The Disability Tax Credit (DTC) is designed to provide tax relief for individuals with severe and prolonged mental or physical impairments. Which of the following statements regarding the DTC is most accurate?

Question: The Disability Tax Credit (DTC) is designed to provide tax relief for individuals with severe and prolonged mental or physical impairments. Which of the following statements regarding the DTC is most accurate?

Answer options:

• The DTC is a refundable tax credit that provides a direct payment to eligible Canadians, regardless of their income.
• To qualify for the DTC, an individual's impairment must result in their inability to perform any activities of daily living. ✅ The DTC can be transferred to a supporting spouse or other supporting person if the qualified individual does not need the full amount to reduce their own tax payable.
• Once approved, the DTC remains valid for the taxpayer's lifetime without any need for re-evaluation.

Correct answer: The DTC can be transferred to a supporting spouse or other supporting person if the qualified individual does not need the full amount to reduce their own tax payable.

Explanation: The DTC is a non-refundable tax credit, meaning it reduces tax payable but does not result in a direct payment if no tax is owed by the individual. It requires a severe and prolonged impairment, but not necessarily an inability to perform any activities of daily living across all categories; rather, it often implies significant restriction in a basic activity or cumulative effect. The credit can be transferred to a supporting person. It is not necessarily valid for life; the CRA may request re-evaluation.