How to Transfer Unused DTC Amounts

The Disability Tax Credit (DTC) is designed to reduce the income tax payable by individuals with a severe and prolonged impairment. But what happens when the person who qualifies for the credit does not have enough taxable income to use it? In these cases, the unused portion of the credit can often be transferred to a supporting relative—providing meaningful tax relief for the person who offers financial or caregiving support.

This matters when you are helping a child, parent, or another family member who qualifies for the DTC but has little or no taxable income. If you meet the CRA’s conditions as a caregiver or supporter, the unused portion of their credit can be added to your tax return.

Let’s explore who can transfer the DTC, who can receive it, and how to correctly report the transfer when you file.

When Can the DTC Be Transferred?

A DTC transfer is allowed when:

• The person with the disability has a valid CRA-approved Form T2201

• They do not need the full amount of the DTC to reduce their own taxes to zero

• A supporting family member provided consistent financial or caregiving support during the tax year

This transfer ensures that the credit does not go unused simply because the qualifying individual had little to no income. The credit can be a meaningful benefit for the person who helps them most.

Who Can Transfer the DTC?

Only the individual who has been approved for the DTC can transfer it. This person must:

• Have filed or intend to file a return for the year

• Not have used the full DTC amount on their own return

• Agree to transfer the unused portion to a specific relative who qualifies to receive it

The CRA will automatically determine how much of the credit was unused based on the return filed by the person with the disability.

Who Can Receive the Transfer?

The person receiving the transferred DTC must be a supporting relative, such as:

• A parent, grandparent, or child

• A sibling, aunt, uncle, niece, or nephew

• A spouse or common-law partner

The relative must have:

• Provided regular and necessary support for basic needs like food, shelter, or care

• Not claimed the full amount themselves for someone else

• Lived in Canada and filed a return for the year

DTC Transfer Eligibility Summary

How to Report the Transfer on Your Return

If you are receiving a DTC transfer:

1. Confirm the person with the disability has a valid Form T2201 on file with the CRA

2. Ensure they are not using the full DTC amount to reduce their own taxes

3. Report the transfer on Line 31800 of your federal return

4. If you are also claiming the Canada Caregiver Amount, complete the related sections to reflect your support

5. Retain documentation to show how you supported the dependent throughout the year

You do not need to recalculate the credit amount yourself. The CRA will assess how much of the DTC was unused and apply the correct transfer to your return.

Common Scenarios Where Transfers Apply

• Parents of a child with a disability: If the child has no taxable income, one parent can claim the unused portion of the DTC. In shared custody, only one parent can claim the transfer in a given year.

• Adult children supporting aging parents: If the parent is retired and has low income, a son or daughter who provides housing or ongoing financial help may claim the transfer.

• Siblings supporting each other: In some situations, a sibling providing regular support may be eligible to claim the unused credit.

What Documentation to Keep

While you do not need to submit paperwork with your return, you should retain:

• A copy of the dependent’s approved Form T2201

• Evidence that they had little or no taxable income (such as a Notice of Assessment)

• Proof of your financial or caregiving support—such as shared housing expenses, direct payments, or care schedules

• Any written agreements among family members about who would claim the credit