Private member’s bill expanding disability tax credit eligibility to cost $48 million: PBO

Hill Times
By . Published on Jan 29, 2019 4:54pm

A private member’s bill expanding eligibility for the federal disability tax credit will cost Canadians $48 million each year, according to a new study from parliament’s spending watchdog.

The Parliamentary Budget Officer said in a report Tuesday that Conservative MP Tom Kmiec’s Bill C-399 would cost Ottawa $25 million in lost tax revenue and $13.4 million in additional program expenses each year as the number of claimants grows by 22,000. The provinces would also stand to lose $9 million annually in reduced tax revenue.

Kmiec’s bill would make it easier for claimants to qualify for the disability tax credit on the grounds of “life-sustaining therapy,” which currently represents about four per cent of all approved claims.

To qualify now, applicants must show they need therapy to support a vital function at least three days each week for a minimum of 14 hours, including time spent determining necessary dosages. They also require certification from a doctor.

The bill would lower the necessary hours to 10 and allow claimants to include time spent determining dosages of medication related to a dietary or exercise regime. It also clarifies that time spent measuring dosages of medical food and formula would count toward the threshold.

Kmiec, who requested the PBO study, said he thought it was a reasonable cost, noting the lost tax revenue will flow back to Canadians with disabilities who must pay themselves for treatments and specialized medical needs.

“I think it makes the point that this a reasonable private member’s bill,” he told iPolitics.

“I’m not asking for the moon, I’m just doing a small tweak that will bring a lot of fairness for persons with disabilities.”

Kmiec said he requested the PBO study to help with his efforts to win support in the House for the bill, specifically among Liberal and NDP MPs. Most of the members from these parties, he said, did not oppose the idea of the legislation, but wanted more information on the “mechanics and costs associated” with implementation.

Green Party Leader Elizabeth May has already announced she will co-sponsor the bill, while Kmiec said he has the support of the Conservative caucus.

Kmiec’s office told iPolitics Thursday that the bill now had the support of Liberal MP Nathaniel Erskine-Smith.

Émilie Gagnon, a spokesperson for Revenue Minister Diane Lebouthillier, said the federal cabinet had not yet made a decision on whether to support the bill.

Kmiec blamed his “not so great number” in the House lottery to determine private members’ business for slowing passage of the bill, but said he hopes to see the first hour of second reading debate take place in mid-March. From there, he wants to see it moved to committee in the spring and voted on before the summer recess.

Kmiec said he introduced the bill in response to criticism of how the Canada Revenue Agency was assessing applications for the tax credit from diabetics, noting the legislation largely mirrored a prebudget submission from JDRF, historically known as the Juvenile Diabetes Research Foundation.

In 2017, Diabetes Canada went public with claims that the CRA was rejecting virtually all applications from adults with Type 1 diabetes despite previously qualifying for the credit.

Minister Lebouthillier’s office insisted it had made no changes to the eligibility criteria, though the CRA suggested it was employing a new interpretation of the rules that would disqualify activities needed to manage the disease like meal planning as life sustaining therapies, as reported by the Globe and Mail.

The CRA later reversed course under public pressure and said it would revert to an earlier interpretation when assessing applications.

Including language clarifying dosage calculations in the bill will “partially prevent” the CRA again from interpreting the rules to disqualify diabetics, said Kmiec, who has three children that suffer from a chronic kidney condition.

The PBO report said the bill will cost the federal government $13 million more each year in tax and program spending under the Registered Disability Savings Plan (RDSP), which will become more popular under the expanded eligibility criteria. It will also cost Ottawa $400,000 more in working income tax benefit supplements.

The RDSP is a savings plan for disability tax credit claimants that allows them to withdraw funds without it counting as income.

If passed, the bill will increase the available amount per average benefit claim by $748, according to the PBO’s estimates.

Kmiec said his bill is about addressing tax fairness, arguing Canadians with disabilities should be able to claim tax deductions for the money they spend addressing medical needs that others do not require.

“This is about fairness and it’s about the reasonable burdens you place on taxpayers,” he said.

Many Canadians not taking advantage of tax credits

More than one-third of families who financially contribute to the care of a loved one due to advanced age or illness are out of pocket an average $430 per month. And while tax credits are available in some cases, many caregivers aren’t taking advantage of them, says a new CIBC poll.

Three-quarters of caregivers who provide financial support admit they’re making financial sacrifices as a result of their caregiving responsibilities, including cutting back on expenses (59%), dipping into personal savings (41%) and saving less (41%).

“The good news is that you may be able to take advantage of some tax credits to lessen the financial burden, even if you’re sharing the costs [with others],” says Jamie Golombek, managing director, Tax & Estate Planning, CIBC Financial Planning and Advice.

Golombek co-authored the new report, entitled Who Cares? Easing the financial burden for caregivers, with Debbie Pearl-Weinberg, executive director, Tax & Estate Planning, CIBC Financial Planning and Advice.

You can split some tax credits among siblings and parents

If a parent requires full-time care from a personal support worker and you choose to split the bill with the other parent or siblings, you may each be able to claim the Medical Expense Tax Credit for these costs. You may each also be eligible for a 15% non-refundable Canada Caregiver Credit up to a shared maximum of $6,986, says Golombek.

There is also the Home Accessibility Tax Credit that can provide up to a $1,500 credit for renovations and other one-time expenses, as well as the Disability Tax Credit which may provide tax savings of $1,235 federally, plus provincial or territorial tax savings, for individuals with a disability or those who care for them.

Despite the costs, the poll showed that 74% of caregivers feel grateful for the opportunity to help, and 53% would do so even if it put their own financial future at risk.

 

Source: https://insurance-journal.ca/article/many-canadians-not-taking-advantage-of-tax-credits/.

The Canada Revenue Agency Keeps People With Disabilities In Poverty

The administration of the Registered Disability Savings Plan and the Disability Tax Credit must be taken out of the CRA’s hands.

 

Huffington Post, 04/16/2018

When a friend is hurt and in a temporary wheelchair, it is time to visit and change is mind. Two man having a chat and a coffee in a home kitchen, talking about the morning paper. Horizontal waist up indoors shot in natural light. This was shot in Montreal, Canada.

Canada’s Registered Disability Savings Plan (RDSP) is the first poverty-fighting tool for people with disabilities in the world. This remarkable example of federal/provincial/territorial cooperation, which was created in 2008, has already changed the lives of more than 150,000 Canadians with disabilities.

Unfortunately, the RDSP is only reaching 29 per cent of those eligible. Due to restrictions imposed by the Canada Revenue Agency (CRA), it’s not available for many other Canadians with disabilities who are poor. For this to change, two things must happen: administration of the RDSP and the Disability Tax Credit (DTC) must be taken out of the hands of the CRA, and coordinated national action to eliminate the link between disability and poverty must begin.

The RDSP has three components: contributions by the individual, family or community; matching federal grants; a disability Savings Bond of $1,000 a year. To be eligible, an individual must quality for the Disability Tax Credit first. That’s the source of the bottleneck.

The CRA is determining who has a disability. The result: people with autism,Type 1 Diabetesbrain injury and mental illness are too frequently being denied the DTC, even though they qualify for other disability benefits at the provincial and territorial level. Still others are having their eligibility terminated by the CRA and are being asked to refund federal contributions to their RDSP.

The irony of the CRA, an agency set up to go after tax cheats and fraudsters, keeping people with disabilities in poverty would not be lost on the families who originally proposed the RDSP. I know because I’m the father of a daughter who experiences disability, and I was with these families through every step of the campaign to set up the RDSP.

Together we created Planned Lifetime Advocacy Network (PLAN) to address the question, “What happens to our sons and daughters with disabilities when we die?” Our search for answers led us to rethink the assumptions associated with having a disability.

For example, the punitive and suspicious mindset associated with disability welfare kept our sons and daughters poor. They couldn’t save beyond a modest amount without being disqualified, and if we financially supported them, it would be clawed back. Furthermore, disability services don’t address financial well-being, and too often unwittingly perpetuate a view that financial well-being isn’t a major consideration for people with disabilities in care.

We concluded that one of the biggest handicaps to overcome was the link between poverty and disability. Our proposal for a savings plan had two practical goals. First, to enable Canadians with disabilities to earn or receive income and to accumulate financial assets without penalty, claw back or disentitlement from other government benefits. Second, to access this income when they were most in need.

Ten years later, it’s clear financial freedom for Canadians with disabilities makes a big difference. There is a discernible pride and confidence among those I meet across Canada who have an RDSP. They tell me they can now dream and start controlling their destiny.

The precedent of provinces and territories to eliminate some of the soul-destroying aspects of welfare has now been established. Governments all over Canada have essentially said to people with disabilities and their families: “We trust you to spend RDSP income on what you think is best. You don’t have to report, you don’t have to justify.”

But the RDSP is only one tool among many that are needed, because Canadians with disabilities are more likely to live in poverty than other Canadians.

Here are four recommendations to improve the RDSP and raise Canadians with disabilities out of poverty.

First, there should be an automatic enrollment in the RDSP once someone becomes eligible for the DTC, or is receiving provincial/territorial disability benefits and assistance. If they have already satisfied eligibility for provincial/territorial disability benefits, that should be sufficient to qualify for federal benefits.

Second, remove all CRA responsibility for assessing and determining eligibility for the DTC, and place it under the Minister of Persons with Disabilities. People with disabilities and their families are not cheats. The CRA should go after people who defraud and cheat the tax system. However, that requires a suspicious and mistrustful mentality that should not be associated with the RDSP.

Thirdly, ensure the forthcoming federal accessibility legislation explicitly addresses poverty. The RDSP demonstrates that economic citizenship is the primary engine of accessibility.

Fourth, create a Guaranteed Basic Income Supplement for Canadians with disabilities. Quebec’s minimum income program, Ontario’s Basic Income pilots, British Columbia’s liberalization of welfare restrictions, the push for a refundable Disability Tax Credit and improvements to the RDSP all point to the need for coordinated national action.

We’re getting better at closing the poverty gap for seniors and low-income families. The RDSP has shown us that we must now do the same for Canadians experiencing disability.

Disability Tax Fairness

MP Tom Kmiec has Introduced Legislation Calling for Disability Tax Fairness

 

On March 21st, I tabled Private Member’s Bill C-399, the Fairness for Persons with Disabilities Act that aims to improve accessibility to the Disability Tax Credit (DTC).

This builds on previous efforts by Canada’s Conservatives to ensure that Canadians eligible for the DTC receive it.

In 2017, the Canada Revenue Agency began restricting access to the DTC that affected hundreds of Canadians living with diabetes and other rare diseases, after it changed the interpretation of the rules around life-sustaining therapy and associated requirements for these types of diseases.

Bill C-399 would achieve three things:

  1. Reduce the time to qualify for the DTC from 14 to 10 hours;
  2. Include calculation of dosage into time to qualify for the credit; and
  3. Add medical food and medical formula to qualifying for the DTC.

 

I expect Bill C-399 will have favour amongst all parties. It’s a common sense bill that will leave more money in the pockets of persons with disabilities to cover the medical costs associated with managing their disease.

I remain committed to improving the government’s processes to ensure that all Canadians living with a disability receive the benefits they deserve and are entitled to.

We Need Your Support

Add Your Name to the Growing List of Canadians Who Support The Fairness for Persons with Disabilities Act

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The culture at the CRA is changing – and we should all be concerned

Globe and Mail – MARCH 9, 2018

I’ve been immersed in the world of personal finance for about 25 years. I’m aging now – as is my wife, Carolyn. She regularly reminds me that a gentleman always remembers a woman’s birthday but never her age. Sorry, dear, I know exactly how old you are. But I digress.

The point is, I’ve been around long enough to remember what it was like to deal with the taxman of a generation ago. We’re in a very different world today. The culture at the Canada Revenue Agency (CRA) is not what it used to be – and we should all be concerned.

Twenty years ago, the CRA was full of reasonable people who used common sense when looking more closely at your tax affairs.

That type of employee seems to have been replaced with staff who are all too often smug and patently unreasonable – who choose to ignore common sense. A verdict handed down by the Supreme Court of British Columbia this week speaks to the failure of the CRA’s leadership to promote a culture that is fair and reasonable with taxpayers.

The story

Tony and Helen Samaroo are a couple who for the past 10 years have been battling the CRA. They owned and operated a restaurant, nightclub and motel in Nanaimo, B.C. In 2008, they were charged with 21 counts of tax evasion. The CRA accused them of skimming $1.7-million from their restaurant without paying tax.

The Samaroos were acquitted of all charges after a 19-day trial in April, 2011. Mr. Samaroo was found by the judge to be a credible witness. His demeanour was impressive, and his explanations were plausible and consistent with significant and material aspects of the evidence.

In March, 2012, the Samaroos commenced legal action against the CRA for malicious prosecution, and last week, Justice Robert Punnett sided with the couple, awarded them about $1.7-million and found the CRA liable for the actions of Keith Kendal, a senior investigator for the CRA (who was accused of suppressing and misstating evidence), and other employees.

The words of the judge were harsh: “The CRA is vicariously liable for the conduct of Mr. Kendal and its employees. Its conduct in this case was high-handed, reprehensible and malicious.” He went on to say: “It offends this Court’s sense of decency and was a marked departure from conduct expected of an individual in Mr. Kendal’s position and an agency such as the CRA.”

Surely this type of behaviour by CRA employees is the exception, not the rule. While it’s true that many of its employees do care and want to be fair, I have to agree with Justice Punnett when he went on to say: “There is also evidence that Mr. Kendal’s approach may indicate an unfortunate culture within the CRA.”

Other stories

If you take the time to speak to tax professionals around the country, you’ll hear many stories of a changing culture at the CRA. I’m talking about a shift from using common sense to resolve issues early in the dispute process to forcing taxpayers to file notices of objection or notices of appeal because front-line CRA employees simply refuse to listen to logical explanations.

Prominent tax lawyer David Rotfleisch says “some tax audits seem like make-work projects or a game of chicken.” He adds that “if you get audited, you can expect to get put through the wringer by CRA auditors who defy logic and reason, even when presented with clear evidence of no wrongdoing.” This does nothing but waste the time and money of taxpayers.

I know of a widow who inherited a business from her husband. She relies on the business for a modest income but doesn’t understand or run it; the few employees do this for her. After her husband’s death, the business failed to remit sufficient payroll taxes and HST (this was her husband’s job).

She had no idea.

There are taxes owing, and she wants to pay these off as soon as possible. After negotiating a reasonable payment plan with an empathetic CRA auditor, his supervisor vetoed the payment plan and wants payment today – even though she doesn’t have the means.

She’s losing sleep over this, and it’s affecting her health. She’s still hopeful that the CRA will do the right thing and agree to a payment plan she can manage.

Prime Minister Justin Trudeau talks about making taxes fair for the middle class. How about making the CRA’s dealings with honest taxpayers fair? If Mr. Trudeau wants a fair tax system, start by changing the culture at the CRA.

Canadian Organization for Rare Disorders (CORD)

On behalf of the 2.8 million Canadians affected by one or more rare disorders, the Canadian Organization for Rare Disorders is grateful to Tom Kmiec, MP, for his leadership in introducing these amendments.  Many of the 7,000 rare disorders are severe and debilitating, necessitating considerable time, care, and attention.  The proposed changes will provide much needed support for all these families.

~ Durhane Wong-Rieger, President and CEO, Canadian Organization for Rare Disorders (CORD)

Canadian PKU and Allied Disorders

This Private Members’ Bill would reinforce the legal right for the disability tax credit to PKU sufferers and end CRA’s systemic discrimination against them. Because it improves the wording of the Income Tax Act around diet regimes to include certain activities like preparing meals intended for the specific dietary management of a disease or condition like PKU, it offers hope for the fewer than 2,000 people with PKU in Canada. I am confident the bill will help the CRA better understand the disorder and ultimately consider PKU much like it considers other metabolism disorders like diabetes for the tax credit.

~ John Adams, Co-Founder, President and CEO, Canadian PKU and Allied Disorders 

Juvenile Diabetes Research Fund (JDRF)

“The Fairness for Persons with Disabilities Act will make it easier for Canadians with diabetes and others to qualify for the Disability Tax Credit by making some small but meaningful changes to the Income Tax Act. Importantly, it recognizes the arbitrary nature of the 14 hour requirement for life-sustaining therapy. By reducing the number hours to 10 we’ll see more people qualify in this category.  As important, the bill will allow for carbohydrate calculation to be included as part of time spent managing diabetes which is just common sense as appropriate insulin dosages really can’t be calculated without taking into account carbohydrates.

~ Patrick Tohill, Director of Government Relations, Juvenile Diabetes Research Fund (JDRF)

Diabetes Canada

Diabetes Canada supports the reduction of time spent on life-sustaining therapy to 10 hours. The financial and health burden of diabetes is the same regardless of time spent managing it and more Canadians with diabetes need the financial relief the Disability Tax Credit is designed to provide in order to effectively manage this disease.

~ Kimberley Hanson, Director of Federal Affairs, Diabetes Canada

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.