Credit Low in Canada?


Disability supports should be designed to provide benefit and not burdens to eligible recipients. Unfortunately, this is not a reality when it comes to one of the main benefits open to Canadians with disability: the federal Disability Tax Credit (DTC). Designed to recognize some of the higher costs faced by people with severe disabilities and their caregivers, the DTC appears to be more of a burden for many, with estimated utilisation unacceptably low at around 40 per cent of working-aged adults with qualifying disabilities.

Low uptake is a concern not only because people are missing out on the credit itself but also because eligibility to the DTC – which is not automatic – is a gateway to other important and more valuable benefits such as the Child Disability Benefit and Registered Disability Savings Plans (RDSP).




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The Disability Tax Credit: Why it Fails and How to Fix It

When the government establishes a social program whose primary purpose is to help provide support to low-income people with disabilities, its success should be measured on how well it achieves that purpose. Unfortunately, there are reasons to seriously question the usefulness of Canada’s disability tax credit since it is helping so very few of the people it is intended to support. In fact, the credit is helping only a small number of Canadians with disability who qualify for it, and least of all those in the poorest families who receive an average of only $29 annually.

There is an uncomplicated way to begin rectifying this: By making the disability tax credit refundable. Along the same lines as a guaranteed minimum income, or negative income tax, those low-income Canadians with disabilities who qualify for the credit but lack sufficient income to benefit from the credit could simply be made eligible for a refund of the amount they cannot claim.




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