CRA Denies Disability Tax Credit to Hard of Hearing Taxpayer in Newfoundland Case
The Canada Revenue Agency has denied a disability tax credit claim from a taxpayer with hearing loss, underscoring that not every disability automatically qualifies for this valuable tax benefit. In a case decided in late 2025, a Newfoundland and Labrador resident who works as a food service supervisor in a school cafeteria kitchen attempted to claim the DTC for the 2023 taxation year.
Understanding the Disability Tax Credit
The Disability Tax Credit is a non-refundable tax credit designed to recognize the impact of various disability-related costs that aren't typically itemized. For 2025, the federal credit value was $1,470, but when combined with provincial tax savings, the total annual benefit can exceed $3,200 depending on the province of residence. The DTC also serves as a prerequisite for opening a Registered Disability Savings Plan, making it particularly valuable for long-term financial planning.
The Taxpayer's Hearing Impairment Details
The taxpayer submitted the required Form T2201, Disability Tax Credit Certificate, with relevant sections completed by her audiologist. The documentation revealed she has mild to moderately-severe sensorineural congenital hearing loss in both ears and uses bilateral behind-the-ear hearing aids. According to the audiologist's assessment:
- Without hearing aids, she misses approximately 86% of the average speech spectrum
- With optimized hearing aids, this improves to missing only 27% of speech
- Hearing speech in noisy environments remains difficult
Regarding the specific question about her ability to hear so as to understand a familiar person in a quiet setting while using hearing aids, the audiologist noted the taxpayer has difficulty, but does not take an inordinate amount of time to accomplish this task.
CRA's Determination and Tax Court Appeal
After reviewing the submitted form, the CRA issued a notice of determination informing the taxpayer she was not eligible for the DTC. The taxpayer objected to this decision and ultimately appealed to the Tax Court of Canada, where she presented additional evidence about how her hearing loss affects daily life.
During the trial, the taxpayer testified about various limitations she experiences:
- She missed out on playground games during childhood due to her hearing impairment
- She cannot participate in swimming activities because moisture damages her hearing aid batteries
- Even sweating in the gym creates similar moisture-related risks for her hearing aids
- At work, background noise sometimes causes her to miss conversations, requiring repetition
- Phone conversations present challenges, sometimes necessitating follow-up emails to ensure accurate information absorption
The taxpayer also noted she reads lips to supplement her hearing aids, though this skill only helps when the other person is within her direct line of sight.
Specific Eligibility Criteria for Hearing Disabilities
This case highlights the specific criteria the CRA applies when evaluating hearing disability claims. The agency examines whether the impairment significantly restricts basic activities of daily living, with particular attention to:
- The degree of hearing loss with and without assistive devices
- The time required to perform hearing-related tasks
- The cumulative effect of the disability on various aspects of life
- Whether the impairment meets the marked restriction threshold defined in tax legislation
The CRA's position in this case suggests that even significant hearing impairments may not automatically qualify for the DTC if they don't meet the specific legislative criteria for marked restriction. This creates important considerations for Canadians with hearing disabilities who are contemplating DTC applications.
The outcome of this Newfoundland case serves as a reminder that taxpayers should carefully review eligibility requirements and seek professional advice when applying for disability-related tax benefits. The decision also underscores the importance of comprehensive medical documentation that clearly demonstrates how a disability meets the CRA's specific criteria for the Disability Tax Credit.
