Emails show CRA altered interpretation of tax credit for diabetes patients, challenging government’s claim

Agency directed staff to ‘disallow without clarification’ applicants who could not prove they spent at least 14 hours a week managing insulin injections

 December 4, 2017 – Financial Post

OTTAWA — The Canada Revenue Agency made it more difficult in May of this year for diabetes patients over the age of 18 to access a key tax credit, newly released emails reveal — contradicting the federal government’s claims that the agency had not altered its approvals process.

In an email dated May 2, a CRA officer told several agency employees to “disallow without clarification” any applicants for the disability tax credit (DTC) who were over the age of 18, had type-1 diabetes but could not prove they spent at least 14 hours a week managing their regular insulin injections.

The email marked a shift in the interpretation of the rule, as the CRA began excluding from the minimum time requirement “carb counting, and activities related to exercise.” The instructions also suggest that only patients under “exceptional circumstances,” or those with other chronic disabilities, should be approved for the DTC based on the 14-hour criterion.

The emails were released to media Monday by Diabetes Canada and the Juvenile Diabetes Research Foundation (JDRF), which secured them via an access-to-information request. They appeared amid ongoing criticism against the CRA and the revenue ministry over access to the DTC becoming more onerous in recent years.

Representatives of Diabetes Canada said Monday more than 2,000 applicants with diabetes have been rejected for the credit in the first half of 2017, a more than twofold increase over earlier years. Advocacy groups representing people with mental disabilities have also claimed the DTC has become more difficult to access, due in part to how eligibility for the credit is determined.

In response to regular criticism in the House of Commons, Minister of National Revenue Diane Lebouthillier has repeatedly said that the legal language around the DTC had not been altered, and that CRA forms have even been simplified to help applicants.

However, Diabetes Canada and the JDRF said the emails prove there were recent changes to the interpretation of some key thresholds, challenging claims made by CRA officials and Ottawa.

“I feel like there’s a nuance being used between a change in law and a change in practice,” said Dave Prowten, president and CEO of JDRF Canada.

The two groups said they met personally with the revenue minister last week and showed her the emails, but said that the minister appeared unlikely to reverse the change.

“I think that there’s either been a terrible breach in communication between the CRA and the minister, or the minister has been expressing false information,” Kimberley Hanson, the director of federal affairs at Diabetes Canada, told reporters Monday.

In a written response Monday, the revenue ministry repeated its claims that eligibility requirements remain unchanged, saying the CRA email “indicated an update to communications related to Life-Sustaining Therapy, however no change has been made to the eligibility criteria for this credit, nor has a change been made to the criteria laid out in the legislation.”

The greater number of rejected DTC applications come amid record-high volumes of applications for the credit, according to the agency. The CRA receives about 220,000 applications for the DTC every year, and approves about 80 per cent of applicants, the agency said.

For sufferers of type-1 diabetes in particular, new and simpler technologies for insulin injections mean that patients spend less time regulating their glucose levels than in past years.

“Unless there are exceptional circumstances, adults with diabetes can generally manage their daily insulin therapy without taking 14 hours per week,” the May 2 email said.

Advocates for people with mental disabilities and diabetes say that losing access to the DTC also means people lose access to the registered disability savings plan (RDSP), a program introduced in 2008, which has in some cases forced patients to pay back thousands of dollars in government grants and bonds.

In late November the revenue minister reinstated the disability advisory committee (DAC), a group tasked with overseeing the application process for people with mental and physical disabilities for the DTC and other credits. The committee was scrapped by the Conservative government in 2006.