Tax credits available to people with diabetes

Managing a chronic condition like diabetes can be expensive. That’s why governments have made some tax credits available to help reduce the cost burden for eligible Canadians living with diabetes.

Some people with diabetes may benefit from federal and provincial/territorial tax credits.

Diabetes Canada advocates for fair and equitable access to the Disability Tax Credit (DTC) and similar programs for people with diabetes. In 2022 the Government of Canada announced the eligibility of people with type 1 diabetes based on their diagnosis, as well as the expansion of permitted activities that can be counted by applicants with type 2 diabetes using insulin towards the 14-hour- hours a-week eligibility requirement.

Disability Tax Credit (DTC)

The DTC is a non-refundable tax credit that helps people with disabilities or requiring a life-sustaining therapy, or caregivers reduce their income taxes. People who have diabetes and use insulin typically apply for the DTC under the category of life-sustaining therapy.

Applying for years 2021 and later

People who have type 1 diabetes may qualify for the DTC under the category of life-sustaining therapy by submitting to the Canada Revenue Agency (CRA) a completed tax form (T2201, Disability Tax Credit Certificate) signed by a medical practitioner. Additional information about time spent on permitted activities is no longer required from the applicant and/or their medical practitioner for the years 2021 and later.

People who have type 2 diabetes and use insulin may also qualify under life-sustaining therapy and must submit to the CRA a completed T2201 tax form signed by a medical practitioner, as well as information detailing the time spent on CRA permitted activities that satisfies the average of 14 hours a week eligibility criteria. The 2021 enhanced list of permitted activities is available on the CRA website. https://www.canada.ca/en/revenue-agency/services/tax/individuals/segments/tax-credits-deductions-persons-disabilities/disability-tax-credit/eligible-dtc/life-sustaining-therapy.html

Applying for years 2020 and earlier

Applicants who have type 1 diabetes or type 2 diabetes and use insulin can apply for the DTC for the years prior to 2021 (up to a maximum of 10 years) if they spend an average of 14 hours a week on the CRA permitted activities applicable to those years. The list is available on the CRA website. https://www.canada.ca/en/revenue-agency/services/tax/individuals/segments/tax-credits-deductions-persons-disabilities/disability-tax-credit/eligible-dtc/life-sustaining-therapy.html

Programs tied to the DTC

People who are eligible for the DTC may also qualify for other important programs, including:

The Registered Disability Savings Program (RDSP) – save for future expenses in a tax protected RDSP, which also attracts government grants and bonds (similar to the Registered Education Savings Program).

The Child Disability Benefit – a tax-free monthly payment made to caregivers of children under the age of 18 who qualify for the DTC.

Provincial and territorial tax credits

In addition to the federal DTC, some provinces and territories have disability tax credits or related programs. Consult your tax professional or provincial or territorial government websites for further information.