Please note: See below for Special Note for RDSP Holders to protect your investment while appealing the DTC.
If you do not agree with the reason(s) to disallow the Disability Tax Credit (DTC), you may register a formal complaint by filing an Objection to have the decision reviewed by the Appeals Branch of the Canada Revenue Agency (CRA). The Objection must be filed with the regional tax office of CRA within 90 days of the date of the Notice of Assessment disallowing the tax credit. A letter is also acceptable. Provide the reasons for your Objection, along with all of the pertinent information, including name, address, phone number, Social Insurance Number, and taxation year(s) under appeal. Stress the disabling effects of your "prolonged and severe impairment" with as much detail as possible. Attach copies of any supporting medical documents. If the DTC was granted in previous years, include this information. Keep copies of all correspondence.
(Note: If you did not file your objection on time because of circumstances beyond your control, you can apply for a time extension by writing to the Chief of Appeals at your Appeals Intake Centre or by using the My Account online services. You will need to explain why you did not file your objection on time and enclose your objection. Apply as soon as possible, but the application must be made within one year after the expiration of the time limit to file an objection.)
You will receive one of two letters:
(Note: If you have missed the deadline, because of circumstances beyond your control, you also have up to one year to file an application requesting an extension to file the appeal. Provide details of your case, the reason why you need an extension and a copy of the Letter of Confirmation. Send your letter to The Tax Court of Canada, 200 Kent Street, Ottawa, ON K1A 0M1.)
Provide the reasons for your appeal in detail along with all of the pertinent information including your name, address, phone number, Social Insurance Number and taxation year(s) under appeal, the date of the Letter of Confirmation and the name of the agent or lawyer if you have someone acting on your behalf. Submit the original and two copies of the Notice of Appeal to the Tax Court in your area.
When you file the Notice of Appeal, you are identified as the Appellant and can be represented by an agent such as a relative or friend if you do not wish to represent yourself or you may retain a lawyer. (If you are represented by an agent or lawyer, you will need to inform the Tax Court by letter.)
The following steps have been summarized. Visit Tax Court of Canada Rules for the Informal Procedure or call 1-800-927-5499 if you have any questions.
The lawyer acting on acting on behalf of the Department of Justice must file the Respondent's Reply to the Notice of Appeal within 60 days outlining the facts CRA relies on for its assessment, along with statutory provisions supporting its assessment. Generally speaking, the Reply sets out which facts in the Notice of Appeal that CRA admits to and which facts the CRA denies.
The Appellant must file the Answer with the Tax Court within 30 days. Although it is not mandatory to file an Answer, it provides you with an opportunty to identify new facts in light of the Reply from CRA.
After you have received a Notice of Hearing with the date and location, the CRA lawyer will be contacting you.
If you have evidence to present, provide copies of all documents, including copies of relevant Tax Court cases, to the lawyer at least a week prior to the Hearing so that he/she will have an opportunity to review your evidence. You will also need two additional sets of copies of all documents for the Judge and the recording secretary at the time of the Hearing.
Consent to Judgement
If the lawyer acting on behalf of CRA is not confident that he or she has a solid case, you will be contacted with a settlement offer and asked to accept the Consent to Judgment acknowledging your entitlement to the DTC for the taxation year(s) in dispute.
Special Note for RDSP Holders
Unless an Election is filed with the financial institution holding the RDSP before the end of the year following the year that the beneficiary is no longer considered to have a severe or prolonged impairment in physical or mental functions, the RDSP will be terminated.
In order to ensure that the RDSP remains open during the appeal process, the holder of the plan is required to submit a letter to the financial institution (issuer of the plan) from a licensed medical doctor, certifying in writing that the beneficiary is likely to become eligible for the DTC at some point in the future because of the disabling effects of the patient’s impairment.
The doctor's letter is submitted to the financial institution which will complete the Election form, signed by the issuer and the holder of the plan, and submit it to the Employment and Social Development Canada. Otherwise, the financial institution will be required to terminate the RDSP if the DTC is not reinstated before December 31st of the year following the first year for which the beneficiary is no longer eligible for the DTC, that is, the taxation year under appeal.
The Election will generally be valid until the end of the fourth calendar year following the first full calendar year for which a beneficiary was disallowed the DTC.
If a beneficiary becomes eligible for the DTC while an election is valid, the usual RDSP rules will apply commencing with the year for which the beneficiary is eligible.
No contributions can be made to the RDSP while it is on hold.
John (the beneficiary) has been eligible for the DTC from birth to 2015 because of the disabling effects of autism and ADHD. John’s mother (plan holder) set up an RDSP for her son in May 2011.
CRA asked John to reapply for the DTC for the 2016 tax year. CRA denied the claim and John’s mother appealed the decision.
The appeal processes may take considerable time so the mother asked her son’s doctor to write a letter, stating that in his/her professional opinion, as a medical doctor, John is likely to become eligible for the DTC in the future because of the severity of his medical condition.
The mother takes the doctor's letter to the financial institution holding the RDSP, where the agent completes the Election Form, signed by John’s mother and the agent. The agent will notify Employment and Social Development Canada that an Election has been made to keep the RDSP on hold.
If there is a decision to reinstate the DTC for the 2016 tax year, John’s mother will take a copy of the Notice of Redetermination to the financial institution to activate the RDSP effective the 2016 tax year.
If there is no decision to reinstate the DTC for the 2016 tax year, the RDSP will remain on hold until 2020, allowing John to reapply for the DTC. However, there will remain a gap in contributions until the DTC is approved.
If you have any questions, contact CRA's RDSP helpline at 1.866.204.0357.