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Is the CRA Denying the Disability Tax Credit (DTC) to the Canadians Who Need It?

Feb 24, 2018 9:30:00 AM The MacMillan Estate Planning Team Estate Planning, Tax Planning, canadian revenue agency, disability tax credit


Though our socialist ideals are hardly on par with many of the Nordic European countries, Canadians generally pride themselves on belonging to a nation that cares for everyone — especially those who cannot care for themselves. We’ll proudly look at our publicly funded, single-payer healthcare system as an example of how all Canadians can access the care they need.

But Canadians have a bad habit of only looking south of the border when we compare how Canada and our safety nets affect our citizens compared to other nations. While comparing ourselves to the US may make sense in geographical terms, it’s important to keep in mind that the States regularly places last in health outcomes, income disparity, incarceration, and even violence when compared to other developed nations.

The Disability Tax Credit (DTC) is a non-refundable tax credit available to both Canadians with disabilities and Canadians who are supporting a person with a disability. It helps to reduce the amount of income tax a person with disabilities (or the person they are dependent on) has to pay, which is important in providing relief to these Canadian families who often face unavoidable additional expenses to accommodate the disability. This can include physical things like ramps or renovations to a kitchen to make the countertops wheelchair height. But it also includes services, like tutors and caregivers, for those with mental disabilities.

It’s the latter group that is currently struggling the most for recognition and access to the DTC. This is very unsettling news because 3 of every 4 children with a disability has a cognitive or mental health-related disability rather than a physical one. This includes disabilities like autism, schizophrenia, and down syndrome, among others. In fact, Autism Canada recently accused Ottawa of making a tax grab by clawing back tax credits from those with mental illness over the last three years.

Furthering the issue is that eligibility for the DTC is often used to access whether Canadians qualify for other federal and provincial disability benefits including the Child Disability Benefit and the Registered Disability Savings Plan (RDSP). Parents, whose children initially qualified but no longer do, can find themselves forced to close their child’s RDSP and forfeiting government contributions of up to $70,000.

So What’s Changed? Advocates for mentally disabled Canadians are arguing that the DTC has changed the language in the rules for determining who can qualify for the tax credits. They find the changes to be unreasonably restrictive so that only the most-impaired individuals are even able to qualify. This means many individuals who struggle with autism or bipolar disease and who have been benefiting from the DTC for over 20 years have suddenly found themselves cut off.

At the moment, it’s significantly more difficult to prove the need of someone with a mental disability as it is for someone with a similarly detrimental physical ability. Advocates are lobbying the government to reinstate the Disability Advisory Committee. This body was in charge of monitoring the CRA’s access to tax credits for mentally and physically challenged Canadians, but it was scrapped in 2016 by the Harper government. Fortunately, Revenue Minister Diane Lebouthillier has announced that the advisory committee will be reinstated, so this will hopefully allow challenges to be dealt with in a timely manner.

As with most tax difficulties in Canada, there are few easy answers. One of the clear things that need to be addressed in this discussion is the clarity of the law and how current interpretations are failing many Canadians. The application process is not user-friendly, and the information and help available to Canadians has been scaled back in recent years. An audit found that two in three calls to the CRA help centre are never answered, and the appeals process lacks clarity as well. All these complications led to some professionals taking advantage of Canadians with disabilities. They would advocate for on their behalf to help them obtain the DTC, but they would charge unreasonable amounts. Fortunately, a Conservative bill has now set clear maximums for this service to protect Canadians.

At MacMillan Estate Planning, we want Canadians to go into and leave tax season feeling like they paid their fair share and nothing more. Excessive taxation and the removal of important benefits should not be tolerated, and it’s important for Canadians to stand up to their government for our mentally-disabled neighbours, family members, and friends. Let’s work together to constantly build a stronger, more welcoming Canada for all of us.

At MacMillan Estate Planning, our team of professional trust and estate practitioners, chartered accountants, financial planners, and legal professionals look forward to assisting you with the design of your estate plan and will ensure you build, protect, and enjoy your wealth. The information provided is general and may not be suited to your objectives or sufficient to ensure the protection of you and your family. You should not act on this information without providing MacMillan Estate Planning with the opportunity to ensure that it is suitable for your unique situation.

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