How the DTC Transfer Works
The Disability Tax Credit is a non-refundable tax credit, it reduces income taxes owed but doesn't generate a refund by itself. If the person with the disability has little or no income tax payable (perhaps because their income is too low), the credit becomes partially or fully "unused."
CRA allows unused DTC amounts to be transferred to a qualifying supporting person. This is one of the most powerful but least-understood features of the DTC system. Here's the core concept:
- Person A (the person with disability) qualifies for the DTC, $1,481 federal credit
- Person A has no federal tax payable (income below taxable threshold)
- Person B (spouse, parent, adult child, etc.) supports Person A
- Person B can claim the unused portion of Person A's DTC on their own return
The result: Person B's tax bill is reduced by up to $1,481 federally (plus provincial amounts), even though it's Person A who has the disability.
Who Qualifies as a "Supporting Person"?
CRA defines a qualifying supporting person broadly. You may be eligible to claim the transferred DTC if you are:
- Spouse or common-law partner of the person with the disability
- Parent, grandparent supporting a child or grandchild with a disability
- Child or grandchild supporting an elderly parent or grandparent
- Brother or sister providing support
- Uncle, aunt, niece, or nephew, if you support the person and they depend on you
The key conditions are: (1) the person with the disability must have an approved T2201 on file, and (2) they must be dependent on you for support (financially or physically), and (3) they must have unused DTC amounts, meaning the credit exceeds their own federal tax payable.
The Income Test: When Can the Credit Be Transferred?
The transfer amount is calculated as follows:
- Calculate the person with disability's federal DTC entitlement (e.g., $1,481 base, plus $864 child supplement if applicable)
- Subtract any DTC the person with disability actually uses on their own return (the amount that reduces their own tax to zero)
- The remainder is the transferable amount
If someone earns below approximately $16,000 in 2026, they typically have no federal income tax payable and the entire $1,481 federal DTC can transfer. If they earn more, the transfer is reduced proportionally.
Line 31800 and Schedule 2: The Mechanics
Here's exactly how to claim the transferred DTC on your tax return:
- Complete Schedule 2, "Federal Amounts Transferred from your Spouse or Common-law Partner" (for spouses) or the applicable Schedule for other dependants. Schedule 2 calculates the transferable amount step by step.
- Enter the amount on line 31800, "Disability amount transferred from a dependant" on your T1 return. This is where the transferred credit flows into your return.
- Keep the T2201 documentation. CRA may ask to see the approved T2201. You don't need to attach it to the return, but have it ready if requested.
For a spouse or common-law partner transfer, Schedule 2 also handles other spousal transfers (the basic spousal amount, age amount, etc.) in the same place. The DTC transfer is one component of the broader spousal transfer calculation.
The Child Disability Supplement, Extra Credit for Children
If the person with the disability is under 18, the DTC includes a child supplement: an additional $5,758 in 2026 (which translates to an additional federal credit of approximately $864). This supplement is automatically included when a child's T2201 is approved.
Important: the child supplement cannot be claimed by the child (who has no income), it always transfers to the supporting parent or guardian. This makes the DTC for children with disabilities particularly valuable, and it should flow automatically into the parent's return when they complete Schedule 2.
The Canada Caregiver Credit (CCC), A Separate Benefit Worth Knowing
Beyond the DTC transfer, qualifying caregivers may also be eligible for the Canada Caregiver Credit (CCC). This is a distinct credit worth up to $7,607 in 2026, and the credit value is approximately $1,141 (15% of $7,607).
The CCC is available if you support a spouse, common-law partner, or dependent relative with a physical or mental impairment, even without an approved DTC. However, having an approved DTC strengthens and simplifies the CCC claim.
You can claim both the CCC and the DTC transfer in the same year, they are not mutually exclusive. Together, these two benefits can significantly reduce a caregiver's tax bill.
The Child Disability Benefit (CDB), Tax-Free Monthly Payments for Parents
Parents of children under 18 with an approved DTC may also be eligible for the Child Disability Benefit (CDB), a tax-free monthly payment issued by CRA alongside the Canada Child Benefit.
For the 2025-2026 benefit year, the maximum CDB is approximately $3,173 per year per child (approximately $264/month). The CDB is income-tested, higher family income reduces the amount, and for very high-income families it may phase out entirely.
The CDB is retroactive too. If your child's DTC was approved back to a prior year, CRA will automatically recalculate past CDB entitlements and issue back-payments, often as a separate lump sum.
Combining Benefits: What Caregivers Can Claim Together
Here's a summary of what a qualifying caregiver may be able to claim:
| Benefit | Where Claimed | 2026 Max Value | Notes |
|---|---|---|---|
| DTC Transfer (federal) | Line 31800 / Schedule 2 | $1,481/year | From person with disability's unused credit |
| DTC Transfer (provincial) | Provincial return | Varies by province | Separate calculation per province |
| Child Supplement (federal) | Line 31800 / Schedule 2 | $864/year | For dependants under 18 only |
| Canada Caregiver Credit | Line 30450 or 30500 | $1,141/year | Separate from DTC; income-tested |
| Child Disability Benefit | Auto-calculated by CRA | $3,173/year | Tax-free monthly; income-tested |
Frequently Asked Questions
Yes, if the adult child is financially dependent on the parent and the child's income is below the basic personal amount (approximately $16,129 in 2026). The parent claims the transferred amount on line 31800 using Schedule 2. The adult child must have an approved T2201.
Yes. If the person with the disability has insufficient income to benefit from the credit, the unused portion transfers to their spouse or common-law partner via Schedule 2, claimed on line 31800. This is one of the most common DTC transfer scenarios.
Yes, the Canada Caregiver Credit (CCC) is entirely separate from the DTC transfer. Worth up to $7,607 in 2026 (about $1,141 in credit value), the CCC is available for caregivers of dependants with physical or mental impairments, even without an approved DTC. You can claim both in the same year.
The Child Disability Benefit (CDB) is a tax-free monthly payment to families of children under 18 with approved DTCs. The maximum is approximately $3,173/year for 2025-2026, issued as part of the Canada Child Benefit. It's income-tested and issued retroactively once the DTC is approved.