Ottawa accused of new tax grab after disability tax credit clawback hits those with mental illness

Sources say that some lifelong sufferers of mental disabilities have been cut off from the disability tax credit after having received the credit for decades

October 26, 2017 – Financial Post


OTTAWA — Sufferers of autism, bipolar disorder, schizophrenia and other mental health issues are the latest victims of a clampdown on access to the disability tax credit by the Canada Revenue Agency, according to several accountants, mental health associations and other advocacy groups.

Sources told the National Post that some lifelong sufferers of mental disabilities have been cut off from the disability tax credit, or DTC, in the past two or three years after having received the credit for decades.

The statements come after an uproar in Ottawa earlier this week over restricted access to the DTC for sufferers of diabetes, which caused a firestorm of accusations toward the Trudeau Liberals from the opposition NDP and Conservatives. The Liberals have in recent months faced widespread criticism over proposed tax changes directed at private corporations.

Advocates say similarly restricted access to the DTC has occurred for mentally disabled people, largely due to a change in the language used to determine whether they are adequately disabled to be eligible for the tax credit. That has led to a higher number of people appealing rejections for DTC funding, advocates and tax consultants say.

“What the CRA has done is set that bar so high that it is almost impossible for people to apply,” said Lembi Buchanan, head of the Disability Tax Fairness Campaign.

Weissman and Buchanan are both currently lobbying to reintroduce the Disability Advisory Committee, a body that used to monitor CRA’s access to tax credits for mentally and physically challenged people that was scrapped by the Harper government in 2006.

The pair has asked to reinstate the DAC through letters to the Department of Finance. The department said in response in a June 02, 2016 letter that it was “seriously considering” comments from Canadians about improving CRA access to tax credits, but hasn’t yet brought back the committee.

Observers say part of the trouble for mentally disabled people is that their DTC eligibility often expires without the person’s knowledge, usually without a notice letter warning them to reapply. After reapplication, many are denied and then forced to appeal the CRA decision.

The number of people going into appeals has increased a lot,” said Ella Huang, the executive director of the Richmond Centre for Disability in B.C.

Huang said the number of people being rejected for DTC funding has risen from roughly one in 10 to something closer to five in 10, though she stressed that it was difficult to put hard numbers on the levels of reapplications and rejections. The Richmond Centre assists disabled people in applying for tax credits like the DTC.

Observers say that people who are deemed ineligible for the DTC also lose access to the registered disability savings plan (RDSP), a program introduced by former finance minster Jim Flaherty in 2008.

Losing access to the plan means that recipients of the DTC often have to pay back government grants and bonds that were awarded when they were deemed eligible for the credit.

Tim Ames, the executive director of Vancouver-based Planned Lifetime Advocacy Network, said one family was forced to pay back as much as $15,000 in bonds and government grants after the death of their autistic son.

“It’s a very stressful thing for families to have to go through,” Ames said.

PLAN supports about 65 families with mentally disabled members, and helps roughly 500 mentally disabled people every year apply for the DTC through its hotline.

Ames said the CRA has issued an increasingly high number of “secondary assessment forms” to ask receivers of DTC funding to resubmit their credentials for the credit, but said there appears to be little consistency in which recipients are asked to reapply.

“It seems to be very arbitrary, there doesn’t seem to be a system behind it.”