2020 Second Annual Report of the Disability Advisory Committee

Table of Contents

Introduction

In November 2017, the Minister of National Revenue, the Honourable Diane Lebouthillier, announced the creation of the Disability Advisory Committee to provide advice to the Canada Revenue Agency (CRA) on interpreting and administering tax measures for persons with disabilities in a fair, transparent and accessible manner. The committee’s full mandate is attached as Appendix A. Key disability tax measures are described in Appendix B.

Members of the Disability Advisory Committee very much appreciate the opportunity to advise the Minister of National Revenue and to work with CRA officials on improving disability tax measures. The full list of committee members is attached as Appendix C.

Our first annual report, Enabling access to disability tax measures, was published in May 2019. Since that time, we believe there has been important progress with respect to the administration of and communications about the disability tax credit (DTC). Our second annual report describes in detail the many improvements that the CRA has introduced over the past year in response to the recommendations in our 2019 report. These changes are summarized in “The Client Experience” on the following pages.

Section 1 of this second annual report presents a review of the 42 recommendations made in our first annual report. Each recommendation summarizes the relevant context and associated follow-up actions.

Section 2 covers the new areas of conversation during the second year of our mandate. Selected topics focus, for example, on DTC data, concerns of Indigenous peoples and eligibility for a registered disability savings plan.

Section 3 includes the appendices, which provide details not covered in the text.

As in the first year of our mandate, the DTC has continued to be the primary focus of our work. The committee recognizes the challenges involved in the fair and consistent assessment of DTC eligibility. We know that this determination is no easy task.

The key eligibility criterion is not the presence of a severe and prolonged disability, but rather the effect of this condition on day-to-day functioning. Eligible applicants must be markedly restricted in at least one of the basic activities of daily living as specifically defined in legislation and administered by the CRA.

Moreover, the DTC story is especially complex because this particular tax measure fulfils two distinct purposes.

First, the DTC reduces the income tax payable of applicants who qualify because they have a severe and prolonged impairment in physical and/or mental functions that impedes their ability to carry out the basic activities of daily living. Canadians with severe disabilities are likely to incur additional costs not experienced by persons without disabilities. These extra expenses are often not readily itemizable, like the costs that may be claimed under the medical expense tax credit or the disability supports deduction (DSD).

Second, the DTC plays a vital role in the landscape of disability-related measures. The DTC has become the gateway to establishing eligibility for a number of federal disability benefits and programs. These are listed in Appendix D.

While access to the DTC has been a long-standing concern, access challenges have become all the more pressing as many Canadians apply not only, or even necessarily, for the financial assistance component of the DTC. They are applying instead for the various benefits and programs linked to DTC eligibility.

As a result of its expanded role, the DTC has effectively become a centrepiece of federal disability policy. Many Canadians with disabilities may not be aware of this dual role. The recent federal announcement of a COVID-19 benefit for persons with disabilities is a prime example of the DTC gateway function and its associated challenges.

In June 2020, the federal government announced a one-time, tax-free, non-reportable payment of up to $600 to DTC-eligible individuals in order to assist with additional expenses incurred during the pandemic. These expenses include, for example, higher costs for personal protective equipment, hiring personal support workers or accessing other disability supports.

When the COVID-19 payment was first announced, the disability community was concerned that many Canadians with disabilities would not receive this financial assistance because they are not eligible for the DTC. While the new measure was positive in its intent, it would have been limited in its impact, as most persons with disabilities would not have qualified for this pandemic-related assistance.

The federal government subsequently expanded the eligibility criteria in July 2020 to include:

  • Canadians who are eligible for the DTC
  • persons who may be eligible for the DTC (they have up to 60 days to apply after the bill receives royal assent)
  • recipients of the Canada Pension Plan or Quebec Pension Plan disability benefit
  • recipients of disability supports provided by Veterans Affairs Canada

The expanded criteria will help an estimated 1.7 million Canadians with disabilities benefit from the new financial assistance. The original announcement actually had served to highlight the problems in using the DTC as the sole gateway to other benefits. It was too narrow an entry point. The committee discussed this concern in our first annual report and identified it once again in the recommendations review section of this second annual report.

While there have been many significant improvements in CRA administrative processes and communications, we acknowledge that significant challenges remain around the DTC and other disability tax measures, such as the DSD. We recognize the difficulties experienced by certain groups, including Indigenous Canadians with disabilities, individuals with impairment in mental functions and persons who live with severe, but episodic, conditions.

Our report also considers DTC refundability. We note that the ability to pay up front for many disability-related goods and services is a major challenge facing persons with disabilities, a problem linked to their disproportionately higher rates of poverty.

The committee will continue to focus on these wide-ranging issues, bearing in mind our mandate is based explicitly on disability tax measures. In the meantime, we hope that our work to date has helped to make these measures more understandable, accessible and fair for the hundreds of thousands of Canadians who rely on this assistance to improve the quality of their lives.

The Client Experience

Over the past year, the Canada Revenue Agency (CRA) has introduced many important changes to its administrative procedures regarding the disability tax credit (DTC) and to its communications and outreach activities. Many of these measures were introduced in response to the Disability Advisory Committee’s previous recommendations.

The changes are intended to help applicants access the DTC, as well as reduce the potential for problems that may lead to delays in eligibility decisions and the need for appeals. Ideally, the entire DTC process will be more transparent, expeditious and fair.

These improved procedures are described in the second annual report. The highlights are presented below.

Information

  • The CRA is improving the quality of information provided to applicants and the organizations and individuals who support them at both the preapplication and the application stages of DTC eligibility
  • All materials are being reviewed for plain language and accessibility
  • DTC-related web pages are being reviewed as part of a web optimization project
  • The CRA has increased its investment in its Community Volunteer Income Tax Program. The investment will help expand its reach, particularly among organizations serving Indigenous peoples and organizations representing persons with impairment in mental functions

Designated call line

  • The regular CRA phone line will continue to respond to basic questions, such as where to obtain and how to complete the DTC application, Form T2201, Disability Tax Credit Certificate
  • More complex questions are being directed to a designated call line with specially trained staff. These questions generally relate to DTC eligibility criteria, impairment in mental functions, applications on behalf of children and DTC appeals

Navigator

The CRA is introducing a navigator function to help individuals with complex circumstances work their way through the DTC application process.

Form T2201, Disability Tax Credit Certificate

  • The CRA is developing a digital application of Form T2201. This interactive application for health providers (and others) will:
    • streamline the application process by ensuring the CRA gets the information it needs so applicants can get access to related financial supports
    • provide greater certainty to the application process and reduce the need for clarification letters
    • clarify the DTC eligibility criteria for persons with disabilities and health providers
  • The CRA has redesigned the paper version of Form T2201, which is being tested with health providers, individuals and DTC assessors
  • The CRA is currently exploring selected federal and provincial/territorial programs for how they handle the treatment of certain conditions for the purpose of expedited processing

Procedural changes

  • The CRA is working to provide more information, guidelines and examples earlier in the application process in order to reduce and, ideally, eliminate the need for clarification letters
  • The CRA currently:
    • informs the health provider that all communication to a health provider about an applicant will be copied to the applicant and that any communication the health provider sends to the CRA will also be made available to the applicant
    • encourages the health provider to contact and consult the applicant as necessary when providing any clarification to the CRA
    • gives the health provider 60 days to respond to a clarification letter. The letter indicates that while the health provider has 45 days to respond, the case is not closed until 60 days have passed. This practice is intended to reduce processing times and associated delays
  • Better and more consistent training is being provided to current and new assessors of DTC cases that involve impairment in mental functions

DTC-linked benefits

The requirement to close a Registered Disability Savings Plan (RDSP) when a beneficiary no longer qualifies for the DTC has been eliminated.

Preface

The Disability Advisory Committee has benefited from a collaborative relationship with the leadership and staff of the Canada Revenue Agency (CRA). We believe that they share the committee’s goal of improving the administration of disability tax measures for all Canadians.

The opinions and recommendations presented in our report have been informed by the concerns we have heard from Canadians with disabilities and their families, as well as health providers who complete the disability tax credit (DTC) application: Form T2201, Disability Tax Credit Certificate.

In some cases, we have highlighted the challenges that a single individual has brought to our attention in a submission to the committee. We acknowledge that we are unable to determine whether the issue being raised is unique to that person or whether it may apply to tens or even hundreds of Canadians.

When the report describes difficulties experienced by Canadians, it is possible that the difficulties we are describing may have been, or are in the process of being, resolved by the CRA. The policy or practice in question may have been corrected. Moreover, the problems a given individual faces may be based on limitations in their understanding of the complex DTC eligibility criteria and associated procedures, which in itself may flag the need for more legislative, administrative or communications clarity.

The committee recognizes that CRA officials have no opportunity to respond to or explain the particulars of a specific case, especially in light of confidentiality requirements. At the same time, we know that many DTC applicants have serious concerns that need to be heard. We believe that it is our role to help give people a voice.

If a case or matter has already been resolved, then that is an excellent outcome for all parties. If, however, a single story affects many others, then we have fulfilled our obligation to turn private troubles into public issues which, ideally, can be addressed and constructively resolved.

Part 1: Review of Recommendations

This section of the second annual report reviews the status of the 42 recommendations the Disability Advisory Committee made in our first annual report. These recommendations were developed within the context of a distinct narrative of the objectives that the committee is seeking to achieve.

The first cluster (recommendations #1–16) focuses on changes to the eligibility criteria that would better reflect the intent, and improve the clarity and interpretation of the disability tax credit (DTC).

The second group (recommendations #17–24) explores various administrative improvements. While the administration of the DTC would be far improved if certain legislative changes were made, the committee recognized that administrative modifications even on their own would be helpful to ensure the more effective and efficient delivery of that tax measure.

After considering both legislative improvements to the eligibility criteria and administrative enhancements, the next category (recommendations #25–31) discusses how best to communicate with persons with disabilities and the public about the DTC and disability-related tax measures, more generally.

Our recommendations (#32–35) subsequently shift to the broader role of the DTC as an entry point to other disability-related benefits and programs. Eligibility for the DTC has assumed an increasingly important role in the landscape of disability measures because of this gateway function.

The final cluster (recommendations #36–42) highlights the costs of disability. Our recommendations begin with a narrow focus on fees linked to the DTC application process and end with a broader discussion of disability-related costs and the disproportionately high rates of poverty among persons with disabilities.

Review of Recommendations

Recommendation #1

That in the determination of disability tax credit (DTC) eligibility, the Canada Revenue Agency (CRA) ensures that the principle of parity guides its actions with respect to physical and mental functions including, but not limited to, the removal of multiple screens of eligibility for persons with impairment in mental functions.

Background

In our first annual report, the Disability Advisory Committee (DAC) noted that there are several aspects of the DTC application process in which impairment in physical functions and mental functions is treated differently.

The DTC application, Form T2201, Disability Tax Credit Certificate, requires that three distinct mental functions, problem-solving, goal-setting and judgment, must be “taken together.” This wording implies that a person must have a severe and prolonged impairment in all three mental functions in order to be eligible for the DTC.

We pointed out that it is unfair to require these functions to be present in combination in order to qualify for the DTC. A person may have severe and prolonged depression, for example, that compromises goal-setting and judgment but not problem-solving.

We also noted that there is no similar conjunctive rule regarding severe and prolonged impairment in physical functions. All the physical functions are treated as entirely distinct entities and entries on Form T2201.

The committee wondered throughout our discussions whether this disproportionately high bar may be a key factor in explaining the high rates of DTC rejection among persons with impairment in mental functions. While we knew intuitively that this rejection rate was a problem, the extent of it subsequently was confirmed by the data provided to us by the CRA. We examine this concern in “DTC Data” in Part 2 of this report.

In Recommendation #10, committee members proposed a possible route to ensure more consistency between the treatment of impairment in physical and mental functions. The proposal refers to the way in which physical functions on Form T2201 are described.

Actions

Both legislative and administrative changes are required to effect this recommendation. Legislative responsibility rests with the Department of Finance Canada rather than the CRA. There has been limited progress on this recommendation from a legislative perspective. While the committee assumes that all of our legislative recommendations regarding eligibility criteria are being assessed as a package, we hope that the modest, but important, change represented by this proposal can proceed on its own.

However, there has been progress on this recommendation from an administrative perspective. The CRA is actually interpreting this clause disjunctively through its administrative practice. Form T2201 appears to acknowledge, via the following note on the form itself, that problem-solving, goal-setting and judgment may be interpreted separately: “A restriction in problem-solving, goal-setting or judgment that markedly restricts adaptive functioning, all or substantially all of the time, would qualify.”

Moreover, the work underway on a redesigned Form T2201, procedural updates and the implementation of a new navigator role, described below, will advance the intent of this recommendation. These actions are discussed throughout this section of the report.

Recommendation #2

That the CRA amend the list of mental functions on Form T2201 as follows:

  • attention
  • concentration
  • memory
  • judgment
  • perception of reality
  • problem-solving
  • goal-setting
  • regulation of behaviour and emotions
  • (for example, mood disturbance or behavioural disorder)
  • verbal and non-verbal comprehension
  • learning

Background

The list of mental functions used to determine eligibility for the DTC is outlined on Form T2201 (Appendix E). The committee’s first annual report described the many concerns that have been identified with respect to that list. The three major problems with the current criteria are as follows:

First, the current list of mental functions is not considered to be clinically meaningful in many situations. It includes only select mental functions and requires that some impairments occur together when, in fact, they may not (for example, problem-solving, goal-setting and judgment). Because Form T2201 requires that a physician, nurse practitioner or psychologist attests to the nature and impact of an applicant’s impairment, the criteria should reflect actual impairments in mental functions as traditionally and routinely assessed by those providers.

Second, health providers informed us about the challenges they face related to mental functions, in particular, when completing Form T2201. The form does a better job of assessing impairment in physical functions, perhaps because their impacts are easier to observe, quantify and convey (for example, a person who has a complete paraplegia cannot walk) than impairment in psychological or neuropsychological functions. There appears to be an implicit bias against the latter.

Third, there is lack of clarity with respect to the eligibility of persons impaired as a result of some mental disorders. Health providers identified the following conditions as especially problematic: autism, attention deficit and hyperactivity disorder, and post-traumatic stress disorder, due to any of the following:

  • the conditions can vary considerably in their expression
  • there continues to be an erroneous belief among health providers that some conditions are categorically ineligible
  • the form falls short in capturing the breadth and depth of impairment that can result from a mental condition

Actions

The committee discussed this recommendation with officials of the CRA and of the Department of Finance Canada. The committee was asked to provide an internationally recognized list of mental functions in support of this proposed reform.

Because there is no single universally accepted list of mental functions, the DAC provided the lists employed by the World Health Organization (WHO) and the U.S.-based National Institute of Mental Health. In formulating our recommendation, the committee had combined the functions identified on both lists with feedback from the more than 1,000 health providers who had completed our health provider survey in 2019 regarding their experience with Form T2201.

The proposed new list of mental functions represents a blend of international criteria and practitioner feedback and, as such, is an evidence-based taxonomy of mental functions. The committee acknowledges the need to test this revised list with the health providers who complete Form T2201 in the area of mental functions.

The CRA and the committee have endeavoured to do this in 2020 and, in part because of the impact of COVID-19 and the fact that health providers are otherwise occupied, this effort is ongoing. Outstanding issues for health providers working in the area of mental functions include:

  • whether each of the functions stands on its own or whether some are composites of others. For example, learning can depend on attention and memory, and attention and concentration may be redundant
  • the misunderstandings that exist even among knowledgeable health providers that some conditions don’t qualify or that those people who work despite their conditions are ineligible
  • that the breadth and depth of impairments in mental functions are not adequately assessed by the current eligibility criteria on Form T2201 (see Recommendation #4)

Recommendation #3

That the CRA replace on page 5 of Form T2201 the term “effects of the impairment” with the following:

“The effects of the individual’s impairment must restrict their activity (that is, walking, seeing, dressing, feeding, mental functions, eliminating, hearing, speaking or some combination thereof) all or substantially all of the time, even with therapy and the use of appropriate devices and medication.”

Background

Reformulating the definition of mental functions as we proposed in Recommendation #2 is clearly important. However, the committee learned during the course of our work that administrative clarifications would also ease the DTC eligibility application process.

More specifically, the text box on page 5 of Form T2201 asks health providers to describe the effects of the applicant’s impairment. In a survey that the committee conducted last year, health providers informed us that they are confused as to whether they are being asked to assess the actual impairment or to determine its impact on the applicant’s functional capacity. Our recommendation is intended to clarify the information that the CRA is requesting on Form T2201.

Actions

The CRA has incorporated this recommendation into a redesigned paper version of Form T2201, which had been scheduled for release in the spring 2020. The first round of user testing with health providers, individuals and DTC assessors has been completed.

The second iteration of the redesign of Form T2201 was tested in February 2020. Due to COVID-19, however, the process was disrupted and the CRA has not received feedback on the latest testing. The work on the paper version of Form T2201 will resume as soon as possible.

Recommendation #4

That the CRA delete the reference to “social activities” on page 5 of Form T2201 due to the contradiction on page 3 of the form. Page 5 states that one is ineligible on the basis of social and recreational activity, while page 3 states that the inability to initiate and respond to social interactions makes one eligible, as does the inability to engage in common simple transactions.

Background

Form T2201 is confusing to many health providers in that it appears to present contradictory information. One page of the form indicates that a certain set of conditions makes an applicant potentially eligible for the DTC, while another page states that these same activities would make that same person ineligible. Health providers have underscored that social dysfunction is an extremely important feature of some mental disorders (for example, autism), that it can be a profound impairment and that it is not clearly captured in the eligibility criteria for the DTC.

Actions

The CRA has incorporated this recommendation into a redesigned paper version of Form T2201, which was scheduled for release in the spring 2020. The first round of user testing with health providers, individuals and DTC assessors has been completed.

The second iteration of the redesign of Form T2201 was tested in February 2020. As noted in Recommendation #3, the process was disrupted due to COVID-19 and the CRA has not received feedback on the latest testing. The work on the paper version of Form T2201 will resume as soon as possible.

Recommendation #5

That the CRA change the question on page 5 of Form T2201 about the likelihood of improvement to ask health providers whether the individual’s illness or condition that is responsible for the impairment in function, such as walking or cognitive functions, is likely to improve, as in the following example:

“In thinking about the individual’s impairment, please consider whether the condition that causes the impairment (for example, blindness, paraplegia, schizophrenia or bipolar disorder) can be expected to last for a continuous period of at least 12 months.”

Background

In addition to the problems identified in Recommendations #3 and #4, health providers raised a third area of confusion regarding the wording of Form T2201. There is a question on page 5 of the form that asks health providers about the applicant’s likelihood of improvement.

Our proposal builds on the concern raised in Recommendation #4. In response to our survey, health providers told us it is not clear whether the CRA is asking if the applicant’s underlying condition or functional capacity is expected to improve. The committee requested that the CRA clarify the text or reword it entirely in order to explain its meaning.

Actions

The CRA has incorporated this recommendation into a redesigned paper version of Form T2201, which had been scheduled for release in the spring 2020. The first round of user testing with health providers, individuals and DTC assessors has been completed.

The second iteration of the redesign of Form T2201 was tested in February 2020. As mentioned in recommendations #3 and #4, the process was disrupted due to COVID-19 and the CRA has not received feedback on the latest testing. The work on the paper version of Form T2201 will resume as soon as possible.

It should be noted that, in order to reduce the number of clarification letters sent, the CRA has removed the “Effects of impairment” box and replaced it with two questions asking health providers if their patients are either unable to perform the activity or if it takes them an inordinate amount of time to do so. This recommendation was identified during usability testing.

Recommendation #6

That the CRA no longer interpret all or substantially all as 90% of the time and no longer interpret an inordinate amount of time as three times the amount of time it takes a person without the impairment.

Background

In order to qualify for the DTC, the presence of impairment is not sufficient. Rather, the effect of the impairment must be severe and prolonged. In fact, the restriction must be present all or substantially all the time, which has been interpreted by the CRA to mean at least 90% of the time.

During the first year of our mandate, discussions around this recommendation were held with Department of Finance Canada officials who raised two key issues. First, they noted that the Income Tax Act does not specify a minimum percentage of time that impacts must occur in order to qualify for the DTC. They acknowledged that in determining whether the legislated criterion of “all or substantially all of the time” is met, the CRA generally uses a 90% of the time threshold, but that there are other situations in which the legislated criteria may also be met. Second, they noted the policy precedent for this percentage. The 90% guideline is employed in several other contexts, including business and charitable accounts.

Our first annual report documented, however, the many problems with this guideline when applied to the DTC. It acts as a major barrier to DTC eligibility, particularly for persons with impairment in mental functions or other serious conditions which have many symptoms, some or all of which may be episodic.

A person whose memory or perception of reality is impaired even half the time, for example, is seriously and significantly impaired, requiring any combination of supports, remedial treatments and devices, or medication. Moreover, there is no basis in law for the 90% guideline; it is simply administrative practice. In fact, several judgments in Tax Court of Canada cases involving impairment in mental functions as well as the goods and services tax have challenged the use of the 90% guideline.

Actions

As in the case of a number of recommendations that require legislative amendment and that are considered to be particularly complex, the committee seek further consultation on this proposal. We want to identify possible ways in which the current guideline could be replaced by instructions that are both rigorous and able to be assessed by health providers who are not with the applicant 90% of the time.

Recommendation #7

That in the DTC assessment process, the CRA employ the following definition to determine marked restriction in mental functions:

“The individual is considered markedly restricted in mental functions if, even with appropriate therapy, medication and devices (for example, memory and adaptive aids):

  • all or substantially all the time, one of the following mental functions is impaired, meaning that there is an absence of a particular function or that the function takes an inordinate amount of time:
    • attention
    • concentration
    • memory
    • judgment
    • perception of reality
    • problem-solving
    • goal-setting
    • regulation of behaviour and emotions (for example, mood disturbance or behavioural disorder)
    • verbal and non-verbal comprehension
    • learning

or

  • they have an impairment in two or more of the functions listed above, none of which would be considered a marked restriction all or substantially all the time individually but which, when taken together, create a marked restriction in mental functions all or substantially all the time

or

  • they have one or more impairments in mental functions which are:
    • intermittent and/or
    • unpredictable; and
    • when present, constitute a marked restriction all or substantially all the time.”

Background

Form T2201 asks health providers whether the applicant is markedly restricted in performing designated activities related to mental functions. The committee made this recommendation in response to concerns raised by many health providers who had identified challenges in interpreting the “marked restriction” criterion. Our proposed new wording is intended to provide some clarification and guidance to health providers as they complete Form T2201.

Actions

The CRA is working to establish a framework that will include the responsibilities of a newly proposed navigator role (see Recommendation #20). The navigators will be answering questions according to the current legislation. If the committee’s Recommendation #7 is implemented as presented, the navigators may be able to use these examples. The CRA will continue to work on this initiative.

The CRA and the committee noted that some physical disorders have intermittent and unpredictable symptoms and that any revision to the treatment of conditions with intermittent symptoms, should apply to both mental and physical disorders.

Recommendation #8

That the CRA remove specific references to activities in the Form T2201 section on mental functions and include examples of activities in Guide RC4064, Disability-Related Information, to help health providers detail all the effects of the markedly restricted mental function(s), as in the following illustration:

“The individual is considered markedly restricted in mental functions if they have an impairment in one or more of the functions all or substantially all of the time or takes an inordinate amount of time to perform the functions, even with appropriate therapy, medication, and devices. The effects of the marked restriction in mental function(s) can include, but are not limited to, the following (this list is illustrative and not exhaustive):

  • with impaired memory function, the individual cannot remember basic information or instructions such as address and phone number or recall material of importance and interest
  • with impaired perception, the individual cannot accurately interpret or react to their environment
  • with impaired learning or problem-solving, the individual cannot follow directions to get from one place to another or cannot manage basic transactions like making change or getting money from a bank
  • with impaired comprehension, the individual cannot understand or follow simple requests
  • with impaired concentration, the individual cannot accomplish a range of activities necessary to living independently like paying bills or preparing meals
  • with impaired ability to regulate mood (for example, depression, anxiety) or behaviour, the individual cannot avoid the risk of harm to self and others or cannot initiate and respond to basic social interactions necessary to carrying out basic activities of everyday life
  • with impaired judgment, the individual cannot live independently without support or supervision from others or take medication as prescribed

Background

In our first annual report, the committee noted that Form T2201 asks whether the applicant is markedly restricted in performing designated activities related to mental functions. We believed that it would be helpful for the CRA to include concrete examples of marked restriction in mental functions as guidance for health providers. Rather than make a general recommendation, the committee developed a set of examples to convey our intent.

Actions

The CRA is introducing a digital application of Form T2201 (Recommendation #28) that will include multiple examples for each function currently listed on the form. The content will be tested with selected health providers to ensure both its accuracy and clarity. Fortunately, digital application lends itself to the modification or expansion of materials as required.

Ideally, there would be an avenue at the early stages of this process for health providers to send feedback on the helpfulness of the examples. These comments would allow for clarifications that may be required or the correction of errors or omissions.

The digital application of Form T2201 is being tested in stages. Selected health providers who can certify specific functions are being asked for feedback on how well the digital form identifies the requirements for that function.

Committee members also participated in a demonstration of selected parts of the digital application. The digital format was well received, with committee members noting that it responds to many of the concerns raised in the health provider survey we conducted last year. It will be simpler and faster to complete. The digital application allows for tick boxes rather than long descriptions. It can provide examples and guidance to health providers around specific questions that may have been confusing or open to interpretation.

There are a few technical aspects to work out including, for example, the use of electronic signatures and the ability for health providers to retain a copy of the completed digital form in the individual’s electronic medical record. When the digital application is fully in use, the CRA anticipates that its clarity will reduce the need for clarification letters, which will be of great benefit to applicants (Recommendation #21).

Recommendation #9

That the CRA consider a child and an adult version of Form T2201, with eligibility criteria tailored as necessary.

Background

Several respondents to the health provider survey identified another serious weakness in the DTC eligibility process. The current Form T2201 does not readily apply to children because they typically require assistance with most of the activities of daily living. Respondents to the survey suggested that examples would help health providers distinguish between a disability-related limitation and a developmentally related limitation due solely to age and maturation.

The committee recognized that it would take time to develop a new form for children and that legislative underpinnings would need to be introduced for this reform. In the meantime, we urged the CRA to expand the list of guidelines for health providers to include examples that apply to children. This action would at least respond to the concern we heard that “Clearer guidelines for parents with children with disabilities are a must.” The examples should include behaviours related to autism and developmental disabilities, in particular.

Actions

The CRA indicated that testing of the redesigned Form T2201 will help determine the need for a child-specific version.

In the development of the digital application of Form T2201, the CRA is exploring the possibility of directing respondents to a different set of questions if they indicate upfront that they are completing the form on behalf of a child. The CRA is considering including selected examples of behaviours that would apply to children.

This approach may be preferable to the introduction of an entirely separate form. Several health providers noted that, if there were different forms for children and adults, some applicants might be lost to the system when they are required, upon turning age 18, to transition from one form to another.

Recommendation #10

That the CRA revise the list of functions on Form T2201 to the following:

  • vision
  • speaking
  • hearing
  • lower-extremity function (for example, walking)
  • upper-extremity function (for example, arm and hand movement)
  • eliminating
  • eating/feeding
  • mental functions

Background

Recommendation #1 noted that the eligibility DTC requirements on Form T2201 set the bar higher for mental functions than they do for physical functions. We called for parity in the treatment of mental and physical functions. In order to respect this parity principle, the committee felt it was necessary to revise the current list of functions on Form T2201 as proposed.

Actions

The CRA has seriously considered this recommendation and identified a few concerns, notably whether the proposed changes might inadvertently give some applicants the understanding that they were no longer eligible. For example, they queried whether some conditions, such as severe cardiopulmonary disorders, would not qualify for the DTC if “extremity function” served to replace dressing.

The committee agreed that this problem can be avoided, provided that “upper and lower extremities” are well defined. For example, a restriction in upper-extremity function can result from a number of underlying conditions, including cardiopulmonary ones. The digital application of Form T2201 discussed in Recommendation #8 may help clarify potential confusion around this concern.

Recommendation #11

That the CRA, in respect of the parity principle, create a list of examples of activities for each impaired function for inclusion in Guide RC4064 to help health providers detail all the effects of markedly restricted function(s), as in the following proposed guidelines (this list is illustrative and not exhaustive):

  • with impaired lower-extremity function, the individual cannot walk
  • with impaired upper-extremity function, the individual cannot feed or dress themselves, or cannot attend to basic personal hygiene
  • with impaired eating/feeding, the individual cannot swallow or eat food

Background

If the CRA follows up on Recommendation #10 and proceeds to modify the list of physical functions, the committee felt that it would be helpful to include a few examples as guidelines for health providers completing Form T2201.

Actions

Should Recommendation #10 proceed, the CRA will follow up on this action, which proposes a change to the list of physical functions on Form T2201. As noted in the discussion on that recommendation, several challenges must be addressed before the CRA can act on its implementation.

It will be essential, for example, to identify any conditions that may no longer qualify for the DTC if the proposed changes in eligibility criteria are adopted. Any clarifications or improvements to these criteria should not jeopardize current or potential DTC eligibility.

Recommendation #12

That the CRA review the current eligibility criteria for hearing, which are out of date.

Background

This issue was brought to the attention of the committee through the health providers survey that we carried out during the first year of our mandate. Respondents who identified this problem gave no details, however, about the specific shortcomings in the current criteria. In making this recommendation, we knew that follow-up work would be required to determine precisely where changes in the eligibility criteria should be made.

Actions

The CRA has made initial contact with the Canadian Hearing Society and the Canadian Society of Audiologists. The work on revised eligibility criteria will continue.

Recommendation #13

That the CRA work in collaboration with the Department of Finance Canada to consult with relevant health providers and stakeholders before introducing any legislative changes to the Income Tax Act with respect to the definition of mental or physical functions.

Background

The Disability Advisory Committee was preceded by the Technical Advisory Committee (TAC) on Tax Measures for Persons with Disabilities, which was appointed in 2004 by the Minister of Finance and the Minister of National Revenue. The TAC’s report, Disability Tax Fairness, proposed that mental functions for DTC eligibility be defined as follows:

  • changing “thinking, perceiving and remembering” in the Income Tax Act to “mental functions necessary for everyday life”
  • providing for the cumulative effects of restrictions in more than one basic activity of daily living, where the effects are equivalent to a marked restriction in a single basic activity of daily living

The TAC also recommended that the list of mental functions be expanded as it was deemed to be too narrowly defined. Mental functions include memory, problem-solving, judgment, perception, learning, attention, concentration, verbal and non-verbal comprehension and expression, and the regulation of behaviour and emotions. These functions are necessary for activities of everyday life that are required for self-care, health and safety, social skills and simple transactions.

The Income Tax Act subsequently was amended in 2005. Mental functions necessary for everyday life as set out in Form T2201 were changed to all of the following:

  • adaptive functioning (for example, abilities related to self-care, health and safety, abilities to initiate and respond to social interactions, and common, simple transactions)
  • memory (for example, the ability to remember simple instructions, basic personal information such as name and address, or material of importance and interest)
  • problem-solving, goal-setting, and judgment, taken together (for example, the ability to solve problems, set and keep goals, and make the appropriate decisions and judgments)

The committee was unclear as to how the federal government arrived at this interpretation of the TAC recommendations regarding mental functions. The changes that were introduced did not accurately capture the intent of the TAC proposals. We included Recommendation #13 in our first annual report in order to avoid a similar misinterpretation of our proposals.

Actions

The CRA has requested additional information and clarification around these proposed changes. The committee will continue to work on advancing the implementation of this recommendation.

Recommendation #14

That the CRA replace the current eligibility criteria for life-sustaining therapies as set out in Form T2201 with the following:

  • Individuals who require life-sustaining therapies (LSTs) are eligible for the DTC because of the time required to administer these therapies. These are therapies that are life-long and continuous, requiring close medical supervision. Without them, the individual could not survive or would face serious life-threatening challenges. Close medical supervision is defined as monitoring or visits, at least several times annually, with a health provider. These therapies include but are not necessarily limited to: intensive insulin therapy for type 1 diabetes; chest therapy for cystic fibrosis; renal dialysis for chronic and permanent renal failure; and medically prescribed formulas and foods for phenylketonuria (PKU).

Background

Applicants are potentially eligible for the DTC if they require life-sustaining therapy. A medical doctor or nurse practitioner must certify that several conditions are met.

An individual must require this therapy in order to support a vital function. This condition applies even if the therapy has eased the symptoms. The applicant must require this life-sustaining therapy at least three times a week and for an average of at least 14 hours per week.

Over the course of our mandate, several concerns regarding the eligibility criteria for life-sustaining therapy were brought to our attention and are documented in our first annual report. Perhaps most important, there are serious questions about the empirical basis for the 14-hour minimum weekly time requirement, in particular.

The 14-hour requirement includes only the time related to the actual therapy. The requirement assumes that people must take time away from their normal everyday activities in order to receive it. The time may also be spent administering life-sustaining therapy to a child.

Actions

This is a complex recommendation that will require significant work over time. The committee will continue to work on its implementation.

It should be noted that after our first annual report was completed, we received a submission from a parent whose child had been diagnosed with a rare disorder known as maple syrup urine disorder (MSUD). The parent requested that this condition be included in a modified Recommendation #14 because of the similarity of this condition to PKU. We agreed with this proposal and have modified the recommendation accordingly. We discuss this proposal in “Selected Conditions and Other Concerns” in Part 2 of this report.

Recommendation #15

That the CRA do the following:

  • consider whether some conditions, such as a complete paraplegia or tetraplegia, schizophrenia or a permanent cognitive disorder with a MOCA below 16, should automatically qualify for the DTC in the way that blindness does. (MOCA is a mental status examination of cognitive functions used commonly to assess impairment that results from conditions such as dementia, brain injury or stroke)
  • examine the eligibility criteria employed in other federal and provincial/territorial programs, such as the Ontario Disability Support Program and the programs for Canada Pension Plan disability benefits and veterans’ disability pensions to identify the conditions/diagnoses that establish automatic eligibility for those programs

Background

In trying to ease DTC access through improved eligibility criteria, the committee discussed whether it would be helpful to include a statement of condition or diagnosis on Form T2201. While diagnosis alone would not necessarily qualify someone for the DTC, awareness of the presenting condition might assist CRA assessors in making DTC eligibility determinations. There is, of course, the precedent that some conditions, such as blindness and paraplegia, are already categorically eligible on the basis of diagnosis alone.

Our first annual report noted that there is precedent for the inclusion of diagnosis on the eligibility forms of selected programs. The Ontario Disability Support Program (ODSP), for example, identifies a set of prescribed classes in its eligibility criteria. These classes refer to specific categories of people who do not have to go through the disability adjudication process in order to qualify for the ODSP.

At the same time, we acknowledged the challenges with this approach. A certain diagnosis does not necessarily mean serious impairment in function. In many cases, it is neither appropriate nor factually correct to equate the two. But there may be some conditions, such as paraplegia or dementia, whose effects are more clearly evident and predictably stable.

Finally, we acknowledged that a designated list in any area of public policy invariably raises questions of fairness about the groups, items or conditions that have been left out. On balance, however, committee members believe that the merits of this recommendation outweigh its potential weaknesses.

Actions

This is a complex recommendation that will require significant work over time. The committee will continue to work on its implementation.

In the meantime, the CRA is researching federal and provincial/territorial programs for automatic eligibility and expedited processing. Obvious conditions will be included in the digital application and the ongoing testing process will provide important guidance. The CRA has also added an area under each functional category, such as vision and walking, to capture a diagnosis on the new paper version of Form T2201.

Recommendation #16

That the CRA examine the new eligibility form being used for Canada Pension Plan disability benefits to identify areas in which there might be synergies regarding eligibility for the DTC, such as including the presenting condition or diagnosis as supplementary information identifying functional limitations.

Background

The committee made this proposal in order to provide additional relevant information when CRA officials assess for DTC eligibility. We recognize, however, that the presence of a certain diagnosis does not automatically equate with impairment.

Actions

CRA officials are in the process of examining the application form currently being used for Canada Pension Plan disability benefits. The CRA is proceeding cautiously on this proposal because DTC eligibility is based on impairment in function rather than presence of a specific condition (other than blindness). A single diagnosis does not always result in severe or prolonged impairment in physical or mental function.

It should be noted that the CRA may decide to use diagnoses in the two areas around which the committee has made specific proposals, notably Recommendation #14 on life-sustaining therapies and Recommendation #15 on the recognition of designated conditions. The digital application of Form T2201 also adds a question about diagnosis.

Recommendation #17

That the CRA test or pilot various approaches that would remove the gatekeeper role from health providers. One such approach would be for community tax clinics to take on a screening or advisory function. Another would be to establish a CRA call centre explicitly for this function.

Background

Health providers made clear to the committee in both their responses to the health provider survey and in committee submissions their concern that they have effectively become the gatekeepers to the DTC.

In addition to the cost and time burden associated with this role, it can inadvertently jeopardize the client/health provider relationship if the provider has an incomplete understanding of who is and isn’t eligible, and completes a form for someone who is not eligible or fails to complete a form for someone who is.

Further, the effects of the impairment upon which they are asked for their judgment may not be the ones they can observe directly. For example, health providers do not spend all or substantially all of the time with their patients to witness the functional impacts of their medical conditions.

Actions

The CRA has introduced several measures to implement this recommendation. The CRA is working to establish a framework that will include the responsibilities of a newly proposed navigator role (see Recommendation #20).

The CRA continues to support its Community Volunteer Income Tax Program, discussed in Recommendation #31. In fact, the investment in this program has increased in order to expand its reach, particularly among organizations serving Indigenous peoples and organizations representing persons with impairment in mental functions. The CRA recognizes that these two populations would benefit greatly from additional tax assistance.

An enhanced phone line has been introduced for call centre agents to consult directly with a DTC unit assessor for answers to more complex questions related to the DTC that they are unable to resolve. These complex questions typically relate to DTC eligibility criteria, impairment in mental functions, applications on behalf of a dependant, and DTC appeals. Generally, the call centre agent is able to obtain and relay an immediate answer to the taxpayer’s query. However, if the taxpayer’s query is not resolved by the call centre agent, an assessor in the DTC unit will either speak to the taxpayer at the time or the taxpayer will receive a callback within two business days.

Recommendation #18

That the client experience survey on the DTC and other disability tax measures to be carried out by the CRA include a question as to whether the individual or recipient had any difficulty accessing a health provider for the purposes of completing Form T2201 and, if so, for which activity. Clients should also be invited to provide any additional comments on this question. Special attention should be paid in this survey to the needs and concerns of Indigenous Canadians.

Background

In the first year of our mandate, the committee heard from several organizations that proposed expanding the list of health providers approved to complete Form T2201.

While the committee appreciates the need to ensure access to health providers, we felt that we did not have sufficient information about the nature and extent of the problem. We also questioned whether access to specialized health providers, such as chiropractors or ostomy nurses, was a serious concern for Canadians and whether DTC recipients would have requested some of the proposed changes.

Actions

In order to determine whether DTC recipients themselves felt a need for an expanded list as proposed, the committee asked the CRA to include a question in its client experience survey about access to health providers. We wanted to know more about the access problems that DTC recipients actually face.

The CRA modified the questions in the client experience survey, based on input from committee members. The survey went live in April 2020. The results of the survey are attached as Appendix F.

Recommendation #19

That the CRA develop a process for expanding the list of health providers with the appropriate expertise who can assess eligibility for the DTC.

Background

Committee members recognized that the CRA likely would receive requests on an ongoing basis to update and expand the list of health providers who can assess for DTC eligibility. We had therefore proposed that data be gathered in order to substantiate the need for an expanded list, as the committee was not clear as to whether clients faced challenges in getting access to qualified health providers. We also suggested the development of principles to guide any expansion in future.

Actions

The CRA is currently considering possible actions with respect to this recommendation. Its first step is to gather information from DTC recipients, as proposed in Recommendation #18, to determine the extent of the problem. The committee agreed that potential expansion of the list would be explored if results from the client experience survey, discussed in Recommendation #18, indicated a need to do so.

Committee members also had a preliminary discussion about key principles that should guide any additions to the health provider list of assessors. For example, the profession must be governed by a recognized regulatory body.

Another possible principle would be that the designated health provider can assess only for the specific function or functions related to their training. For instance, if ostomy nurses are added to the list as requested (Recommendation #18), they would be permitted to certify only for eliminating (bowel or bladder functions) and not for any other impairment in physical or mental functions.

Recommendation #20

That in the case of determining DTC eligibility for persons with impairment in mental functions, the CRA include relevant specialized health providers, including, but not limited to, psychiatrists and psychologists, in the review process when applications are disallowed.

Background

Most of the problems related to DTC eligibility have arisen around impairment in mental functions. Challenges regarding the definition of mental functions were discussed in Recommendations #1 to #16 and are documented at length in our first annual report.

As a result of these wide-ranging concerns, the committee proposed that the CRA carry out a second-level internal review on all rejected DTC applications when a duly-completed Form T2201 and all associated supporting documentation have been submitted.

Committee members made this recommendation in recognition of the fact that CRA assessors typically face complex conditions. We believe that this proposal to include qualified mental health providers as advisors would both enable access to the DTC where appropriate and reduce the need for objecting to and even appealing decisions to disallow eligibility. Formal appeals through the Tax Court of Canada can be a long, costly and stressful process that should be avoided if possible.

Actions

The CRA has acted on this recommendation though not in the precise way the committee proposed. All applications denied the DTC involving impairment in mental functions are sent for secondary review by a CRA team not involved in the initial decision. The CRA will also provide better and more consistent training to current and new assessors of DTC cases that involve an impairment in mental functions.

The CRA has committed to consulting with mental health professionals around selected cases.

In addition, DTC assessors now have access to the guidelines in the document “Mental functions necessary for everyday life.” The guidelines permit greater flexibility in the interpretation of “all or substantially all of the time” by noting that the effects of the impairment must be present and challenging “most of the time” rather than the arbitrary 90% rule.

Different components of Recommendation #20 can be found under various CRA initiatives, such as implementing a new navigator role and strengthening the tools and procedures available to DTC assessors. The navigator role was the result of discussions from the committee’s June 2019 meeting.

While navigators will help streamline the application process and provide co-ordination between the CRA and applicants, their role does not yet include consulting with outside sources on denial of applications from persons with impairment in mental functions. Based on committee feedback, the CRA is currently revising the framework, roles and responsibilities of this new position.

Recommendation #21

That the CRA:

  • copy to the applicant all clarification letters sent to the health provider
  • let the health provider know that all communication to a health provider about an applicant will be copied to the applicant and that any communication the health provider submits to CRA will also be made available to the applicant
  • encourage the health provider to contact and consult the applicant, as necessary, when providing any clarification to the CRA
  • extend the time for a health provider to file a clarification letter with the CRA from 45 to 60 days, and note this timeline on the first page of the questionnaire

Background

The committee’s first annual report identified a number of problems with the clarification letters used by the CRA to request additional information regarding Form T2201 completed on behalf of an applicant. Health providers flagged their concern about the apparent increase in recent years in the frequency of clarification letters.

The CRA often asks health providers for additional information about a particular applicant even after they send substantial documentation in the initial application. Some health providers noted that Form T2201, which originally had been rejected, subsequently was approved after precisely the same information was submitted to the CRA a second time.

Others pointed out the difficulty in responding to these clarification letters. The questions on the letters generally are considered too broad and not always relevant to a specific disability.

Actions

As part of its quality review, the CRA is in the process of implementing all the components of this recommendation. It is working to provide more information, guidelines and examples earlier in the application process in order to reduce the need for clarification letters.

The discussion on the development of the digital Form T2201 noted that the application process itself will be made easier. Tick boxes will replace the need to provide long descriptions. Multiple examples will be included at several points in the form as guidance for health providers. The CRA has indicated that it currently:

  • informs the health provider that all communication to a health provider about an applicant will be copied to the applicant and that any communication the health provider submits to the CRA will also be made available to the applicant
  • encourages the health provider to contact and consult the applicant as necessary when providing any clarification to the CRA
  • gives the health provider 60 days to respond to a clarification letter. The letter indicates that while the health provider has 45 days to respond, the case is not closed until 60 days have passed. This practice is intended to reduce processing times and associated delays

The CRA will not be copying the applicant on clarification letters sent to health providers as has been done in the past. However, in order to capture the essence of the recommendation, the CRA has added information to the delay letter sent to the applicant, indicating that their health provider has 45 days to reply to the CRA’s clarification letter.

Recommendation #22

That the CRA:

  • provide in notice of determination letters a relevant reason as to why a DTC application was denied
  • include in notice of determination letters a copy of the clarification letter and the health provider’s clarification response. This information is vital in case of an appeal
  • move the consumer survey request to the bottom of the notice of determination letters

Background

In our first annual report, the committee identified problems with respect to the clarification letters that the CRA sends to health providers to complete on behalf of identified applicants (Recommendation #21). We also noted several problems related to the notice of determination letters that the CRA issues to communicate its decision regarding a given application.

A notice of determination letter does not always provide a reason for not allowing the DTC. Rather, it relies on pre-written clauses it calls “verses” that may have limited relevance to the application. The committee has questioned whether these verses are appropriate guidelines and whether they need to be modified and updated.

The current practice creates difficulties as well for applicants who may want to appeal a decision because they often receive no information regarding the rejection of their application. Disability Advisory Committee members also felt that it was inappropriate to include a consumer experience survey immediately following the statement turning down a DTC application.

Actions

The CRA is drafting verses and accompanying procedures to improve the denial letters. The CRA Appeals Branch has provided proposed wording for the CRA Assessment, Benefit, and Service Branch to include in DTC denial letters to ensure that applicants are informed of their recourse options. This issue is discussed in “Review of DTC Decisions” in Part 2 of this report.

The new client experience survey went live in April 2020. The request to complete the survey will appear at the bottom of the notice of determination. The results of the survey are attached as Appendix F.

Recommendation #23

That the Minister of National Revenue review the current appeals process with a view to creating a straightforward, transparent and informed process where the applicant has access to all relevant information (including the precise reason their application was denied) and documents (including copies of all information submitted by health providers that pertain to their application).

Background

Applicants deemed ineligible for the DTC can challenge that determination through case review, a notice of objection and a notice of appeal. These steps are described in “Review of DTC Decisions” in Part 2 of this report.

Actions

The CRA is taking steps to improve the quality of information provided at both the pre-application and the application stages of eligibility. The CRA is in the process of introducing a navigator function to help individuals presenting complex circumstances work their way through the eligibility process (see Recommendation #20). The digital application of Form T2201 currently in development will respond to many of the problems that health providers identified in the original Form T2201.

The CRA Appeals Branch has taken a number of steps to ensure that DTC determinations are consistent with CRA policy. For example, it has centralized the DTC objections workload for both eligibility and entitlement to four centres of expertise (COEs), with a recent updating of branch procedures to ensure that all DTC objections are forwarded to a COE. It has formed a working group within the COEs to ensure that the objections program has the required support to process increasingly complex DTC files with a consistent approach. Additional improvements are summarized in “Review of DTC Decisions” in Part 2 of this report.

Recommendation #24

That the CRA include a document (one- page, two-sided information sheet) entitled “Your Rights When a Notice of Determination Denies a Claim for the DTC” that would:

  • explain the requirements, timelines and details for filing the following:
    • review
    • notice of objection with the Appeals Branch
    • notice of appeal with the Tax Court of Canada
  • inform taxpayers that other persons (that is, family members, friends or professional advisors) can act on their behalf by submitting Form T1013, Authorizing or Cancelling a Representative, or writing a letter
  • inform taxpayers that they have access to all documents in their files, including a copy of the follow-up questionnaire and any clarification letter completed by the health provider
  • inform taxpayers that they can contact the CRA for a copy of Pamphlet P148, Resolving your dispute: Objection and appeal rights under the Income Tax Act, if they do not have access to the Internet
  • provide the correct contact information and mailing addresses for the submission of any required materials

Actions

The CRA is taking steps to ensure that DTC applicants know they can submit, at any time, additional material or clarifications with respect to their case. As discussed in Recommendation #22, it will also include in notice of determination letters any relevant information that DTC applicants may require if they choose to object to or appeal a CRA determination.

In response to our recommendation, the Appeals Branch has prepared suggested wording for the notice of determination. The Appeals Branch has also prepared a decision tree to help applicants understand the process of challenging a DTC determination as well as three videos that explain the process involved in launching a challenge. Details and links are provided in “Review of DTC Decisions” in Part 2 of this report.

Recommendation #25

That the CRA consult on a regular basis with selected community organizations to:

  • ensure that all its communications and materials (including letters of correspondence with individuals) are easily accessible by persons with disabilities and are available in plain language. Organizations such as People First can assist with ensuring plain language
  • determine whether its communications and materials are keeping pace with technological change and with the technologies in common use by communities of persons with disabilities

Background

The committee pointed out in our first annual report that most Canadians are unaware of the various tax provisions from which they can benefit. Moreover, many tax measures are hard to understand. The DTC, in particular, is especially complex because of its complicated eligibility criteria and onerous application process.

We also wanted to ensure that the CRA is using the most up-to-date, disability-related communications technology. At the same time, we recognize that some individuals still use older technologies because they do not have the financial means to upgrade or replace existing communications equipment or they live in rural or remote areas where these upgrades may not be available.

Actions

The CRA has consulted with communications advisors in the Public Affairs Branch and CRA field agents on this recommendation. The Outreach Program and Community Volunteer Income Tax Program continue to work with communications advisors in the Public Affairs Branch to ensure that all materials are reviewed for plain language and are accessible. Outreach field agents are working with individuals claiming the DTC and disability community organizations to solicit feedback on DTC-related material. Comments on CRA products and services are welcome during all outreach events.

It should be noted that the committee received a letter from an individual who had encountered challenges associated with hearing technologies when trying to communicate with the CRA. The committee hopes that the CRA will increase the technological options available to individuals with significant auditory impairments who face unreasonable barriers in accessing the current tools, such as teletypewriter and My Business Account. The CRA has indicated its interest in addressing this issue.

Recommendation #26

That CRA web content, which outlines disability tax measures, link to relevant provincial and territorial websites that identify disability-related provisions in those jurisdictions, as well as the range of federal and provincial/territorial disability measures that require DTC eligibility in order to qualify.

Background

In the first year of our mandate, the committee heard from organizations representing persons with disabilities about possible ways of enabling navigation through the complex webs of disability-related programs and services throughout the country. La Confédération des organismes de personnes handicapées (COPHAN) du Québec had suggested, for example, that the CRA web content follow Quebec’s lead in making links to related disability programs and supports in other provinces and the territories.

Actions

The DTC-related web pages were to be reviewed in spring/summer 2020 as part of the web optimization project, led by the CRA’s Public Affairs Branch. Unfortunately, the DTC content optimization project was temporarily put on hold due to COVID-19.

The purpose of the project was to improve user experience. It was intended to ensure that Canadians spend less time looking for DTC answers on the Canada.ca website and be better able to complete DTC tasks on that site. By making it easier for individuals to find and understand answers to their most frequent DTC questions, the project would:

  • improve Canadians’ understanding of whether or not they are eligible for DTC and how to apply
  • increase the number of correctly completed and submitted applications
  • reduce low-complexity DTC-related enquiries to the call centre, allowing CRA staff to deal more with high-complexity calls
  • bring the needs and expectations of Canadians into the design of the optimized web pages

The optimization project is in its early stages and the DAC secretariat has notified the project team of the related committee about Recommendations #25 and #26. The DAC secretariat will be involved in the progress of the project and has suggested that the committee also be engaged, where appropriate.

Recommendation #27

That the CRA provide and make publicly available relevant data on the DTC, including number of applications, approvals, rejections, and appeals; durations of eligibility by function; and a demographic profile of current beneficiaries by age and gender.

Background

For the better part of a year, the committee had requested that the CRA provide data on disability tax measures and the DTC, in particular. We felt that it was essential, at the very least, to have basic information on the actual and potential DTC caseload. We believed that it would be important to know more about DTC applicants in terms of their age, gender and geographic region as well as the impairment in functions(s) for which they were applying.

The purpose of requesting this detailed data was to understand the ratio of successful cases (the actual caseload) to all applications (the potential caseload). The data would be informative for comparative purposes.

We would find out, for example, if there is an imbalance with respect to applications for certain functions, which would then raise questions for further exploration. For example, we know through feedback from disability organizations and health providers that applicants with impairment in mental functions face serious challenges. Empirical data would help determine the extent of this problem.

A serious underrepresentation of applications for certain conditions could point to weaknesses in the approval process. It could also reflect the challenges that health providers face in trying to complete certain sections of Form T2201.

Actions

In May 2019, the CRA publicly released a set of DTC statistics. It subsequently prepared a November 2019 update based on committee comments. We were very pleased to receive this information and to note that it has also been made available to the public. In fact, we examined the data in some depth in order to identify any concerns or determine any policy directions that might derive from this information. Our findings are presented in “DTC Data” in Part 2 of this report.

Recommendation #28

That the CRA provide an option for the electronic submission of Form T2201 and related materials that:

  • is convenient and accessible for both taxpayers and tax preparers
  • permits submission of those materials at the same time as, or after, the filing of an income tax and benefit return

Background

Tax preparers and other organizations had proposed to the committee and to the CRA that DTC applicants be permitted to file online their Form T2201 and associated materials. This process would make it easier for many individuals to apply for the DTC. In fact, most government transactions are now being carried out through electronic submission.

Actions

The CRA fully supports this proposal and, as noted in Recommendation #8, is in the process of developing a digital application of Form T2201. It will be able to address many of the concerns that health providers raised with respect to the current form.

The digital application will allow for health providers to mark tick boxes rather than provide descriptive responses. The application process will be clearer and more consistent for health providers. A digital application will enable the inclusion of detailed examples, as the committee proposed in Recommendation #8.

A digital form also makes it easier for the CRA to update content as required. For instance, the committee or the CRA may learn that the wording of a certain example appears to be confusing or that an example pertaining to a specific condition should be added.

Finally, it was noted in committee discussions that a digital form may make it easier to incorporate a separate section for children. If an applicant is aged 18 or younger, then the health provider can be directed automatically to a different set of questions.

Throughout the second year of our mandate, CRA officials made several presentations on the status of this proposal. Committee members were pleased with the progress of this work. We raised questions regarding the protection of client privacy and procedures for storing and recognizing electronic signatures.

The CRA is in the process of consulting with health providers who specialize in the various functions listed on Form T2201. It is testing proposed content and wording changes with these groups in order to address any potential problems prior to its use (although updates and adjustments will be required on an ongoing basis). Committee members also participated in a review of selected functions. We will monitor the progress on this work as it evolves.

Recommendation #29

That the CRA develop, in collaboration with the Disability Advisory Committee, a client experience survey that would align with the health provider survey, but be modified as appropriate to suit the needs and concerns of the target group comprising a representative sample of current and former DTC beneficiaries.

Background

In formulating our initial set of recommendations, the committee relied heavily on the results of the health provider survey that we had undertaken in the first year of our mandate. We received 1,800 responses as well as several hundred detailed comments on the survey questions.

While the committee reached out to and received 40 submissions in our first year from a range of disability-related organizations, we also wanted to hear directly from individuals who had first-hand experience in applying for and receiving the DTC. We therefore proposed the development of a client experience survey.

Actions

The new client experience survey went live on April 20, 2020. The results of the survey are attached as Appendix F.

Recommendation #30

That the CRA provide dedicated support to ensure call centre agents are accessible and have the expertise to answer enquiries related to the DTC form and eligibility.

Background

This recommendation responds to several concerns brought to the attention of the committee.

We learned that there is often a long wait time when calling the CRA phone line for general enquiries. Some individuals told us about continually getting a busy signal or even being disconnected from the phone line. We felt that there had to be a way of linking individuals with DTC-related inquiries to a specially-designated phone line.

The committee knew it would be essential to ensure that the call line would be appropriately staffed. Because the DTC eligibility criteria are complex, staff must be properly trained to respond to the wide-ranging enquiries regarding the DTC application process and the content of Form T2201, more specifically.

Actions

The CRA has implemented this recommendation. It has set up designated phone lines staffed by CRA workers who are being trained to handle both straightforward and complex enquiries with respect to the DTC. These trained staff will help ensure that potential applicants receive appropriate information and guidance as early as possible in the application process.

The provision of appropriate information earlier in the process not only will reduce time, cost and stress in the short term. Ideally, it will cut the time and resources involved in trying to resolve problems later on. It may also reduce the number of requests for reconsideration of DTC decisions and for the filing of objections and appeals.

Recommendation #31

That the CRA, through the Community Volunteer Income Tax Program, which supports voluntary organizations to provide and train volunteers, run community tax clinics and raise awareness about the DTC. There should be a special focus on Indigenous communities.

Background

The committee was pleased to learn that the CRA administers the Community Volunteer Income Tax Program (CVITP). The program supports community organizations across Canada to host free tax clinics where volunteers complete income tax and benefit returns for eligible individuals who have modest income and straightforward tax circumstances. While CVITP volunteers are able to inform clients about the DTC, these volunteers are not in a position to initiate or process any applications.

The CRA provides support to the sponsoring organization through free promotional material, tax preparation software, web-based training for their volunteers, and access to a year-round dedicated help line and guidance from a CRA co-ordinator. In Quebec, the program is called the Income Tax Assistance – Volunteer Program and is administered jointly by the CRA and Revenu Québec.

Actions

The CRA has had considerable success in administering and expanding the CVITP. In 2019–2020, the CRA carried out close to 300 outreach activities involving persons with disabilities and their related organizations to raise tax and benefit awareness and to promote the CVITP. More than 950 outreach activities included Indigenous Canadians, and close to 600 of these activities were held in Indigenous communities.

More than 3,560 community organizations and 19,240 volunteers completed an estimated 835,220 income tax and benefit returns on behalf of Canadians across the country. The individuals assisted by the CVITP during that period were entitled to receive refunds and benefits that totalled more than $1.9 billion.

The CRA will continue to improve the program and extend it to additional communities and regions. The CVITP is hosting free virtual tax clinics by phone and videoconference. Organizations can also submit requests for outreach activities and learn more about the CVITP online through Canada.ca.

Recommendation #32

That the CRA revisit and restate the purpose of the DTC in order to reflect its multiple roles.

Background

The purpose of the DTC is to reduce the income tax burden for Canadians with severe disabilities who are likely to incur additional costs not experienced by persons without disabilities. These extra expenses are often not readily itemizable, like the costs that can be claimed for the medical expense tax credit or the disability supports deduction, discussed later.

A related assumption is that, compared to other Canadians, individuals with severe disabilities may take an inordinate amount of time to carry out a basic activity of daily living or may have to devote substantial time to a life-saving therapy. As a result, income-generating options for persons with severe disabilities may be more limited than for those without similar disabilities. The DTC acknowledges these additional costs and/or extraordinary circumstances by reducing the income base on which DTC-eligible individuals are required to pay income tax.

But the DTC is now playing a larger role in the landscape of disability-related measures. It also acts as the gateway to establishing eligibility for a number of disability-related benefits and services (see Appendix D).

As a result, the DTC has become the centrepiece of federal disability policy in Canada. Committee members felt that the federal government must highlight this profound shift and explain to Canadians the dual role of the DTC. In fact, we questioned whether the Income Tax Act should be amended as there is currently no legislative basis for this expanded DTC role.

Actions

The role of the DTC in the larger landscape of disability-related measures goes beyond the scope of the CRA. The committee will continue to advocate for the review of this role.

Recommendation #33

That the Minister of National Revenue work with the Minister of Families, Children and Social Development to ensure that individuals are able to keep all contributions they made to, and any and all grants and/ or bonds they may have received for, their registered disability savings plan for periods during which they qualified for the DTC.

Background

The purpose of a registered disability savings plan (RDSP) is to help an individual and their family members and friends save for the long-term financial security of a person who is eligible for the DTC. RDSP account holders may also qualify for associated grants and bonds to bolster their long-term savings.

To open an RDSP, an individual must be eligible for the DTC. When a beneficiary no longer qualifies for the DTC, the RDSP rules would require that the plan be closed, and that grants and bonds be repaid to the federal government. Committee members expressed concern about this practice, which we viewed as unprecedented and unfair.

The practice was unprecedented in that no other program of income security in the country requires the repayment of benefits after these have been paid out. Maternity benefits and sickness benefits provided through employment insurance, for example, do not have to be returned after a worker has given birth or is no longer ill. Neither are provincial/territorial social assistance recipients required to repay any benefits if they are no longer eligible for financial aid.

The practice was unfair in that people make long-term life plans on the basis of the income they receive, whether it is through employment, investment or government support. A sudden and unexpected requirement to return hundreds or even thousands of dollars represents a financial and emotional shock in the short term and potential financial destabilization and life upheaval down the road.

Actions

The committee was very pleased to learn that our recommendation was accepted, at least in part, by the federal government. Budget 2019 proposed that RDSPs need no longer be closed when a beneficiary ceases to qualify for the DTC. Committee members questioned whether the RDSP grant and bond portions for which an RDSP holder was eligible would be repaid or paid retroactively. As of March 2019, financial institutions that issue RDSPs are not required to close a RDSP solely because the RDSP beneficiary is no longer eligible for the DTC.

We noted that Budget 2019 also proposed modified repayment rules so that previously contributed federal grants and bonds can be included in RDSP withdrawals in later years, rather than being repaid to the government. These rules were to apply after 2020 and take effect after required changes to the Income Tax Act and Canada Disability Savings Regulations receive Royal Assent. Once the changes become law, they will apply to withdrawals made on or after January 1, 2021: any excess repayments of Canada disability savings grants and Canada disability savings bonds in respect of withdrawals made after 2020 and before the measure is enacted would be returned to a beneficiary’s RDSP following enactment.

Recommendation #34

That, as a short-term measure, the federal government should ensure continued eligibility for related DTC-gateway programs, at least at the federal level, even if DTC eligibility has been revoked. This interim measure would allow for the development of secondary screening processes to determine whether individuals or households can continue to remain eligible for gateway-related services and supports.

Background

The fact that the DTC acts as a gateway to other programs and benefits (Appendix D) has significant implications for the financial and social well-being of households. Individuals and families may lose access to a range of benefits and programs if their DTC eligibility is denied, withdrawn or otherwise lapses after a certain time.

The purpose of our recommendation is to ensure that Canadians with disabilities can retain access to all the programs and measures linked to DTC eligibility. The serious financial and social challenges that most households would face in losing access to these wide-ranging measures are incalculable. In our view, access to all gateway benefits and services should remain intact until a set of checks and balances is in place to determine whether the assistance or support provided through other programs should be withdrawn.

Actions

In considering this recommendation, the CRA informed the committee that this action was beyond its scope because the proposal was directed toward the federal government more broadly. Until recently, there was no federal table or forum to which to bring this concern. We were pleased that the federal government had appointed a COVID-19 Disability Advisory Group to make recommendations on short-term considerations and selected long-standing issues, such as income security for persons with disabilities.

The committee believes that the federal government must be made aware of the concerns related to the DTC role as a gateway to other vital disability benefits and services. A better system should be in place to determine whether households no longer eligible for the DTC still require other important assistance, such as the child disability benefit, for which they had also qualified.

Second, even if the DTC application process were improved, we wondered whether DTC eligibility is the most appropriate screen to identify the households that may require additional assistance. There is a need to think through the provision of financial support for families with children with disabilities more broadly than our committee mandate permits. In the meantime, the federal government should reconsider its practice of disqualifying individuals and families from other DTC-linked benefits.

Recommendation #35

That the CRA, in collaboration with the Province of Quebec, determine a single eligibility process for the DTC in order to avoid separate eligibility at different levels of government.

Background

Throughout the course of our mandate, the committee has considered various ways to ease eligibility for the DTC. As noted in our first annual report, we wondered whether the disability screening process should be shifted from the CRA altogether and moved to a different department, such as Service Canada. That agency would determine access to a range of disability benefits and services, including the DTC. We acknowledged that challenges related to eligibility criteria would nonetheless remain.

We also discussed the idea of a cluster of gateway programs for the DTC. Eligibility for certain benefits, such as long-term social assistance (welfare) for persons with severe and prolonged disabilities, would mean automatic entitlement to the DTC.

We recognize, however, that the eligibility criteria for various programs are not identical and that this approach would have to be carefully examined. Yet because of the DTC’s vital gateway role, we still feel that the CRA needs to seek ways to ease its eligibility process. One possible short-term option is to ensure better integration with Quebec, in particular, which administers its own disability tax credit.

Actions

Discussions are being held with Revenu Québec to examine possibilities where the two DTC-related programs could be streamlined.

Recommendation #36

That the CRA cap the fee that consultants can charge to assist with an initial DTC application and act as expeditiously as possible to draft the regulations introducing this cap.

Background

The multiple complexities involved in applying for the DTC have forced many persons with disabilities to seek the assistance of tax promoters and others who charge a contingency fee for their services as well as a percentage of the DTC claim if the application is successful. The committee expressed concerns about reports of excessive fees. The CRA estimates that promoters collected between $9.5 million and $25.4 million for their services in respect of approximately 36,000 DTC applications for the 2018 calendar year.

The committee acknowledged that many legitimate tax promoters put in substantial time and effort to assist DTC applicants. At the same time, we want to ensure that tax promoters are not charging inordinately high fees for their services.

Actions

On June 1, 2019, the federal government posted the Disability Tax Credit Promoters Restrictions Regulations in the Canada Gazette, Part 1. These regulations set a maximum fee that a promoter can accept or charge to assist with a DTC request. The intent is to ensure that persons with disabilities and their supporting family members can keep more of the benefit they may receive.

The proposed Disability Tax Credit Promoters Restrictions Regulations would establish the maximum fee that a promoter can accept or charge in respect of a DTC application as:

  1. $100 for a DTC application made for a determination of DTC eligibility; and
  2. $100 per taxation year for a DTC application in respect of a deduction for an individual or for a dependant or in respect of any deduction or overpayment of tax under the Income Tax Act that is contingent upon DTC eligibility for that individual or for a dependant.

The Disability Tax Credit Promoters Restrictions Act remains inoperative until regulations are enacted to set the maximum fee. The notice in the Canada Gazette sought feedback on the proposed regulations. Comments and concerns were to be analyzed by the CRA and the act modified as required.

Recommendation #37

That the CRA reimburse an applicant or provider at a reasonable rate in accordance with the provincially recommended fee for the time involved in responding to CRA clarification letters in support of a DTC application or reassessment.

Background

Many health providers are not compensated by the public health care system for the time they spend completing Form T2201 or a follow-up questionnaire for clarification when requested by the CRA. Some health providers charge the applicant a fee to compensate for their time.

There appears to be no standard practice regarding billing for completion of Form T2201. Charges vary widely by health provider. The fee can be prohibitive, especially for individuals living on low income. While the committee considered the option of the CRA paying or helping to offset the cost of completing the form, we acknowledged that this action is unlikely. Such a practice would encourage virtually any individual with some form of functional impairment to apply for the DTC.

However, it seemed reasonable to ask the CRA to pay the cost incurred to provide additional information or clarification if Form T2201 has already been duly completed. There is policy precedent for this approach. Service Canada, for example, reduces the cost of the medical report required when applying for a Canada Pension Plan disability benefit by paying up to $85 directly to the doctor or nurse practitioner. Veterans Affairs Canada goes even further in its repayment practices.

Actions

We are hopeful that the various reforms the CRA is introducing to ease eligibility and improve administrative processes will lessen the financial burden upon DTC applicants and recipients. For instance, several of the actions taken by the CRA to clarify eligibility criteria and procedures will reduce, and ideally eliminate, the need for clarification documents and the associated costs for their preparation.

The committee will continue to monitor the implementation of this recommendation.

Recommendation #38

That the Minister of National Revenue work collaboratively with the Minister of Finance, the Minister of Families, Children and Social Development, and the Minister of Sport and Persons with Disabilities to:

  • identify ways of addressing the disproportionate poverty of Canadians with disabilities, or alternatively, that the Minister of National Revenue request the establishment of a parliamentary committee to address this issue and bring forward recommendations
  • transform, as a first step, the current DTC from a non-refundable credit into a refundable credit in order to recognize the non-itemizable costs incurred by lower-income Canadians with disabilities
  • ensure that the poverty alleviation of Canadians with disabilities is a focus of all relevant federal-provincial/territorial ministers’ meetings and that there be no provincial/territorial clawback of any new or improved federal measures

Background

Because the DTC is a non-refundable tax credit, it is of little or no value to Canadians who are too poor to pay income tax (although it still plays an essential role for these individuals by acting as a gateway to other disability-related programs). Yet these individuals and households still face high costs if they have a severe and prolonged disability.

To address this problem, there have been proposals over the years to convert the non-refundable DTC into a refundable credit. A non-refundable credit is subtracted from income tax owing and can only reduce that tax to zero. A refundable tax credit, by contrast, not only reduces income tax to zero, but also pays a benefit if the taxpayer deducts the value of the credit from tax owing and has a negative balance.

A refundable DTC would be of great assistance to lower-income Canadians. If they have a disability that is severe and prolonged, they typically incur the same disability-related costs as higher-income households. A refundable DTC would help offset these costs.

The amount of a refundable DTC would still be very modest (a maximum $1,262.40 for the 2019 tax year). It would not provide anything near a basic level of income for persons with disabilities. Converting the DTC to a refundable credit would be an important first step in creating a basic income for Canadians with a severe disability who face disproportionately high rates of poverty in this country.

Actions

The recommendation recognizes the need for a government-wide approach to tackling the long-standing and complex poverty challenge. The proposal is also based on policy precedent. Over the past few decades, the federal government has played a key leadership role in taking action to reduce poverty among seniors and children.

The committee was pleased to see the announcement in the 2020 Throne Speech of the federal government’s plan to introduce a Canadian disability benefit, modelled on the guaranteed income supplement for seniors. The proposed benefit could go a long way toward reducing the high rate of poverty among persons with disabilities in Canada.

In addition, in response to the work of the COVID-19 Disability Advisory Group, the federal government announced in June 2020 a one-time, tax-free, non-reportable payment to DTC-eligible individuals in order to assist with additional expenses incurred during the COVID-19 pandemic. The commitment was to pay up to $600 to those individuals, an extra $300 to DTC-eligible pensioners who receive an old age security pension and an extra $100 for DTC-eligible pensioners who receive both an old age security pension and the guaranteed income supplement. Additional expenses include, for example, higher costs for personal protective equipment or extra expenses related to hiring personal support workers and accessing other disability supports.

When first introduced, the new benefit was to be paid only to DTC-eligible individuals. The disability community quickly expressed concern that the eligibility criteria would leave out many thousands of Canadians with disabilities. While the new measure was positive in its intent, it would have been limited in its impact.

In July 2020, the federal government expanded the eligibility criteria to include:

  • Canadians who qualify for the DTC
  • persons who may be eligible for the DTC (they have up to 60 days to apply after the bill receives royal assent)
  • recipients of the Canada Pension Plan or Quebec Pension Plan disability benefit
  • recipients of disability supports provided by Veterans Affairs Canada

The expanded criteria will help an estimated 1.7 million Canadians with disabilities benefit from the new measure. The original announcement actually had served to highlight the problem of using the DTC as the sole gateway to other benefits.

The deadline for new DTC applications was extended to December 31, 2020.

Recommendation #39

That the CRA, in partnership with the Department of Finance Canada, Statistics Canada and the disability community, undertake a study of the current data needs regarding the DTC and identification of appropriate new ways of tracking needed DTC information, including the estimated number of Canadians who potentially would be eligible for the DTC, but are unable to benefit because of its non-refundable status.

Background

The importance of reliable data was raised in a conference call on the issue of DTC refundability that the committee had organized with selected experts in the country.

Many disability organizations, research institutes and academics have proposed the refundability of the DTC as a first step in reducing the disproportionately high poverty rates among persons with disabilities. However, in the absence of reliable data, it is difficult to carry out serious policy analysis that would identify the potential scope and cost of the proposed reform. Understanding the universe of potential applicants is vital in determining the viability and possible design of any reform of the current DTC.

Actions

The CRA has responded to the committee’s request for information on the numbers of DTC applicants and recipients, their demographic characteristics and the nature of their impairment. The committee had an opportunity to review the initial figures and requested clarification and additional information, which the CRA provided. In fact, it updated the original figures in response to many of our comments and questions. See “DTC Data” in Part 2 of this report.

At the same time that we need to better understand the profile of current DTC beneficiaries, it is also essential to have more information about the thousands of Canadians who do not qualify for the DTC but potentially could be eligible: the estimated number of individuals with a severe and prolonged disability. If the DTC were refundable, these individuals would be eligible to receive an amount to help offset their non-itemizable disability-related costs.

Recommendation #40

That the CRA:

  • raise awareness about the disability supports deduction, including special information sessions to inform disability organizations, post-secondary educational institutions and student networks, unions, employer organizations, training programs and the general public about the availability, purpose and provisions of this tax measure
  • in collaboration with the disability community, review on an annual basis the list of allowable items for the disability supports deduction to ensure it keeps pace with technological updates and changes

Background

The disability supports deduction (DSD) can be claimed by taxpayers who incur disability-related costs in order to earn employment or self-employment income or to attend an educational institution. The committee has documented several challenges related to this measure, including its low take-up rate and the limitations of the current list of items that may be deducted.

Unfortunately, few Canadians are aware of the DSD. Only an estimated 2,600 individuals claimed the deduction in 2016, the latest year for which figures are available. https://www.canada.ca/content/dam/fin/migration/taxexp-depfisc/2019/taxexp-depfisc19-eng.pdf.

Yet nearly one million employed Canadians with disabilities had moderate to severe disability. https://www150.statcan.gc.ca/n1/pub/89-654-x/89-654-x2018002-eng.htm. The low take-up rate of the DSD numbers reinforces the need to improve awareness of this important tax measure.

The committee also discussed the limitations of a tax measure that relies on a designated list. While we proposed an annual review of the existing list, our preference is to remove entirely the need for a set list (see Recommendation #42).

Actions

The committee recognizes that this recommendation must be directed toward the Department of Finance Canada as a change to the list of allowable items would require an amendment of the Income Tax Act. The committee hopes that the Minister of National Revenue and CRA officials will relay our concerns to their departmental colleagues. Alternatively or in addition, we have suggested that observers from the department be invited to our committee meetings.

We were pleased to see that the CRA has prepared information sheets on the DSD, medial expense tax credit, attendant care expenses and the Canada caregiver credit. We hope that this information will inform potential beneficiaries about these measures (see Appendix G).

Recommendation #41

That the CRA take steps to raise awareness among employers about any tax measures that provide incentives for hiring persons with disabilities and/ or that help offset any of the costs of accommodation.

Background

The committee has focused our attention almost exclusively on tax measures for persons with disabilities and, more specifically, on the DTC. Our recommendations encourage the CRA to improve its communications materials and procedures in order to inform Canadians about these measures.

At the same time, we recognize the need to raise awareness among employers regarding tax-related incentives for hiring or accommodating persons with disabilities. We discuss this issue more fully in “Work-Related Disability Tax Measures” in Part 2 of this report.

Actions

The CRA has informed the committee that its Benefits Outreach Program activities target many organizations that support vulnerable individuals, including persons with disabilities, and include information about the DSD, as appropriate. The program will continue to contact these organizations.

The CRA has also indicated that it will hold discussions with Employment and Social Development Canada on raising awareness about incentives for hiring persons with disabilities and promoting these incentives through the CRA’s social media platforms.

Recommendation #42

That the CRA:

  • amend the disability supports deduction to allow the deduction of any form of disability-related technical aid, equipment and service required for education, employment and participation in the community
  • study and report on the implications of converting the current disability supports deduction from a deduction to a credit

Background

The list of items that can be claimed under the disability supports deduction is outlined in Part 2 of this report. While the current list is extensive, the committee noted in our first annual report that important items may be excluded in the future. New technologies typically take some time to be recognized.

The committee has suggested the following additions to the current list: ergonomic work chairs (with prescription); bed-positioning devices for work (with prescription); mobile computer cart for sit/stand work at home (with prescription); alternative input devices (keyboards/mice); digital pens; and navigation devices for low vision.

Ideally, there would be no list. Persons with disabilities would be able to deduct any essential items they require for education, training and work. Prescriptions and receipts currently must be kept for most items as proof of need in case of audit. We proposed the continuation of this practice.

Actions

There has been limited progress on this recommendation. We discuss this issue more fully in “Work-Related Disability Tax Measures” in Part 2 of this report.

Part 2: Other Issues

The Disability Advisory Committee spent most of the first two years of our mandate discussing disability tax credit (DTC) concerns. These relate to eligibility criteria, administrative procedures, communications, cost and financial challenges, and the role of the DTC as a gateway to other disability benefits and programs.

In our second year, the committee explored several DTC issues in more depth. This section also incorporates several new subjects related to the broader aspects of our mandate (Appendix A), which includes:

  • to provide advice to the Minister of National Revenue and the Commissioner of the Canada Revenue Agency (CRA) on the administration and interpretation of laws and programs for disability-related tax measures administered by the CRA
  • to provide advice on how the needs and expectations of the disability community can be considered by the CRA as they interpret and administer disability-related tax measures. This may involve recommendations for information gathering and collaboration between the CRA and the disability community

Since the publication of our first annual report, the CRA was able to provide substantial DTC data that the committee had not previously seen. We reviewed the figures, noted significant patterns and provided guidance for future data collection and policy work.

The committee spent time discussing the challenges facing DTC applicants who wish to question or appeal the decisions made with respect to their cases. Highlights of our discussion are presented here.

Our first annual report discussed the major issues that had been brought to our attention regarding the links to registered disability savings plans (RDSPs). New submissions to the committee raised additional challenges arising from the fact that DTC eligibility is one key criterion for opening an RDSP.

After the publication of our first annual report, the committee had further discussions about selected conditions and other concerns highlighted in submissions and correspondence from individual Canadians and organizations.

Since the beginning of our mandate, the committee has been mindful of the fact that Indigenous peoples face several unique DTC challenges. These include awareness of various tax measures, filing of income tax and benefit forms and access to designated health providers to complete their DTC application: Form T2201, Disability Tax Credit Certificate. Their concerns are outlined in this section.

In addition to the DTC, the committee was interested in exploring tax measures that directly promote participation in education, training and work. Our discussions, presented in this section, focus primarily on the disability supports deduction and the medical expense tax credit.

DTC Data

Overview

Since the beginning of our mandate, the Disability Advisory Committee has requested Disability Tax Credit (DTC) data. We wanted to know how many Canadians currently receive this tax credit as well as how many have applied and were refused. In both categories of accepted and rejected applicants, we asked for further breakdown of the information. We were interested in understanding the composition of the DTC caseload by age, gender and region.

We also requested details regarding the reason for application. The committee considered this aspect to be particularly important. Problems have been documented for years with respect to the DTC eligibility process and, more specifically, the applications related to impairment in mental functions. These wide-ranging problems were confirmed both in submissions to the committee and in the results of the health provider survey we conducted last year. The many challenges are documented in detail in our first annual report.

We wanted to determine whether there were notable patterns that pointed to certain conclusions or at least the need for further study. For example, did the numbers confirm the substantial experiential evidence about the high rate of rejection among applicants with impairment in mental functions? Did certain groups, such as seniors, represent a disproportionately large component of the caseload?

Canada Revenue Agency (CRA) officials presented an initial package of data at our May 2019 meeting. The committee identified some limitations in these figures. It was agreed that our questions would be addressed, if possible, in updated packages being prepared for our November 2019 and February 2020 meetings. One request we had made was for the CRA to present DTC data not only as absolute numbers but also in percentages to enable easier analysis of the trends. The CRA provided this percentage information to the committee.

We would like to point out that the committee very much appreciates the work carried out, to date, by the CRA. We were pleased that it acted on our recommendation to provide more detailed DTC information to the committee and to the public. The following link enables access to DTC numbers, which will be updated on a regular basis. The tables discussed in this section are attached as Appendix H. https://www.canada.ca/en/revenue-agency/programs/about-canada-revenue-agency-cra/income-statistics-gst-hst-statistics/disability-tax-credit-statistics/dtc-statistics-2017.html.

Specific tables

Table 1 is presented in two parts, which set out the number and percentage, respectively, of individuals with a DTC certificate by province/territory and age group, 2018. The fact that Table 1 provides two important dimensions of DTC recipient data gives rise to many questions. The highlights of our discussions are summarized here.

The committee considered the percentages in the final column, which represents the total unique certificates for all the functions combined. At first glance, it appears that Ontario residents have a disproportionately higher number of DTC certificates at 42.5% of the total. However, it is important to place this figure in context. When considered relative to its proportion of Canada’s population, the figure does not appear unbalanced. Ontario represents 40% of the overall population in this country.

What is more difficult to understand, however, is the total unique certificates represented by Quebec, at a low 14.2%. Quebec residents comprise 24% of the Canadian population. When viewed as a proportion of the overall population, it appears that Quebec residents may be underrepresented in relative terms. It is not clear why this is the case. One possible explanation is that Quebec administers its own DTC.

The table also shows that the patterns by function are different in that province. For example, compared to the rest of Canada, Quebec is underrepresented when it comes to walking. At the same time, it appears to be overrepresented in the speaking category. Committee members questioned whether the differences are due to available information, approval processes, the incidence of impairment in these functions and/or the accessibility of health providers to complete Form T2201 on behalf of applicants.

There are several other issues worth noting in this table. On the whole, total unique certificates in the remaining provinces and territories are generally consistent with their population. But perhaps most striking are the relatively scant numbers of DTC applicants from the North. On the one hand, the three Territories represent only 3% of Canada’s population. The percentage of total unique DTC certificates, taken together for the North, is not out of line with this population.

At the same time, we know from Statistics Canada data that close to one in three First Nations people living off reserve as well as Métis had a disability. In addition, close to one in five Inuit had a disability. Yet Table 1 shows that the total representing unique DTC certificates from Nunavut was 0%. https://www150.statcan.gc.ca/n1/daily-quotidien/191212/dq191212c-eng.htm. Because of the relatively higher incidence of disability in the Indigenous population, it would be reasonable to assume that there would have been more DTC certificates from the North and that the numbers from that region would actually be disproportionate to their share of the overall population in Canada.

There are several possible explanations for these results. The numbers may reflect the difficulties experienced by many Indigenous communities in applying for tax credits because of the need to complete an income tax and benefit return. Another factor involves the difficulty of finding, in northern and remote regions of the country, a qualified health provider to complete Form T2201. The cost of completing the form may be prohibitive for many potential applicants. The unique challenges faced by Indigenous Canadians with disabilities is discussed in a separate section of this report.

Table 2 is presented in two parts, which set out the number and percentage, respectively, of individuals with a DTC certificate by province/territory and age group, 2018. While every cell in this table tells a unique story, it is not possible to explore each one in depth. As in the case of Table 1, we tried instead to identify any outliers in the numbers or percentages that potentially might represent red flags or key questions to pursue.

There are several issues worth noting. Table 2 shows a high percentage of DTC applicants under the age of 18 from the territories, far above the proportion from the rest of the country. For example, 31% of DTC applicants from Nunavut were under the age of 18 in 2018, compared to 13.3%, 13.5 % and 13.6% in Nova Scotia, P.E.I. and Manitoba, respectively.

It is not clear why this is the case. Table 4 may provide some answers. It shows that the majority of applicants under the age of 18 applied due to impairment in mental functions. A table that combines the three variables of age, province/territory and restriction would be helpful in answering this question. The committee requested and has just received confirmation that the CRA will produce such a table in the updates it is preparing for its next release.

Table 3 is presented in two parts, which set out the number and percentage, respectively, of DTC recipients by duration and jurisdiction. Applicants for the DTC may be approved on an indeterminate or temporary basis. Indeterminate status means that the approved applicants do not have to reapply for the credit. Applicants may also be approved on a temporary basis, which means that they must go through the entire eligibility process once again after a designated number of years, as determined by the CRA.

Because this is the first time these numbers have been compiled, there is no baseline or benchmark to assess the appropriate or reasonable balance of indeterminate to temporary approvals. However, for the majority of jurisdictions, there is an approximate 67/33 split between permanent and temporary approvals, respectively.

The Atlantic region appears to be the notable exception in which there are relatively higher rates of temporary approvals in Newfoundland and Labrador, Nova Scotia and New Brunswick. We noted that there is no table that combines jurisdiction, status and function. It is therefore difficult to draw any definitive conclusions. Neither is it possible to answer this question from the figures in Table 1, which present only jurisdiction and function. It is worth exploring why the Atlantic region appears to have a higher rate of temporary approvals than elsewhere.

At the same time, Table 3 shows that Quebec has relatively higher rates of indeterminate approvals. The numbers raise questions as to whether there are significant differences in the approval processes by region.

Regional variation in administrative processes had been identified by the Auditor General of Canada in his 2016 review of the Canada Pension Plan disability benefits. Section 6.65 of that report states: “We also noted that the Department’s (referring to Employment and Social Development Canada) data on granting rates for initial applications varied significantly across the regional service centres. For example, the national average was 43 percent for the 2014-15 fiscal year, but granting rates for individual service centres ranged from 35 to 49%. Granting rates for reconsideration also varied by regional centre, ranging from 31 to 49%.”

The CRA may want to explore the consistency of decisions and status by region to determine whether there are significant differences in the DTC assessment processes.

The committee members had several questions with respect to duration. We wondered about the criteria used to determine temporary or indeterminate status. Members also asked why the CRA is requesting people who have been receiving the DTC for 20 or more years to reapply.

The committee questioned why it is necessary to ask an individual who has already been a DTC claimant for an extended period, in some cases more than 20 years, to repeatedly reestablish their eligibility. After such a considerable period of time, it would seem unlikely that the impact of a given condition on basic functioning would be likely to change significantly in the future.

The CRA indicated that every application received for the DTC is unique and is therefore treated on a case-by-case basis. The period for which an individual is allowed is an administrative decision based on the information provided by the health provider. The information included on Form T2201 and any supplemental information submitted is reviewed and considered when making this determination.

Table 4 is presented in two parts, with the number and percentage, respectively, of individuals with a DTC certificate by age group and restriction, 2018. The committee was surprised by these figures.

It is well known that the process of aging often brings with it the need for sensory, mobility and other assistive devices. Some impairment in functional capacity is considered a normal part of aging. But until we saw the data, we had not appreciated the disproportionately higher numbers of older Canadians who comprise the DTC caseload.

In our view, these results raised questions about the purpose of the DTC. Its original intent was to help offset the costs of disability by reducing income tax payable to the federal government. The idea was to level the playing field between workers without disabilities and those with severe disabilities who were likely to incur substantial costs as a direct result of their disability. It was deemed unfair that the latter group would have to pay income tax on monies they effectively were not keeping for themselves as disposable income.

Canadians age 65 and over comprise a significant proportion of DTC applicants. It made us question whether the original intent of this tax measure, to level the playing field between workers with and without disabilities, still holds.

Given the caseload structure, the DTC no longer acts primarily to provide a work incentive. It is basically a tax break for both higher-income workers and Canadians with investment income. We noted earlier in our report that while lower-income Canadians face similar costs, they are not eligible for a tax break to help recognize these costs. The issue of refundability was earlier discussed in our Recommendation #38. The committee wondered whether the CRA would be able to produce data on income levels of DTC claimants to get a better picture of the income status of the current caseload.

The committee also enquired about the average age of initial acceptance among DTC certificate holders who are now 65 or older. The current numbers may reflect the fact that applicants were much younger when approved and are now simply turning 65. In other words, the figures represent an aging existing caseload, rather than a disproportionately higher number of applications from Canadians over age 65. While the numbers likely represent a combination of these factors, we are unable to determine from the data the relative proportion of existing cases to new applications.

Unfortunately, the CRA is not able to provide this information due to limitations with the historical information received when it assumed administration of the DTC program in 1995. The start dates of many individuals were not consistently recorded when the information was transferred to the CRA. As a result, the average age upon initial acceptance based on information captured prior to 1995 is not available.

Table 5 is presented in two parts, with the number and percentage of individuals with a DTC certificate by age group and duration. The totals show that two-thirds of DTC recipients were approved for an indeterminate period. Indeterminate status means that they never have to reapply for the DTC. One-third of applicants are deemed to be temporary only and must reapply for the credit. Upon initial approval, the CRA determines for how long that person may receive the DTC before reapplication is necessary.

We note from these numbers that the majority of applications for those under the age of 18 are considered temporary. Among youth aged 15 to 24, Statistics Canada reports that mental health-related disabilities were the most prevalent type of disability. https://www150.statcan.gc.ca/n1/pub/89-654-x/89-654-x2018002-eng.htm.

Table 9 below shows that for applicants age 18 and under, speaking and mental functions were especially high and particularly for males. It is possible that most assessors assume that an applicant’s functional impairment might improve with age or over time. However, we know that for many of the severe and persistent impairments in mental functions, such as developmental disorders and schizophrenia, this is not likely to happen.

At the other end of the age spectrum, the vast majority of DTC recipients over age 65 qualify for the DTC indefinitely. Their status likely results from the fact that no improvement in their functional capacity is expected, and it may actually deteriorate over time.

Table 6 is presented in two parts, with the number and percentage, respectively, of individuals with a DTC certificate by gender and age group, 2018. The table shows that there were considerably more male (22.7%) than female (10.5%) applicants under the age of 18 in that year. By contrast, there were disproportionately more female DTC applicants over the age of 65.

The committee can only speculate about these gender imbalances. It is possible that more males than females under the age of 18 apply as a result of impairment in mental functions. We know that with respect to the autism spectrum disorder, in particular, the proportion of males to females is consistently greater across all ages. https://www.canada.ca/en/public-health/services/publications/diseases-conditions/autism-spectrum-disorder-children-youth-canada-2018.html#a2-3 At the other end of the age spectrum, it is likely that the disproportionately greater number of females over age 65 reflects the fact that women live longer than men and experience limitations in functional capacity as they age.

As noted, the breakdown of recipients by age was a surprise to us. The greatest proportion at 43.7% were over 65 in 2018. Applicants under 18 made up another substantial group at 16.8% in that year. Applicants between the ages of 19 and 64 together comprised 39.5% of the total DTC caseload. Until the committee saw the actual figures, we had not appreciated that seniors represented such a significant proportion of the DTC caseload. Youth and seniors together comprise the majority (60.5%) of the DTC caseload.

Table 7 is presented in two parts, with the number and percentage, respectively, of individuals with a DTC certificate by gender and marital status, 2018. There are slightly more married males with a DTC certificate than married females. Taken together, there are more single applicants, both male and female, than married applicants. Unmarried applicants reflect a wide range of circumstances: children under age 18, adults of working age, and never-married or widowed seniors.

While the breakdown of DTC recipients by marital status is interesting, the real question is whether it is important. Single Canadians with an impairment in mental functions, for example, may be taken care of by a parent. Individuals who are divorced or widowed may be assisted by a child or friend. Single status does not necessarily mean that an individual has no access to assistance or support.

Information about marital status may not provide any relevant policy direction. If the CRA is looking to streamline its data collection efforts, this may be one variable that is not all that necessary to track. Marital status is not necessarily a reflection of the availability of assistance and support. It is nice but not necessary to know.

Table 8 is presented in two parts, with the number and percentage, respectively, of individuals with a DTC certificate by duration and restriction, 2018. It should be noted that the table reflects the decision made by the CRA upon assessing the individual’s case and not by the health provider who completed the application, Form T2201, on that person’s behalf.

The highest areas of indeterminate functions were vision (98.2%) and hearing (90.0%), which make sense because the assessment of impairment in these areas is relatively straightforward. Feeding is the third most frequent category (79.2%), followed by walking (77.4%), dressing (77.0%) and eliminating (75.6%). However, mental functions came in way lower at 61.7%, followed by speaking at 58.0%.

In our view, this table reinforces the fact that applicants with impairment in mental functions are subject to more restrictive provisions than those with impairment in physical functions other than speaking, which ranks lowest among all the functions. The numbers illustrate and confirm the experiential evidence regarding mental functions. We believe it is important to determine why the CRA assessors deem that so many applicants with serious impairment in mental functions will see their cases resolved within a temporary time frame.

Perhaps most surprising is the proportion of individuals with DTC certificates for life-sustaining therapy. The figures show that 55% of DTC recipients who require life-sustaining therapy were granted indeterminate status. It is unclear why these numbers are so low. By definition, anyone who needs life-sustaining therapy will die without it. Given these eligibility criteria, all cases in this category presumably should be considered indeterminate.

We can only assume that the CRA has granted temporary status to a large proportion of recipients under the assumption that some new therapy or life-saving device might be introduced in the coming years that would fundamentally change the administration of their life- sustaining therapy. Without more detailed information about this category, we have no clear explanation of this data.

Table 9 is presented in two parts, with the number and percentage, respectively, of individuals with a DTC certificate by gender, age group, and restriction, 2018. The figures show that for applicants age 18 and under, speaking and mental functions were especially high and particularly for males. The same pattern holds for the next two age groupings (19 to 24) and (25 to 34), but to a lesser extent. The differences in function for the ages 25 to 34 were negligible. The table also shows that more women over age 65 receive the DTC (24.7%) compared to males in that age bracket (18.9%).

Table 10 is presented in two parts, with the number and percentage, respectively, of individuals with a DTC certificate by gender, age group, and marital status, 2018. Once again, it is not immediately apparent that the information on marital status is significant. We are not sure that this table is important to produce in the future. As noted, a far more telling set of data would be a composite picture of age, province/territory and restriction.

Table 11 shows DTC determination by basic activity of daily living (BADL), 2011 to 2018. The committee created percentages by comparing the number of rejections to the number of applications in each functional category.

The figures show that the rejection rate in 2018 is highest for hearing at 16.7% and impairment in mental functions at 18.4%. These rejection rates are well above those for applications related to impairment in dressing at 5.1%, feeding at 5.7%, walking at 6.2%, speaking at 8.3 %, eliminating at 8.1% and life-sustaining therapy at 9.1% and vision at 9.9%.

The higher rate of rejection for applications for hearing may arise from the fact that the criteria for this particular function are out of date. We discuss this concern in Recommendation #12 in Part 1 of this report.

The higher rate of rejection for applications for impairment in mental functions is no surprise, given the wide range of challenges that the committee and many others have pointed out with respect to that function. Our calculations show that the rejection rate for impairment in mental functions remained fairly steady between 2011 and 2015: at 11.8% in 2011, 12.6% in 2012, 11.7% in 2013, 10.7 % in 2014 and 11.0% in 2015. The rejection rate for this function then jumped to 15.6% in 2016 and rose further to 22.7% in 2017. It fell back to 18.4% in 2018, the latest year for which data are available.

Table 12 presents the number of DTC claimants benefiting through a tax reduction broken down by basic activity of daily living (BADL), 2011 to 2018. Because of the problems experienced by applicants with impairment in mental functions, we examined the number of claims for that function, in particular, compared to the total number of claims for all functions. We were interested to see the changes in percentage terms over time.

Our analysis found that the proportion of DTC claimants with impairment in mental functions compared with the overall number of DTC claimants has remained fairly steady over time. The percentage of DTC claimants with impairment in mental functions compared to all claimants rose from 22.9% in 2011 to 24.2%, hovered in this range until 2017 when it dropped slightly to 23.9%, and then went back up to 24.1% in 2018.

Because the percentage of approvals has remained fairly stable over time, the higher rejection rate in this category highlighted in Table 11 may result from a substantially larger number of applications for impairment in mental function. They rose from 78,500 in 2011, to 91,150 in 2016, and peaked at 98,570 in 2018, the latest year for which data are available.

Table 13 presents the dollar amount of DTC utilized by claimants, broken down by BADL. While the figures are interesting, they are not surprising. The dollar amounts in each functional area reflect the numbers of DTC approvals in each category.

Follow-up actions

The committee was pleased to learn that the CRA will continue to produce DTC numbers in order to track changes over time. These changes will provide important information as to whether some of the clarification, procedural and communication improvements that the CRA has been introducing are working. These trends will also help identify the outstanding pain points that need to be addressed.

The multiple tables already provided by the CRA produce a wealth of information. As noted, there are many interesting observations to which these figures give rise. The committee recognizes that it would not be a good use of scarce resources to ask the CRA to pursue all the possible questions arising from the data. We knew it would be essential to separate out the answers that are nice to know from those we need to know.

The important task, in our view, is to highlight both the results that raise questions about CRA practices and procedures, and the results that have serious policy implications. From the perspective of this more focused lens, there are several clusters of challenges, outlined below, which we believe the CRA should pursue.

Regional disparities

The first challenge involves conversations with Quebec officials to determine the relatively low DTC take-up in that jurisdiction. There is a lower rate of DTC acceptance in the territories. This finding was surprising, given the higher incidence of disability among Indigenous Canadians. A table that combines age, province/ territory and restriction would be helpful to pinpoint specific problems or geographic imbalances throughout the country.

Parity

The data reinforce our wide-ranging concerns regarding lack of parity in the treatment of impairment in physical and mental functions. The figures also confirm the relatively high numbers of Canadians with impairment in mental functions who receive the DTC for temporary periods only.

Temporary/Permanent status

We noted the generally higher rate of temporary DTC approvals for the Atlantic region. However, we were unable to ascertain from the numbers whether this imbalance was the result of the functions for which applicants were claiming. It could also reflect the approval process in that region in which temporary assignment is more likely than permanent assignment.

We pointed out the high percentage of temporary status for recipients who require life-sustaining therapy. The figures appear to contradict the eligibility criteria.

Perhaps most surprising were the generally large numbers of applicants in the middle-age ranges who are expected to reapply for the DTC. The CRA clearly assumes that the functional impairment of these applicants is likely to improve. It would be interesting to have more information on these cases. The temporary status can be stressful and costly not only because the applicants must go through the DTC reapplication process. They also lose access to the other benefits and programs linked to DTC eligibility.

Age distribution

Taken together, children and seniors comprise the majority of DTC applicants. This finding raised questions as to whether there are other more effective and less onerous ways to provide disability cost-related assistance to these populations.

Potential recipients

The committee discussed several additional data questions that were not necessarily related to any specific table. We wondered:

  • what proportion of the caseload applies for the DTC only to help offset their costs
  • what proportion applies only to gain access to other disability-related benefits and programs
  • what proportion does both

We were interested in this information because there is currently no legislative base for the DTC gateway role. Moreover, the CRA materials do not describe this important function of the DTC. This vital role is not well known and many Canadians find out about it only when they try to access related measures, like a registered disability savings plan.

We believe that it is important to have some indication of the number of claimants benefiting from a tax reduction, compared to the number of claimants who do not benefit from a tax reduction. Presumably, the latter represents the applicants who are using the DTC solely as a gateway to other programs, though we acknowledge that this assumption would have to be supported by evidence obtained through other sources, such as a survey or focus groups. Unfortunately, the CRA is not able to respond to this request as it is not able to glean this information from its current data.

Finally, the CRA has indicated that it is not able to provide an estimate of the numbers of Canadians who are potentially eligible for the DTC but do not apply because they are unaware of this tax measure. Alternatively, these individuals may believe they need to have a taxable income to take advantage of any benefits or programs linked to the DTC. We discuss this issue in Recommendation #39 in the first section of our report.

Review of DTC Decisions

Introduction

The Disability Advisory Committee’s first annual report described a range of concerns regarding the disability tax credit (DTC) assessment process and associated eligibility decisions. We are pleased to highlight in this second annual report some notable improvements that the Canada Revenue Agency (CRA) has initiated in response to these concerns, summarized below. The CRA has indicated that it will continue to introduce additional reforms in order to reflect this ongoing commitment to improvement.

Key enhancements

The CRA has introduced important enhancements with respect to:

  • public information
  • DTC assessment
  • appeals

a) Public information

The committee has argued that greater awareness of the review process for DTC decisions would help resolve cases at an earlier stage and reduce the need for DTC applicants to challenge decisions regarding their case. Our Recommendation #23 proposed the following:

That the Minister of National Revenue review the current appeals process with a view to creating a straightforward, transparent and informed process where the applicant has access to all relevant information (including the precise reason their application was denied) and documents (including copies of all information submitted by health providers that pertain to their application).

The committee urged the CRA to provide more detailed information to the public about the various steps involved in questioning a DTC decision. We set out specific suggestions in Recommendation #24 as to how the CRA might proceed.

In response to our recommendations, the CRA’s Appeals Branch developed a decision tree to help DTC applicants understand the process if they choose to object to a CRA determination. The decision tree guides them through a series of steps based on their individual circumstances.https://www.canada.ca/en/revenue-agency/services/about-canada-revenue-agency-cra/complaints-disputes/file-objection-cppei-appeal-minister/income-tax-decision-tree.html.

The Appeals Branch also produced three videos that explain the procedures involved in launching a challenge (see the links below at “Challenging a DTC determination”).

Finally, the Appeals Branch provided proposed wording for the CRA’s Assessment, Benefit, and Service Branch to include in DTC denial letters in order to ensure that applicants are informed of their recourse options. (See Recommendation #24.)

b) DTC assessment

The first part of this report described how the CRA is working to improve the quality of its procedures at both the preapplication and application stages of DTC eligibility. It is introducing, for example, a navigator function to assist applicants who have conditions with the variable expression of symptoms to work their way through the DTC system.

The digital application of Form T2201 currently in development will also help address several of the concerns that have been identified around the current form. The CRA has received positive feedback via usability testing on the early prototype of this application. In addition to the digital application, Form T2001 will be redesigned to enhance clarity. It is expected that these changes will reduce both the number of clarification letters and the time frame for decisions around eligibility.

Our first annual report made several recommendations for second-level independent review of applications involving conditions with the variable expression of symptoms. Recommendation #20 proposed:

That in the case of determining DTC eligibility for persons with impairment in mental functions, the CRA include relevant specialized health providers, including, but not limited to, psychiatrists and psychologists, in the review process when applications are disallowed.

In response to this recommendation, the CRA has made a commitment to provide better and more consistent training to current and new assessors of DTC cases that involve an impairment in mental functions, and to consult with mental health professionals around selected cases.

All applications denied the DTC involving impairment in mental functions are now sent for secondary review by a CRA team not involved in the initial decision. At any point in the assessment process, DTC assessors can consult with a resource officer if they need help making a determination. Resource officers are also able to consult with medical advisors at any time.

DTC assessors have access to the guidelines in the CRA document “Mental functions necessary for everyday life.” The guidelines permit greater flexibility in the interpretation of “all or substantially all of the time” by noting that the effects of the impairment must be present and challenging “most of the time” rather than the arbitrary 90% rule.

c) Appeals

The Appeals Branch has taken a number of important steps to ensure that DTC determinations are consistent with CRA policy by:

  • centralizing the DTC objections workload for both eligibility and entitlement to four centres of expertise (COEs), with a recent updating of branch procedures to ensure that all DTC objections are forwarded to a centre of expertise
  • forming a working group to support appeals officers working within the COEs in order to achieve the following objectives:
    • ensure the DTC objections program has the support needed to process increasingly complex DTC files with a consistent approach to applying the DTC criteria
    • consult with other areas of the CRA to ensure consistency and share tools/ideas for improvements
    • ensure the objections program has ongoing communication with the DTC program area and stakeholders to enable a consistent approach in the administration of the DTC
  • carrying out quality reviews of decisions of DTC cases
  • conducting a review of current processes for DTC objections to ensure consistency with the DTC program areas policies and procedures. This work includes regular communication with the litigation program in the Appeals Branch and the Disability Program in the Assessment, Benefit, and Service Branch to ensure consistent application of policies and procedures
  • completing a new tool for appeals officers to enhance their understanding of the legislative and parliamentary intent of the DTC eligibility criteria, as well as the issues raised in the committee’s first annual report

Summary of committee concerns

These improvements have been introduced in response to concerns the committee had raised about various DTC eligibility procedures.

a) Form T2201

Our first annual report documented the many challenges experienced by both applicants and health providers when completing Form T2201. We heard about these issues in submissions to the committee as well as our health provider survey submitted by nearly 1,800 respondents.

These challenges were also highlighted in a report entitled Disability Tax Credit User Experience (UX)/Usability Study prepared in September 2019 by Systèmes Humains-Machines Inc. (SHUMAC) for the CRA. They included, among other factors, confusion about the sections on Form T2201 on cumulative effects, the difference between significant and marked restrictions, the interpretation of “all or substantially all of the time” and the meaning of “inordinate amount of time.”

Definitions and interpretations of cumulative effects, significant and marked restrictions, all or substantially all and inordinate amount of time continue to be areas of concern being addressed by the committee.

b) Adequate training

The committee understands that CRA assessors have a substantial workload and must make important decisions in short periods of time. The SHUMAC report pointed out that CRA assessors have a productivity target of 3.25 forms processed per hour, which is less than 18 minutes on average per application. We believe that this time allocation is not long enough to make an assessment, especially if the case is complex. The latter involves:

  • verifying the basic information of the taxpayer
  • interpreting the information submitted by the health provider
  • deciding the outcome
  • choosing the verse from the DTC Operating Manual and the format for the notice of determination to be sent to the applicant

We have noted our concern regarding decisions to disallow the DTC made by assessors who may not have sufficient training to determine eligibility for the applicants with complex medical conditions. Conditions that vary in the breadth and depth of their symptom expression, such as mental disorders, multiple sclerosis, fibromyalgia and Crohn’s disease, tend to have a higher rate of rejection.

The committee has raised questions about the consistency of DTC eligibility decisions across the country and the apparent increasingly technical interpretations of the legislation in recent years. Consistency of decision-making is hampered by the complexity of the eligibility criteria, especially as these apply to complex conditions. In addition, a growing body of case law refutes the 90% administrative guideline used by the CRA to define the presence of an impairment, all or substantially all the time. This guideline has no statutory basis in law.

c) Temporary or permanent status

CRA assessors not only have the discretion to grant or refuse a DTC application. They also decide whether to allow the DTC for three to five years for impairments considered to be “temporary” or for all future years for impairments considered to be “permanent.” We have raised questions about the criteria used to decide whether a DTC-eligible applicant is approved on a temporary or an indeterminate basis.

Confusion often arises as to whether permanence refers to the condition or the resulting impairment. For conditions that have no cure, including many mental disorders among them, the extent of impairment is a function of how well these conditions are managed. How well they are managed, in turn, typically depends upon available treatments, services and supports. Outside of fatal conditions, any condition arguably might result in less impairment with advances in biopsychosocial resources and management.

The committee is concerned as well about the rejection of applicants who have received the DTC for more than 5, 10 or even 20 years, even though their medical condition has remained largely unchanged or deteriorated. It would be helpful to understand the basis to deny DTC eligibility for future years and require former applicants to begin the entire process yet again.

d) Generic verses

CRA assessors rely on preformulated, generic verses to support their decisions to disallow the DTC. The committee has questioned the legitimacy of the eligibility determination when these verses have 57 2020 Second Annual Report of the Disability Advisory Committee no direct link to the information provided by the applicant or health provider. For example, a common verse to deny the DTC copied to the notice of determination for an individual living with a chronic and persistent mental illness reads as follows:

“Based on the information we received you do not meet the eligibility criteria because your restriction in performing the mental functions necessary for everyday life is present when performing complex tasks or only during flare-up or in stressful situations.”

The committee also raised questions about the following statement:

“As a result, we cannot consider that the restriction is present all or substantially all of the time at least 90% of the time. Although we do not question the seriousness of your medical condition, we must base the decision on the specific eligibility criteria in the “Income Tax Act.””

e) Provision of relevant information

Applicants who want to question or even challenge their DTC determination may not be provided with the relevant facts or understand the basis of the decision to disallow the DTC. Our Recommendation #22 had proposed that the CRA provide in notice of determination letters an appropriate reason as to why a DTC application was denied. A summary of the process involved in challenging a DTC determination is set out below.

Challenging a DTC determination

The committee’s first annual report described the fact that many applicants had difficulty qualifying for the DTC. Most of the eligibility problems arose around conditions that vary in the breadth and depth of their symptom expression, particularly those related to impairment in mental functions.

Applicants have the right to challenge decisions made with respect to their claim for the DTC. There are three main routes to challenge DTC decisions: case review, notice of objection and notice of appeal.

The Appeals Branch has developed an income tax decision tree (see link) to help DTC applicants understand the process if they choose to object to a CRA determination. The decision tree guides them through a series of steps based on their individual circumstances. https://www.canada.ca/en/revenue-agency/services/about-canada-revenue-agency-cra/complaints-disputes/file-objection-cppei-appeal-minister/income-tax-decision-tree.html.

a) Case review

Applicants who receive a notice of determination disallowing the DTC are advised that they can request a second review of their application. They are required to provide additional relevant medical information that had not already been included with Form T2201 and a clarification letter.

A different assessor reviews the case, taking into consideration all new information submitted. If at any point the assessor requires guidance, the case can be referred to a medical advisor who may contact the identified health provider for further clarity regarding the case. Applicants have a year from the date of the notice of determination to send this information to the tax centre in their region.

b) Notice of objection

The applicant may also choose to formally object to the initial decision by filing Form T400A, Notice of Objection, with the Appeals Branch of the CRA (a letter is also acceptable). Applicants may file an objection regarding a DTC notice of determination if they think that the CRA misinterpreted the facts of their circumstances or applied the tax law incorrectly.

The notice of objection must be filed within 90 days of the date of the notice of determination. If the 90-day window for filing the objection has expired, the applicant must write to the chief of appeals at the applicant’s tax services office for an extension.

When an applicant files an objection, the CRA will review all the available information before making a final determination about the case. An appeals officer may write to the health provider to request clarification of the information already on file or additional medical information.

Favourable decisions typically extend eligibility for five years before reapplication is required. When a functional impairment is likely to be permanent, then the DTC will be granted on a permanent or indeterminate basis. Extending eligibility for additional years and/or allowing on a permanent basis is determined and granted on a case-by-case basis.

If the CRA agrees with the applicant in whole or in part, it will make an adjustment and send a notice of reassessment or redetermination. If the CRA disagrees with the objection, the appeals officer will send the applicant a notice of confirmation supporting the decision to disallow the DTC. If the appeals officer intends to disallow the DTC objection, they will always contact the individual or their representative to inform them of the intent to disallow and provide them with the opportunity to submit additional information.

The CRA has prepared a video on the objections process, which explains how to file an objection or formal dispute about a DTC determination. https://www.canada.ca/en/revenue-agency/services/about-canada-revenue-agency-cra/complaints-disputes/file-objection-cppei-appeal-minister/income-tax.html.

A second video explains what happens after an applicant registers a formal dispute or objection. https://www.canada.ca/en/revenue-agency/services/about-canada-revenue-agency-cra/complaints-disputes/complexity-level-processing-time.html.

c) Notice of appeal

The third step in challenging a DTC determination involves appealing to the Tax Court of Canada. Under what is known as the Informal Procedure, the applicant can file a notice of appeal (at no fee) within 90 days of the date of the notice of confirmation outlining the relevant facts and reasons for the appeal.

Under the Informal Procedure, applicants may represent themselves or ask a relative, friend or agent to act on their behalf. They may retain the services of a lawyer if they can afford the legal fees. The tax court transmits the notice of appeal to the Litigation Program of the CRA Appeals Branch. The appeal is reviewed by a litigation officer who will examine the facts of the case and, based on legislation, will determine whether the appellant meets the DTC eligibility requirements.

If there are prior or future years to be considered that are not noted in the appeal, the litigation officer may recommend a motion known as minutes of settlement. This motion allows the Minister of National Revenue the discretion to grant the DTC for years prior to the tax year under review as well as for designated future years.

It should be noted, however, that minutes of settlement are now rarely used in the case of a DTC claim. The current CRA directive has in place an administrative process to ensure that all DTC appeals to the Tax Court of Canada are reviewed at the time of processing the year under appeal to determine if granting subsequent years is applicable.

If, however, the Litigation Program supports the decision by the CRA assessor and the appeals officer to disallow the DTC, a litigation officer will prepare and file a reply to the notice of appeal. This reply must be sent to the applicant (the appellant) on behalf of the CRA (the respondent) within 60 days. The reply specifies the facts upon which the CRA relies to disallow the DTC, along with statutory provisions supporting its decision.

The appellant may respond to the reply within 30 days, identifying the facts that are in dispute. The appellant may also provide pertinent arguments and include references to previous cases heard by the Tax Court of Canada that support the appeal.

The respondent’s lawyer may propose that the case be settled out of court if the additional information submitted by the applicant supports the appeal. A consent to judgment letter is then prepared with the approval of both parties and filed with the court. Consent to judgment decisions allow the DTC to be granted only for the tax years under review.

Whether a determination to allow the DTC is granted by minutes of settlement or consent to judgment, all appeals to the Tax Court of Canada are reviewed to ensure that future years are granted if applicable. This is determined on a case-by-case basis at the time the appeal is processed.

If there is no offer from the CRA to settle the case, the tax court will set a date for a hearing. The appellant is required to provide copies of all documents, including applicable tax court cases, to the respondent’s lawyer. After reviewing the evidence, the lawyer may decide to contact the appellant and offer to settle the case out of court.

The CRA Appeals Branch has prepared a video (see link) on how applicants can appeal to the tax court if they disagree with the CRA regarding their DTC determination. https://www.canada.ca/en/revenue-agency/services/about-canada-revenue-agency-cra/complaints-disputes/file-appeal-in-court.html.

While the tax court ensures fairness within the legislative and parliamentary intent of the Income Tax Act, the formal legal route is never the most desirable option in any dispute. Unrepresented parties are often unaware of court procedures and protocols. They are likely not familiar with the legislation pertaining to the DTC. They may not fully understand the reasons for denying the DTC in their case. The vast majority cannot afford the services of a lawyer to represent them. Appealing to the tax court can also be costly if out-of-town travel is required, especially for Canadians living in rural and remote communities.

Summary

The committee acknowledges the significant progress made to the DTC process to date. We encourage the CRA to continue improving its public information and its DTC assessment and review procedures. Ideally, these reforms will enhance the transparency and consistency of DTC determinations, and will reduce the need to challenge CRA determinations to disallow the DTC.

In addition to these reforms, there may be other avenues to explore. In its 2004 report entitled Disability Tax Fairness, the Technical Advisory Committee on Tax Measures for Persons with Disabilities proposed the need for alternative dispute resolution mechanisms to help resolve DTC cases. These processes represent a less formal means of resolving tax disputes in order to avoid costly and time-consuming litigation.

An independent arbitrator, for example, could hear from both the claimant and the CRA, when a notice of objection is filed, and then recommend whether the DTC claim should be allowed or denied. The recommendation of the arbitrator would not be binding on the CRA or the applicant who could still formally appeal the decision to the Tax Court of Canada. It is expected, however, that the majority of cases could be resolved through this arbitration process if both parties have a clear understanding of the facts and specific reasons to disallow the DTC.

In addition to its ongoing reforms, the committee encourages the CRA to explore various forms of dispute mechanisms that could provide an alternative to the stressful and costly last-resort appeal to the Tax Court of Canada.

Registered Disability Savings Plans

The Disability Advisory Committee’s first annual report explained the importance of registered disability savings plans (RDSPs) and discussed key concerns that had been brought to our attention. These are summarized below. The current report describes additional matters raised in submissions to the committee.

The Department of Finance Canada sets the overall policy parameters for RDSPs through the Income Tax Act. The Canada Revenue Agency (CRA) is responsible for the administration of the Income Tax Act, including approving RDSP plans, authorizing financial institutions to offer RDSPs and registering plans. Employment and Social Development Canada administers the Canada disability savings grant and Canada disability savings bond, and conducts outreach to improve awareness and uptake of these measures. Financial institutions, known as RDSP issuers, are responsible for the day-to-day administration of individual RDSPs.

What is an RDSP?

An RDSP is a savings plan whose purpose is to help an individual with a disability, their parents, or others save for the long- term financial security of the individual. An applicant must first qualify for the disability tax credit (DTC) in order to open an RDSP or for a family member or other designated person to open an RDSP for the individual.

For children under the age of majority, a parent or legal guardian / public department / agency / institution that is legally authorized to act for the child can be the holder of their RDSP. When the child reaches the age of majority, the parent can continue to be the holder of the RDSP, transfer the role to the beneficiary or become joint plan holders with the beneficiary if the financial institution allows for joint holders.

For adult beneficiaries who are unable to be the RDSP holder because they cannot enter into a contract due to capacity concerns, only a parent (who had opened the RDSP when the beneficiary was under the age of majority) or legally authorized individual can be the plan holder. A parent, spouse or common-law partner can open an RDSP for an adult beneficiary if the beneficiary’s ability to enter into a contract is in doubt.

Contributions to an RDSP are not tax deductible and can be made until the end of the year in which the beneficiary turns 59. Contributions that are withdrawn are not included as income to the beneficiary when these are paid out of an RDSP. However, the Canada disability savings grant (grant), Canada disability savings bond (bond), investment income earned in the plan and proceeds from rollovers are included in the beneficiary’s income for tax purposes when these amounts are paid out of the RDSP.

The grant is an amount that the federal government pays into an RDSP. The federal government provides a matching grant of 300%, 200% or 100%, depending on the beneficiary’s adjusted family net income and the amount contributed. A beneficiary can be eligible for up to $3,500 in grants annually. Due to a carry-forward provision, up to $10,500 can be paid into the beneficiary’s RDSP in a given year. A total of $70,000 in grants can be paid into the RDSP over the beneficiary’s lifetime. A grant on contributions can be made until December 31 of the year in which the beneficiary turns 49.

The bond is an amount paid by the federal government into the RDSPs of beneficiaries with low or modest incomes. Depending upon family income, a beneficiary may be eligible for a bond of up to $1,000 annually. With the carry-forward provision, up to $11,000 in bonds can be paid into a beneficiary’s RDSP in a particular year. The lifetime bond limit is $20,000. A bond can be paid into an RDSP if an application is made on or before the end of the year in which the beneficiary turns 49.

Links to DTC eligibility

An applicant who wishes to open an RDSP must first qualify for the DTC. A person who is ineligible for the DTC is not permitted to open an RDSP account and does not have access to Canada disability savings grants and bonds.

Canadians and organizations representing persons with disabilities brought to our attention an important concern related to the DTC gateway function. When applicants are accepted for the DTC, a decision is made about the duration of their eligibility. If they are approved for a temporary period only, they must file another application in order to continue qualifying for the DTC.

We highlighted in our first annual report how problems can arise for beneficiaries who have already opened an RDSP account and are later deemed ineligible for the DTC. We explained that all or part of the grants and bonds that had been in the RDSP for fewer than 10 years had to be repaid to the federal government. Since 2010, an estimated 4,503 Canadians were no longer DTC eligible. They were required to close their RDSP and repay an estimated $26.6 million in grants and bonds to the federal government.

The committee pointed out that the loss of the DTC can be financially catastrophic for those individuals. We were particularly concerned about individuals with lifelong conditions that involve severe and prolonged impairment in physical and/or mental functions. If their functional capacity changes or improves as a result of a new medication or technical aid to a point where they are no longer markedly restricted, they are not eligible for the DTC. If their condition deteriorates, however, they may have difficulty reestablishing their DTC eligibility. In the meantime, they would have lost the only funds they have been able to save for future needs.

The committee argued that individuals who received a federal benefit for which they were deemed eligible, in this case an RDSP grant and/or bond, should be able to keep those funds. While these individuals would no longer qualify for new or additional funds, they should be permitted to retain the funds that they legitimately received from the government during the time they were DTC-eligible. In Recommendation #33, we proposed:

That the Minister of National Revenue work with the Minister of Families, Children and Social Development to ensure that individuals are able to keep all contributions they made to, and any and all grants and/or bonds they may have received for, their registered disability savings plan for periods during which they qualified for the DTC.

Committee members were very pleased with the 2019 federal budget announcement to eliminate the requirement to close an RDSP when an individual no longer qualifies for the DTC. The RDSP can now remain open and account holders will not have to return the invested amounts if they no longer qualify for the DTC. The announced change will have a profound positive impact on the financial security of persons with disabilities.

Budget 2019 proposed that RDSPs need no longer be closed when a beneficiary ceases to qualify for the DTC. Committee members questioned whether the RDSP grant and bond portions for which an RDSP holder was eligible would be repaid or paid retroactively. As of March 2019, financial institutions that issue RDSPs are not required to close a RDSP solely because the RDSP beneficiary is no longer eligible for the DTC.

We noted that Budget 2019 also proposed modified repayment rules so that previously contributed federal grants and bonds can be included in RDSP withdrawals in later years, rather than being repaid to the government. These rules were to apply after 2020 and take effect after required changes to the Income Tax Act and Canada Disability Savings Regulations receive Royal Assent. Once the changes become law, they will apply to withdrawals made on or after January 1, 2021: any excess repayments of Canada disability savings grants and Canada disability savings bonds in respect of withdrawals made after 2020 and before the measure is enacted would be returned to a beneficiary’s RDSP following enactment.

While there have been modifications to the repayment rules, the Committee believes that retroactive pay should be considered for RDSP beneficiaries who are not included by these new rules. We therefore recommend:

That in light of the positive decision to eliminate the requirement to close an RDSP when a beneficiary no longer qualifies for the DTC, the federal government should pay retroactively the RDSP grant and bond portions for which an RDSP holder would have been eligible.

New issues

Our first annual report noted that the RDSP rules and administration are complex and very difficult for most people to understand. In recent months, some new issues have come to our attention that pertain specifically to the interface between the RDSP and the DTC. These are highlighted below.

a) Eligibility

A submission to our committee proposed that DTC eligibility assessment be removed from the Canada Revenue Agency and placed instead with Employment and Social Development Canada, Service Canada or a new federal government body responsible for disability. While we appreciate this recommendation, we believe that any other government agency or department likely would encounter the same eligibility challenges that the CRA currently faces. We believe that the resolution of these eligibility challenges should be the primary policy focus.

Several submissions suggested that other programs, such as long-term provincial/ territorial social assistance, act as a gateway to an RDSP as well. While we are sympathetic to this argument, we are concerned that opening the eligibility door too widely will raise the cost of the RDSP program and might result in a substantial reduction in federal contributions to its grant and bond components. These are vital and their value must be protected.

b) Election

Eligibility for the DTC is a requirement to open an RDSP at a financial institution. An RDSP will be terminated if an individual loses the DTC, unless steps are taken to protect the investment. The CRA used to require an election to be filed by the financial institution holding the RDSP before the end of the year following the year that the individual is no longer eligible for the DTC.

We were pleased to learn that Budget 2019 removed the requirement for RDSP holders to file a DTC election with the financial institution holding the RDSP. As of March 2019, any existing RDSP for which the beneficiary is not DTC-eligible and any new RDSP for which the beneficiary becomes DTC-eligible can remain open without filing a DTC election. Budget 2019 also eliminated the requirement for medical certification that the beneficiary is likely to become eligible for the DTC in the future in order for the plan to remain open.

c) Reapplication

The Canadian Autism Spectrum Disorder Alliance (CASDA) informed us that many individuals report that they are responsible for renewing their DTC application. Often denied at first, adults who rely on this credit can lose eligibility for the RDSP and other financial assistance during the renewal process. Some of CASDA’s members have called for uncoupling the RDSP from the DTC in order to reduce these risks.

CASDA described the case of an individual whose DTC renewal and appeal were denied. The committee recognizes that this case may reflect only the experience of one person and may not represent a general problem. However, we include his story here to ensure that the administrative challenges highlighted in this case are addressed.

While a second appeal was accepted, the individual’s DTC was not in effect for more than a year. During that time, the RDSP was cancelled. Unfortunately, the individual did not know that his DTC renewal had expired. He became aware of the circumstances only when he realized that the government was no longer matching his RDSP contributions. He contacted the CRA and was told that he would need to reapply for the DTC. It had already been several months since his status had expired.

The renewal application took a long time to complete due to several pages of confusing and complicated paperwork. He waited for the application to be assessed and subsequently called the CRA when he received no word after the designated waiting period (an estimated 12 weeks). The CRA had no knowledge of when his application had been received or when it would be assessed.

A few weeks later, the applicant received a letter stating that the CRA had sent additional paperwork to his physician asking for more information. After this letter and several more weeks, the individual received a notice of determination saying that his application for the DTC was denied. The notice contained vague language with few specific answers. In the meantime, many months had passed with an expired DTC status and a time limit before the RDSP would be permanently revoked.

The applicant subsequently became aware of the fact that the nine months of contributions into his RDSP (the time during which the CRA had been processing his renewal) were deemed invalid contributions into an expired fund. The bank had continued to accept his automatic RDSP payments even though the CRA had provided notification that the RDSP was frozen until the DTC was renewed. The bank will not credit his $900 of RDSP contributions, despite the fact it had received a notice from the CRA each time an invalid contribution was made.

The CRA has stated that it does notify applicants in a notice of determination of the years that they are eligible for the DTC. The CRA also advises applicants on their notice of assessment one year prior to expiry and again the year of expiry. If, for example, DTC eligibility was due to expire in 2018, applicants would have received a message on their 2017 and 2018 notices of assessment indicating that they will need to submit a new form for the 2019 tax year.

Employment and Social Development Canada pointed out that financial institutions are notified of changes in DTC eligibility. Because the RDSP is an arrangement between a financial institution and an RDSP account holder, the financial institution is responsible for contacting the RDSP holder to discuss changes in the beneficiary’s DTC eligibility status. When a contribution does not receive a grant payment because the beneficiary is no longer DTC eligible, the financial institution is always made aware of this change. The institution is expected to take appropriate action to resolve the issue, including getting in touch with the holder of the plan when required.

As noted, committee members acknowledge that it is not possible to draw general conclusions based on a single case. There may simply have been a set of circumstances that went wrong or communication that was misunderstood. But we include this story here because there may be many more Canadians who are similarly affected by invalid RDSP contributions being made in error. We also want to ensure that individuals are clearly informed of a DTC expiry date along with its implications for associated programs, like the program for RDSPs.

The committee received another submission from the parents of a 32-year- old man who is autistic. The CRA sent him a letter this year indicating that he needs to reapply for the DTC. The same thing happened five years ago. The parents questioned why their son must reapply for the DTC every five years, given that his health provider had indicated on Form T2201 that the condition is permanent.

In the short term, the parents are worried about the status of their son’s RDSP, if he is deemed no longer eligible for the DTC. Over the longer term, these parents have no idea how their son will cope with the stress and burden of ongoing DTC applications after they are gone.

In a third case, the committee was alerted to the fact a notice of determination was sent in 2019 to an individual who had received the DTC for 15 years but had to reapply and was subsequently disallowed the tax credit. There is reference in the notice of determination to an election “to temporarily keep open the RDSP.”

d) Splitting of assets

One of the new issues brought to our attention involves the status of the RDSP upon dissolution of a marriage. A member of the Disability Tax Fairness Alliance relayed the concern of an individual when a lawyer representing her husband in their divorce case insisted that her RDSP was family property and would be subject to a 50/50 split.

The CRA informed us that it has only recently become aware of this issue. The Income Tax Act allows only three types of distributions from an RDSP: a return of grant and bond to the government, a transfer of funds to a new RDSP for the beneficiary and disability assistance payments. A disability assistance payment must be paid to the RDSP beneficiary. The Income Tax Act does not allow payments to anyone other than the beneficiary. An RDSP issuer asked to pay an amount to an ex-spouse would have to contact the CRA to request a waiver of the RDSP payment rules. The CRA is at the initial stages of reviewing this concern.

e) Problem related to dates

The committee received a submission from an individual who qualified for the DTC from 2010 to 2018. He apparently was advised by the CRA that there was no need to reapply until 2020 for the 2019 tax year because the DTC approval for 2019 is based on the 2018 tax year.

The CRA informed us that this statement is not entirely correct. For DTC purposes related to the credit that is claimed on an income tax and benefit return, an individual whose DTC eligibility expires in 2018 would not need to reapply in order to claim the credit on their 2019 return until April 2020 when they file their 2019 return. However, for the purposes of other programs, such as the RDSP and the child disability benefit, eligibility would need to be established prior to the end of the calendar year that the DTC eligibility expires.

We believe that these complex rules should be clarified or simplified. They appear to create confusion for many applicants regarding their eligibility for various disability-related benefits and programs.

Highlights from our first annual report

In order to maintain a complete record of RDSP-related concerns, we present here a summary of issues identified in our first annual report.

Persons with an intellectual impairment or developmental disability must often subject themselves to guardianship before they can open an RDSP. This requirement has implications for other aspects of their lives.

In 2012, the federal government changed the RDSP rules to allow parents, spouses and common-law partners to open up an account on behalf of people deemed not contractually competent. But many individuals do not have that designated person in their lives. Moreover, each jurisdiction appears to treat these clients differently.

There is a need for a national solution or a pan-Canadian supported, decision- making approach to banking. There likely are similar concerns regarding people with dementia and other related conditions. Who oversees the appropriate use of funds on behalf of the individual?

The federal government stated several years ago that it does not have the jurisdiction to act on a supported, decision-making approach to banking. We noted in our first annual report that the government does have jurisdiction over banking and it did change the RDSP law in 2012, representing an important policy precedent. Moreover, the RDSP provisions are written into the Income Tax Act, so there is a policy lever to introduce changes in this area.

If an RDSP has been opened by parents and they die, the status of the RDSP is unclear. There are questions as to what the banks do with these accounts if the beneficiary is deemed not contractually competent to manage the plan. Do they require a legally authorized financial representative or attorney to act on the person’s behalf? This requirement may have associated costs and may present financial barriers for the account holder. The current status of these accounts and their related assets appear to be unknown territory.

In response to this situation, the committee was informed that the new holder of the beneficiary’s plan should, in most cases, be an authorized financial representative. In some cases, the holder can be an attorney. The power of attorney must have been signed before the beneficiary became incapable to sign it. The RDSP can stay open with the beneficiary named as temporary placeholder until permanent arrangements for a holder can be arranged.

Eligibility problems are essential to resolve because new cohorts are aging out of the plan every year. Age 49 is the last year that the federal government can contribute a $10,000 retroactive Canada disability savings grant and a 10-year retroactive Canada disability savings bond to individual RDSPs.

Grant and bond amounts can be paid on unused entitlements up to an annual maximum of $10,500 for the grant and $11,000 for the bond, representing a maximum payment of $21,500. Retroactive payments can be requested up to December 31 of the year in which the beneficiary turns 49. The maximum retroactive payment in a year is up to $21,500, but they are not systematically worth $20,000 per individual.

Concerns were raised in submissions about the ability of current RDSP holders to access funds. The problem is the result of the 10-year rule for withholding funds, combined with the fact that an annuity-like formula for lifetime disability payments is applied. The formula is calculated as a fixed market value divided by life expectancy (83) minus age. The problem is that most beneficiaries will not live long enough to access the funds in their RDSP. It takes at least 25 years to get the maximum funds out of an RDSP.

The CRA could consider an approach in which beneficiaries are permitted to withdraw a certain amount in stages. Right now, plan holders face limits in how much they can withdraw from their RDSPs. A Senate committee recommended in its Breaking Down Barriers report a reduction of the withholding time to five years. But this change alone will not fully resolve the problem. The formula for lifetime disability payments must also be reviewed.

The RDSP savings vehicle is increasingly being used as a retirement fund. The year withholding rule reinforces that mindset. While tax-deferred growth is important, retirement was not the original intent of this policy measure.

In 2006, the Report of the Minister of Finance’s Expert Panel on Financial Security for Children with Severe Disabilities, A New Beginning, recommended that the RDSP be modelled on the registered education savings plan (RESP) more than the registered retirement savings plan (RRSP). The RDSP was designed as a way for parents to ensure the financial security of their child when the parents were no longer with them. The RRSP-type design of the RDSP savings vehicle has created multiple barriers and complexities.

In order to address these wide-ranging and emerging concerns, the committee believes that the federal government should create a table to consider and tackle these issues. We recommend:

That the federal government set up an advisory body, consisting of RDSP applicants and account holders, to resolve long-standing concerns and to address emerging issues with respect to the RDSP and its interface with the DTC. To help tackle complex issues such as legal capacity, the advisory body should include or consult regularly with selected organizations representing persons with disabilities.

Selected Conditions and Other Concerns

Selected conditions

After the publication of our first annual report, the Disability Advisory Committee had further discussions about selected conditions raised in submissions and correspondence we received from individual Canadians and organizations.

As noted in the preface to this report, we often highlight the challenges that a single individual has brought to our attention in a submission. We acknowledge that we are unable to determine whether the issue being raised is unique to that person or whether it applies to tens or even hundreds of Canadians.

When the report describes difficulties experienced by Canadians, it is possible that the difficulties we are describing may have been, or are in the process of being, resolved by the Canada Revenue Agency (CRA). The policy or practice in question may have been corrected. Moreover, the problems a given individual faces may be based on limitations in their understanding of the complex eligibility criteria and associated procedures for the disability tax credit (DTC), which in itself may flag the need for more legislative or administrative clarity.

The committee recognizes that CRA officials have no opportunity to respond to or explain the particulars of a specific case, especially in light of confidentiality requirements by which they are bound. At the same time, we believe that many 69 Disability Tax Credit (DTC) applicants have serious concerns that need to be heard.

Autism spectrum disorder (ASD)

a) Eligibility criteria

The Canadian Autism Spectrum Disorder Alliance (CASDA) pointed out that the DTC eligibility process for individuals with impairment in mental function is challenging. Its submission states that people with ASD are being rejected at a higher rate than those with physical disabilities.

Form T2201 does not easily apply to people with mental illness or neurodevelopmental conditions. While there is space to answer questions on speaking, for example, there is no section for communication: an activity of daily living that is not specifically captured in the other activities currently addressed in the eligibility criteria for the DTC. Individuals with ASD may need to use augmentative and alternative supports, not because they cannot speak, but because they have serious deficits in social communication.

That said, in order to meet current eligibility requirements for the DTC, the applicant’s ability to communicate with others must be so impaired that they cannot ask for directions, make change in a store or otherwise manage a very basic social interaction. It may well be the case that a person with autism has profound difficulty with social communication that is not severe enough to meet the DTC eligibility criteria around adaptive functions.

CASDA also noted that the eligibility criteria regarding “all or substantially all the time” and the CRA interpretation as “at least 90% of the time” can be confusing. The duration section of Form T2201, which asks whether an individual’s condition will improve, can be difficult for clinicians to answer. While it is possible that functioning related to a given condition will change over time, a diagnosis of ASD is permanent. Like type 1 diabetes or paraplegia, ASD is not a condition that goes away.

The CASDA submission pointed out that the federal government has endorsed the idea of a national autism strategy. As part of that strategy, CASDA has recommended the creation of a new Form T2201 that would better capture the needs of people with neurodevelopmental conditions, as well as a separate form for children and adults. It also proposed use of the World Health Organization’s International Classification of Functioning, Disability and Health (ICF) to establish eligibility for impairment in mental functions.

It should be noted that the committee’s Recommendation #2 made reference to the ICF when considering amendments to the mental functions list on Form T2201. Work is also under way on providing special guidance to health providers when completing the form on behalf of children.

b) DTC reassessment

In addition to challenges related to DTC eligibility criteria and Form T2201, many families report that persons with severe and profound impairment in mental functions must reapply frequently for this tax credit, even when it is known with some certainty that their condition will not change appreciably over time. The submission argues that ASD should be recognized as a lifelong neurodevelopmental condition that should not require continual DTC requalification.

While the committee understands this point, we note that an individual’s functioning can change over time, even when their condition remains. Change can result from improvements in medication or treatment, or other factors and demands that affect a persons’ life. That said, the functioning of individuals with all physical and mental conditions can change over time, and neither should be differentially eligible for permanent status. People with severe and prolonged mental disorders should not have to establish and reestablish their disability while those with physical disorders, such as paraplegia or blindness, do not.

CASDA states that continual reassessment is costly for many families. Wait times to see a specialist in the public sector can take longer than two years. Specialists working in the private sector often charge more than $1,000 for a reassessment. Because the DTC is a gateway to accessing other benefits and programs, the eligibility uncertainty around reapplication can create serious financial problems for a family.

Reassessment is also unnecessarily stressful, taking time and attention away from care and support. Many families report that they have to wait months or close to a year to find out the DTC determination. They often have difficulty accessing information about their application through CRA call centres, all within the context of a permanent and disabling condition for which long-term behavioural intervention may be required.

c) Health providers

Following the initial assessment and diagnosis, some children are not followed on an ongoing basis by any of the regulated providers qualified to fill in Form T2201, but rather by other service providers. Some children do not have a pediatrician or primary care medical doctor whom they see regularly. In order to complete Form T2201, these families rely on physicians at walk-in clinics who lack the required information to attest to the child’s need for support. These families must often pay out of pocket to be reassessed by a qualified health provider.

CASDA proposes a more flexible process for the completion of Form T2201. Medical doctors and nurse practitioners are currently the only health providers permitted to fill out all sections of the form. Psychologists can complete only the section on mental disorders. Yet in many cases, psychologists are the professionals most involved with children with ASD or are most knowledgeable about their functional condition. Psychologists generally make the initial diagnosis. They often supervise the ongoing interventions and have a better understanding of the applicant’s ability to carry out the basic activities of daily living.

The committee recognizes that psychologists who diagnose ASD might be able to confirm other functions that may be affected by the ASD, such as speech. It may be possible to enable psychologists and others who can certify only certain activities of daily living to certify other activities when these are impaired as a result of the primary condition. For instance, a psychologist can assess and diagnose ASD, as well as certify when the ASD may cause functional impairments in other areas, like speech or communication. A person with ASD might qualify under cumulative effect with multiple impaired functions, each not significantly impaired on its own, which would require either a general practitioner or multiple providers to complete Form T2201.

CASDA suggested that other professionals, such as board-certified behaviour analysts who provide services for people with ASD (especially for early learners), be permitted to attest to everyday functioning. The committee will explore all these proposals as part of our conversations on health providers designated to complete the form. In our early conversations on this issue, we made a commitment to the principle that any new health provider must be regulated by a licensing body in their respective province or territory in order to complete Form T2201. We note that behaviour analysts are not licensed and certification is a voluntary credential.

Post-traumatic stress disorder (PTSD)

Veterans Affairs Canada describes post- traumatic stress disorder (PTSD) as a mental disorder that can occur in people who have experienced or witnessed a traumatic event involving death or the threat of death, such as a natural disaster, serious accident, terrorist act, war combat or sexual violence. https://www.veterans.gc.ca/eng/health-support/mental-health-and-wellness/understanding-mental-health/ptsd-warstress#Item3-1.

The term post-traumatic stress disorder came into use in the 1970s, due in large part to the diagnosis of United States military veterans of the Vietnam War who were experiencing flashbacks and nightmares related to the conflict. The diagnosis was officially recognized by the American Psychiatric Association in 1980 in the third edition of the Diagnostic and Statistical Manual of Mental Disorders. In Canada, approximately 10% of veterans, including peacekeeping forces, experience symptoms of PTSD that have a severe negative impact on their daily functioning.

PTSD causes symptoms that interfere with the basic activities of daily living. Many people have vivid nightmares, flashbacks or thoughts of the traumatic event. They may suffer mood disturbances, such as anger or irritability. Many live in a constant state of high arousal and anxiety. They often avoid activities that remind them of the original disturbing event. An individual who was hurt in a car crash, for example, might avoid driving. Others with PTSD are housebound, afraid to leave the safety of their home.

Most people who experience traumatic events do not develop PTSD. But for others, symptoms may persist for years or the rest of their lives. Genetic disposition, brain chemistry and existing mental illness are factors that contribute to the severity and duration of the condition.

The committee has pointed out that the CRA has difficulty approving DTC claims for impairment in mental functions when symptoms are perceived to be “episodic in nature.” The disabling effects do not appear to be present at least 90% of the time. PTSD is an example of a condition that can be severe and prolonged, and its impacts extremely disabling all the time the symptoms are present, though not every symptom of PTSD may be present 90% of the time.

These cases are often considered not to “rise to the level of eligibility” even when designated health providers have certified on Form T2201 that their patients are “markedly restricted all or substantially all of the time.” There is no basis in law or jurisprudence to interpret the Income Tax Act so narrowly and technically. The CRA imposes the 90% threshold even when it is impossible to quantify the disabling effects of a chronic and persistent medical condition.

This is arguably equally true of many physical conditions. For example, a person with a paraplegia is paralyzed 100% of the time but the effects of the paralysis may vary from 100% depending on other health conditions, treatments and supports. However, because the paralysis is constantly present, the person is considered permanently eligible. The same lens must be used when assessing the impact of severe and prolonged mental conditions as physical conditions. Our Recommendation #6 proposed:

That the CRA no longer interpret all or substantially all as 90% of the time and no longer interpret an inordinate amount of time as three times the amount of time it takes a person without the impairment.

The committee continues to work on this recommendation.

Maple syrup urine disorder (MSUD)

The committee heard from a parent whose son had been diagnosed with a rare disorder known as maple syrup urine disorder. MSUD is a condition in which the affected individual is missing an enzyme in the liver that safely breaks down protein. The parent noted that “the result is that all existing food on the planet is lethal to his son.” The family incurs significant cost for the purchase of special food and spends inordinate time in the monitoring and treatment of his condition.

MSUD is a condition that is similar in its impact to phenylketonuria or PKU. The parent proposed that the committee consider including MSUD in our Recommendation #14 on life-sustaining therapies because of its similarity to PKU.

The committee agrees with this suggestion. In fact, we propose that the last part of our recommendation be modified to be more generic in order to include any metabolic conditions with similar effect. Our updated Recommendation #14 would read as follows:

That the CRA replace the current eligibility criteria for life-sustaining therapies as set out in Form T2201 with the following:

Individuals who require life-sustaining therapies (LSTs) are eligible for the DTC because of the time required to administer these therapies. These are therapies that are life-long and continuous, requiring close medical supervision. Without them, the individual could not survive or would face serious life-threatening challenges. Close medical supervision is defined as monitoring or visits, at least several times annually, with a health provider. These therapies include but are not necessarily limited to: intensive insulin therapy for type 1 diabetes; chest therapy for cystic fibrosis; renal dialysis for chronic and permanent renal failure; and medically prescribed formulas and foods for metabolic conditions that prevent the safe breakdown of proteins by the liver, including PKU and MSUD.

Other concerns

Name of the DTC

The committee heard from an individual who currently receives the DTC on behalf of his young son. The parent was concerned about the name of the DTC, which he believes reinforces the stigma of disability.

While many government programs include the term disability, its definition and meaning vary by program. In fact, the DTC page on the CRA website states: “There is no universal definition of disability. Each government department or agency (federal, provincial, territorial, and municipal) has its own definition, based on applicable legislation and the purpose of a given program.”

Moreover, the notion of disability is a much-debated and evolving concept. The parent asked why employ a term that has no commonly agreed definition and has been problematic in its interpretation? He cited the example of doctors who refuse to sign Form T2201 because they do not consider certain conditions to be a disability. For instance, a physician refused to sign the form on behalf of an applicant with PKU on the grounds that there was not yet any brain damage from the condition.

Some members of the deaf community are offended by the disability label. From their perspective, they simply speak another language. Use of the term disability can have a negative impact on families and parents who do not want their children to grow up with a label that remains with them for the rest of their lives.

The committee also learned in the course of our work that many Indigenous Canadians do not see themselves as disabled even though they may have some form of functional impairment. As a result, they would not even consider applying for the DTC.

Finally, the name of the DTC does not match its intent. One of its main purposes is to recognize the additional costs arising from a disabling condition. DTC eligibility is determined not by diagnosis, but rather by the impact of the medical condition on day-to-day functioning. Because the DTC is not tied to the presence of disability but to its impact, the individual proposed in his submission that this tax measure be renamed the impacted health tax credit. While this proposed name has its own challenges, at least it tries to move away from the problematic concept of disability.

The committee spent some time discussing this proposal. While we understand and agree with its premise, we are not convinced that the eligibility problems embedded in the DTC would be best addressed through a name change. We believe that both clarifying the eligibility criteria and resolving procedural challenges should remain the primary focus for the CRA.

Marital status

The committee received a submission from an individual who pointed out what appeared to be a contradiction in CRA practice. As noted, we are not able to substantiate the claim because we have no access to personal taxfiler information. Nor is the CRA able to provide any details about individual cases. Despite these caveats, we raise the issue here in order to ensure that it is addressed.

On his income tax and benefit return, the individual claimed common-law marital status as of January 2019. The CRA reassessed and filed together the returns of this man and his partner from 2018. As a result of the CRA’s joint filing, the individual ended up losing a considerable amount of disability-related benefits.

When the man transferred the DTC to his spouse, the CRA refused to allow this transfer on the grounds that marital status is considered not married or common-law for the 2018 tax year if common-law status is claimed in 2019. Yet the CRA had adjusted and drastically reduced all his benefits, because it works from the 2018 tax year if common-law status is claimed in 2019.

The committee notes that this issue requires further conversation with the CRA in order to understand the circumstances and determine whether the concern raised here applies more broadly.

Concerns of Indigenous Peoples

Background

Indigenous individuals and families living with a disability in Canada are challenged daily when attempting to navigate the country’s complex benefits and service system. They are often hampered in their ability to access necessary resources and support, experiencing barriers related to:

  • limited resources within communities
  • lack of information about external resources
  • complexities arising from the fact that access to programs and services depends on the applicant’s Indigenous status
  • remoteness
  • limited connectivity
  • high turnover of Indigenous social development and health employees
  • discrimination
  • ongoing competition for scarce resources

These are only a few of the factors that contribute to the barriers faced by Indigenous individuals and families living with a disability, creating a marginalized group within an already marginalized population.

The prevalence of disabilities and the likelihood of becoming disabled for Indigenous peoples and those residing within impoverished areas, such as the conditions seen within many Indigenous communities and urban neighborhoods within Canada, are significantly greater than the general population. The Indigenous peoples of Canada conservatively experience a disability rate of almost twice that of the non-Indigenous population of Canada and even higher in specific age groups.

Between 2006 and 2016, the Indigenous population of Canada increased by 42.5% to an overall population of 1,673,790. The disability rates vary by specific group: First Nations people living off reserve 30%, Métis 32% and Inuit 19%. https://www150.statcan.gc.ca/n1/pub/89-653-x/89-653-x2019005-eng.htm (The disability rate increases with age, which explains a lower overall rate for the Inuit who have a younger population.)

While Table 1 is a simplified representation of that reality in that it smooths over these differences, it nonetheless provides a good overall estimate of the total number of Indigenous persons with disabilities and thereby presents a sense of the scope of the problem at a national level. We conservatively estimate that there are more than 500,000 Indigenous persons of all ages living with a disability in Canada.

Table 1 – Estimated Indigenous population living with a disability, by region (2016 census data)*
Region Indigenous population by region Estimated population living with a disability*
Newfoundland and Labrador 45,725 13,576
Prince Edward Island 2,740 848
Nova Scotia 51,495 15,875
New Brunswick 29,385 9,123
Quebec 182,890 55,186
Ontario 374,395 116,628
Manitoba 223,310 69,536
Saskatchewan 175,020 54,756
Alberta 258,640 80,049
British Columbia 270,585 84,447
Yukon 8,195 2,567
Northwest Territories 20,860 6,072
Nunavut 30,550 5,858
TOTAL CANADA 1,673,790 514,521

*Numbers are estimates.

The marginalization, discrimination and racism that Indigenous peoples continue to face, including those living with a disability, have been well documented across Canada. Most recently, these problems have been highlighted once again by the National Inquiry into Missing and Murdered Indigenous Women and Girls as well as the use of excessive force on, and death of, Indigenous peoples by law enforcement. Racist interactions continue to be experienced, both directly and indirectly, by Indigenous peoples within Canada’s health care systems.

These situations may seem far removed from considerations about the disability tax credit (DTC) eligibility criteria and application process. However, the problems of racism, colonization, marginalization, indifference, and a general mistrust of / alienation from the very systems designed to make life better, combined with systemic poverty, create an environment of exclusion.

DTC barriers

Indigenous persons and families living with a disability face a number of challenges related to the DTC in particular. Key barriers are highlighted below.

Limited understanding of the benefits of the DTC

Many Indigenous persons living with a disability and their community support workers have never heard of the DTC. Others do not believe they are eligible or that they will benefit due to their tax-exempt First Nation status. There is also a lack of awareness that the DTC is a gateway to other benefits such as a registered disability savings plan (RDSP), which is a tax measure that is generally unknown and misunderstood. (See Appendices D and B for a list of other benefit measures and a description of an RDSP, respectively.)

Moreover, pressing priorities due to poverty, harmful relationships, poor housing conditions, community political and family dynamics, health issues, lack of employment and limited communications take obvious priority over applications for the DTC. In 2016, Statistics Canada reported that four out of five (80%) of First Nation communities had median incomes that fell below the poverty line. https://globalnews.ca/news/3795083/reserves-poverty-line-census/.

DTC eligibility criteria

As noted earlier in this report, the need to verify that a disability impacts the functioning of a DTC applicant 90% of the time is a very high bar that has never been adequately explained by the Canada Revenue Agency (CRA). This administrative standard is out of line with current provincial/territorial assessment levels for disability benefits. We believe that this standard reflects an insensitivity to applicants’ fragile sense of well-being when having to catalogue the severity of their personal struggles, with no assurance they will be heard and given support.

Lack of access to health providers

In many cases, the ability to access a health provider qualified to complete Form T2201 is limited in remote communities, as is the availability of health providers. Many health providers visit a community sporadically to provide only consultative health care or are performing temporary locum assignments. The completion of application forms in this context is seen not as a priority but as a luxury.

Moreover, the health provider filling in Form T2201 often lacks detailed knowledge or a complete medical history of the applicant. Without an ongoing relationship, the form is frequently filled in with limited or inaccurate information, resulting in denial of those who should qualify. It is also difficult for the DTC applicant to follow up with a transient health provider if the CRA requires additional information in order to complete the application process.

A Disability Advisory Committee member noted that nurse practitioners often work with Indigenous peoples, particularly in northern and remote communities. It was suggested that the CRA consider targeting this group of health providers to enable them to inform communities about the DTC and DTC-linked benefits, and to assist individuals with the completion of Form T2201.

Assessments

Many Indigenous persons living with a disability have not been formally assessed as a youth within the school system. They subsequently transition into adult services where funding for assessments typically does not exist. As a result, the disability of these individuals is never properly assessed or the assessor lacks the social and cultural understanding of the applicant, attributing disabilities and their impact to social and community issues rather than to the condition.

Without formal documentation, these applicants must use their own resources, such as Residential School survivor payments or Sixties Scoop survivor payments, to pay for an assessment that should have already been completed. This requirement is made all the more difficult by the fact that many are living in poverty.

Application fees

No standard fee has been implemented nationally for the DTC application nor the subsequent CRA requests to health providers for additional information. Medical offices may charge up to $250 or more to complete Form T2201 and to provide additional information.

When individuals live in poverty, having to pay any amount to complete an application is a significant burden.

The committee believes that many eligible individuals may simply not apply for the DTC due to their limited financial capacity. As a result, their access to programs and services that could improve their long-term social and economic well-being is blocked.

A committee member raised the fact that families may apply on behalf of their children under age 18 for funds, under Jordan’s Principle, to cover the cost of the assessment. (See Appendix I.) This is an area to explore in future work.

Limited access to transportation

Many persons living in poverty or remote communities do not have access to transportation or the funds to pay for transportation to see a health provider who can complete Form T2201. This problem applies to both the initial application and the frequent “request for additional information” letter and subsequent appointments.

Racism/discrimination

As noted, Indigenous peoples continue to experience systemic discrimination, racism, and the social and economic impact of programs and services that are an extension of colonization. Many individuals and families exclude themselves from various programs and services. They often feel unworthy of the support, or ill equipped and reluctant to interact with the health care system. As a result, they do not embark upon the onerous DTC application process, thereby perpetuating poverty and the loss of economic and social opportunities afforded to other Canadians.

Recommendations

The committee is aware of the fact that the CRA currently has a number of measures related to the hiring of Indigenous persons, including those living with a disability. The committee encourages the CRA to build on those efforts as well as to raise awareness among staff about the concerns of Indigenous peoples. In order to enhance this work, the committee recommends:

That the CRA develop an educational program for leaders, employees and committees in relation to Indigenous peoples, Indigenous disability issues, funding and government initiatives to promote a better understanding of Indigenous systems in Canada and how the CRA and DTC interact with them.

Part 1 of our report documented the many and varied outreach efforts to Indigenous Canadians that the CRA is spearheading through its Community Volunteer Income Tax Program (Recommendation #31). The CRA is also actively involved in a number of partnerships with Indigenous organizations and federal departments around common initiatives related to Indigenous concerns.

The committee hopes that the CRA will continue working in collaboration with federal departments and Indigenous governments to co-ordinate DTC outreach to Indigenous communities. We encourage the CRA to broaden and deepen its partnerships with Indigenous organizations to ensure the development of culturally sensitive approaches, tailored to the needs of individual communities. Outreach efforts should include information not only about the DTC but also about other disability programs that require DTC eligibility.

Wherever possible, the CRA outreach representative(s) should be of Indigenous ancestry or have completed cultural safety training through First Nations communities and urban services. These outreach workers will help inform potential applicants and health providers about the DTC and how best to complete an application that responds to the CRA’s interpretation of “all or substantially all of the time” as being “at least 90% of the time.” The committee recommends:

That the CRA seek financial authority and obtain funding to support community organizations with strong ties to Indigenous peoples to engage and assist individuals and communities in their efforts to understand and apply for the DTC and other benefits, once DTC eligibility has been confirmed.

That the CRA develop an assessment package, similar to the one used for the Canada Pension Plan disability benefits application, which speaks to Indigenous peoples and can be:

  • completed by the individual or an assessor, which considers how a person’s disability affects them “all or substantially all of the time” or an “inordinate amount of time”
  • confirmed by a designated health care provider and attached to the main application

Finally, there is a need for data regarding DTC claims among Indigenous peoples in the same way that these figures are important for all Canadians (Recommendation #27). However, any data collection efforts related to Indigenous peoples must be subject to the OCAP® principles of ownership, control, access and possession. OCAP® asserts that First Nations have control over data collection processes in their communities, and that they own and control how this information can be used. The committee recommends:

That the CRA, in consultation with Indigenous peoples and disability organizations, develop mechanisms for collecting data related to age, gender, type of disability similar to other DTC databases, while respecting the confidentiality of the individual and community. Any new DTC application form should include an option for applicants to identify as an Indigenous person, Métis, Inuit or member of a First Nation (status or non-status).

Work-Related Disability Tax Measures

During the first year of our mandate, the Disability Advisory Committee focused our attention primarily on the disability tax credit (DTC). Significant problems with this measure have been identified over the years by persons with disabilities, health providers, voluntary organizations, and several Parliamentary and federally appointed committees.

Most of the recommendations discussed in Part 1 of this report are concerned with modifying the eligibility criteria for the DTC, improving its administration and enabling access through the provision of clear information.

The DTC itself is not a work-related tax measure. Rather, it is concerned with impairment in functional capacity that affects the ability to carry out basic activities of daily living. Participation in the paid labour market is not a factor in determining eligibility for the DTC. In fact, feedback from health providers who fill in Form T2201, Disability Tax Credit Certificate, suggests that some erroneously believe that if a person works, their disability is not persistent or severe enough to qualify for the DTC.

While workforce participation is not required for DTC eligibility, this tax measure acts nonetheless as a modest incentive to work. It has the effect of “levelling the playing field” somewhat between workers with and without disabilities.

Canadians who qualify for the DTC are deemed to have higher costs linked to their severe and prolonged impairment in physical and/or mental functions. The DTC allows a small reduction in income tax payable in recognition of these additional costs.

In addition to the DTC, the committee was interested in exploring tax measures that enable participation in education, training and work. Our discussions focused on the disability supports deduction (DSD) and the medical expense tax credit (METC).

The DSD provides tax relief for the cost of disability supports incurred for the purposes of employment or education, such as sign language interpretation services and talking textbooks. The METC also provides tax relief for these and other medical or disability-related expenses when they are incurred for reasons not related to employment and education.

As a general context to our discussions, the committee noted the inability of many persons with disabilities to pay for essential technologies or work-related supports in the first place. This inability to pay links closely to our Recommendation #38 on the disproportionately high rates of poverty among persons with disabilities.

Current tax measures are of limited value to potential workers who are unable to pay upfront for these items. There are federal provisions that provide assistance to Indigenous workers who may need disability-related supports to participate in education, training or employment. This assistance is a model for the broader application of this approach.

The committee recognizes that several of the proposals put forward in this section must be directed toward the Department of Finance Canada. These proposals involve changes to the Income Tax Act, like many of our recommendations on the DTC. We suggest, for example, several additions to the items that may be claimed under the DSD. These changes to the Income Tax Act cannot be made by the Canada Revenue Agency (CRA), which is responsible only for the administration of the Act.

We have put forward these proposals in the hope that the Minister of National Revenue and CRA officials will relay them to their Department of Finance Canada colleagues. This is consistent with Section 2(g) of our mandate:

“While legislative change is beyond the mandate of the Disability Advisory Committee and the role of the CRA, recommendations for legislative change to disability tax measures may be made by the committee for consideration and will be forwarded to the Department of Finance Canada.”

Alternatively or in addition, we have suggested that observers from the department be invited to our committee meetings.

The material in this section may also enable the disability community, through their own reports, submissions to Parliamentary committees, conversations with elected representatives and the media, to bring these issues directly to the attention of the federal government and the Department of Finance Canada.

Employment-related disability tax credits

a) Disability supports deduction

Canadians who need specialized, disability-related services or equipment to participate in education, training or employment can deduct the cost of the following items under the disability supports deduction (DSD):

  • attendant care expenses (special provisions apply)
  • Bliss symbol boards
  • Braille note-taker devices
  • Braille printers, synthetic speech systems, large print-on-screen devices
  • deaf-blind intervening services
  • devices or software designed to allow a person who is blind or has a severe learning disability to read print
  • electronic speech synthesizers
  • job-coaching services
  • note-taking services
  • optical scanners
  • page turner devices
  • reading services
  • real-time captioning
  • sign language interpretation services
  • talking textbooks
  • teletypewriters
  • tutoring services
  • voice recognition software

The committee proposed in our first annual report that the following items be added to the DSD list:

  • ergonomic work chairs
  • bed-positioning devices for work
  • mobile computer cart for sit/stand work at home
  • alternative input devices (keyboards/ mice)
  • digital pens
  • navigation devices for low vision

In recent discussions, we identified several other items to be added to this list. They include memory or organizational aids to assist persons with impairment in mental functions, and trained and certified service animals to enable participation in education, training or work. We have modified our earlier recommendation to propose:

That the CRA forward to the Department of Finance Canada for their consideration the following items to be added to the DSD list:

  • ergonomic work chairs
  • bed-positioning devices for work
  • mobile computer cart for sit/stand work at home
  • alternative input devices (keyboards/ mice)
  • digital pens
  • navigation devices for low vision
  • memory or organizational aids to assist someone with a brain injury or problems with executive function
  • trained and certified service animals

While the committee supports an expanded list, we also argued that, ideally, the DSD would have no list. The fact that we proposed additional items in our subsequent discussions illustrates the limitations of a designated list.

Persons with disabilities should be able to deduct any essential items they require for education, training and employment. Under the present system, prescriptions and receipts must be retained as proof of need in case of audit. This check and balance in the existing system should remain in place.

We note that the current provision pertaining to attendant care expenses, in particular, may be confusing. It is unclear whether DTC beneficiaries can claim these expenses under the DSD. The committee was pleased to see that the CRA prepared an information sheet on attendant care expenses (Appendix G). We hope that it will help clarify the tax treatment of these specific costs.

The committee made several additional proposals regarding the DSD. In Recommendation #40, we proposed:

That the CRA:

  • raise awareness about the disability supports deduction, including special information sessions to inform disability organizations, post-secondary educational institutions and student networks, unions, employer organizations, training programs and the general public about the availability, purpose and provisions of this tax measure
  • in collaboration with the disability community, inform the Department of Finance Canada of the need to review on an annual basis the list of allowable items within the disability supports deduction to ensure it keeps pace with technological updates and changes

The CRA notes that Guide RC4064, Disability-Related Information, provides a one-stop shop that presents an overview of all tax measures available to persons with disabilities. The CRA also points out that Guide RC4064 is promoted in Guide P105, Students and income tax, in the section “Is this guide for you?” The CRA recently prepared an information sheet on the DSD (Appendix G).

Both Guide RC4064 and the information sheet should be made widely available, along with other relevant tax materials, to community organizations and in informational sessions throughout the country. Given the current circumstances related to COVID-19, the availability of online information would be particularly helpful at this time. The information sheet should be posted to the CRA web pages and link with the web pages for the DTC and the METC.

The committee feels that more outreach must be done to promote the DSD. Many persons with disabilities are paying, on their own or with the help of family, the full and often high cost of their accommodation for school, training or employment.

The 2017 Canadian Survey on Disability reported that there were 3.7 million Canadians with disabilities between the prime working ages of 25 and 64. An estimated 2.2 million of these individuals were employed. Slightly more than half of these individuals reported mild disabilities, which means that nearly one million employed Canadians with disabilities had moderate to severe disabilities. https://www150.statcan.gc.ca/n1/pub/89-654-x/89-654-x2018002-eng.htm.

Yet only an estimated 2,600 individuals claimed the DSD in 2016, the latest year for which figures are available. https://www.canada.ca/content/dam/fin/migration/taxexp-depfisc/2019/taxexp-depfisc19-eng.pdf. These low numbers reinforce the need to improve awareness of this tax measure.

The committee views the DSD as a necessary and important measure to help remove numerous barriers to employment faced by many Canadians with disabilities. We believe the low utilization of this tax measure is due, in large part, to low awareness of its existence. In the coming year, the committee plans to seek feedback from the disability community to determine their knowledge about and utilization of this benefit.

The CRA points out that without conducting a more thorough analysis of the contributing factors:

“… we believe that employment figures on their own cannot explain the low uptake. For example, a person’s ability to benefit from a tax deduction (or a non-refundable tax credit) would largely depend on whether they have tax payable. Therefore, income level would be one of the major contributing factors.”

The current lack of information makes clear the need for an in-depth study on the DSD. We want to understand why only .26% of Canadians (less than 1%) potentially eligible for this tax measure actually claim it. At the very least, we can reach out to stakeholders to get a better sense of their awareness and understanding of this tax measure.

Recommendation #42 captures other possible reforms:

That the CRA relay to the Department of Finance Canada our concerns regarding the need to:

  • amend the disability supports deduction to allow the deduction of any form of disability-related technical aid, equipment and service required for education, employment and participation in the community
  • study and report on the implications of converting the current disability supports deduction from a deduction to a credit

The CRA has indicated that it is not in a position to carry out a study related to the conversion of the DSD to a credit. We can accept that this tax measure must remain a deduction for the time being. It treats disability expenses incurred for workforce participation in the same way as other work-related expenses. The primary focus right now should be on improving the take-up of this vital measure.

Finally, the committee noted that certain goods and services may be claimed under both the DSD and the METC. It is unclear how persons with disabilities would know which option to select.

The CRA has stated that our concern is more in the nature of a request for tax-planning advice, which the agency does not offer to taxpayers. The CRA further stated that it would be up to each individual to determine which claim would be more beneficial, based on their unique circumstances.

The committee notes that the CRA does have an outreach program through the Community Volunteer Income Tax Program, which we described in Recommendation #31. This program could include information in its hard-copy and online materials about the availability of work-related disability tax measures.

b) Medical expense tax credit (METC)

The METC provides tax relief for medical and disability-related expenses when they are incurred for reasons not related to employment and education. There are a few items that pertain to work, including some overlap with items that may be claimed under the DSD.

We were pleased to see that the CRA has prepared an information sheet on the METC (Appendix G). The information sheet will help individuals with disabilities understand better the measures that may apply to them. Again, we trust that this summary will be widely distributed in both hard copy and online, along with other relevant tax materials, to community organizations throughout the country.

The committee noted earlier the need for greater clarity around the category of attendant care. It is unclear whether DTC beneficiaries are permitted to claim this item as a health expense.

The CRA has indicated that the criteria are spelled out in its materials:

“The following chart shows the certification you need to claim attendant care as a medical expense on line 33099 or line 33199 of your tax return (Step 5 – Federal tax) and if you can also claim the disability amount on line 31600 or line 31800.”

The committee feels that a simpler explanation would be helpful, especially with respect to the “and if” part of the instruction.

The METC allows individuals to claim the cost of certain disability-related aids and equipment, including teletypewriters and optical scanners. These same items may be deducted under the DSD. In our view, the CRA can provide some guidance in its public materials about the difference between these tax measures that allow for claims of the same items.

The CRA claims that all the guidance necessary is already available in the following CRA publications:

The CRA also points out that the section in the folio titled “Taxpayers who can claim the disability supports deduction” advises taxpayers about the difference between the DSD (as a deduction) as opposed to the METC and the DTC (which are tax credits). The committee notes, however, that section 3.8 of that folio states the following:

“Where a taxpayer incurs an expense that can be claimed as either a disability supports deduction under section 64 or in calculating a medical expense tax credit under section 118.2, the taxpayer will have to determine whether it is more beneficial for the amount to be claimed as a disability supports deduction or a medical expense tax credit.”

We understand that the CRA cannot provide tax planning advice. But we believe that the CRA can help make information more readily available and easily understood when it comes to two tax measures that allow claims for the same items. Our Recommendation #25 discussed the plain language principle.

As part of our future work, the committee will consider whether to ask stakeholders themselves about their awareness and understanding of the current system of disability tax measures. One possibility is to develop an online questionnaire to Canadians who currently receive the DTC. Another option is to send this questionnaire to disability organizations which, in turn, can distribute the questionnaire to their members.

Finally, the committee discussed other limitations of the METC: Only expenses in excess of the lesser of $2,397 for 2020 or 3% of line 23600 net income can be claimed for this tax credit. This means that individuals must pay the initial “deductible” on their own, which is a burden especially for lower-income households.

We recognized that the refundable medical expense supplement, introduced on the recommendation of the Technical Advisory Committee (TAC) on Tax Measures for Persons with Disabilities, can be of assistance to these Canadians. An estimated 562,000 individuals received this benefit in 2016, the latest year for which take-up figures are published. We were pleased that information on this refundable tax measure was included in the new METC information sheet.

Disability tax measures for employers

Committee members acknowledge that the DSD and the METC provide modest incentive to work. Unfortunately, these measures are far from sufficient, given the disproportionately high rate of unemployment among persons with disabilities.

The 2017 Canadian Survey on Disability reports that more than 6.2 million Canadians aged 15 and over (22% of the population) identify as having a disability, and it is expected that actual numbers are likely higher. Only 59% of Canadians with disabilities aged 25 to 64 are employed, compared to 80% of Canadians without disabilities. Persons with disabilities earn less than Canadians without disabilities (12% less for those with milder disabilities and 51% less for those with more severe disabilities) and are more likely to live in poverty. https://www150.statcan.gc.ca/n1/pub/89-654-x/89-654-x2018002-eng.htm.

The numbers speak to the fact that more efforts are required to help offset costs and provide incentives to work. In considering the suite of initiatives that would be appropriate, we wondered about the availability of other tax measures to offset additional costs employers may incur in hiring an employee with a disability. These costs may include, for example, the purchase of new equipment, modification of existing equipment, installation of a ramp or the hiring of attendants to assist workers with disabilities perform their duties of employment.

Our Recommendation #41 was concerned with raising awareness about all forms of disability-related tax assistance for employers. We proposed:

That the CRA take steps to raise awareness among employers about any tax measures that provide incentives for hiring persons with disabilities and/ or that help offset any of the costs of accommodation.

We acknowledge that this recommendation is modest in its intended target. Relevant information should be provided not only to employers but should also be made available to job developers and front-line workers in vocational rehabilitation agencies.

In fact, educational materials comprising the entire package of tax measures, the DTC, DSD, METC and employer tax measures, should be developed for a broad network including:

  • employer associations and business councils
  • self-employed workers
  • student associations in universities
  • on-campus disability resource centres
  • job developers and agencies involved in training, vocational rehabilitation and placement (for example, Canadian Council on Rehabilitation and Work)
  • human rights commissions

We included the latter group in the target audience because of the many employment-related complaints involving insufficient accommodation at work. Employers tend to do a better job of accommodating existing workers who become disabled rather than new employees with disabilities.

The Technical Advisory Committee (TAC) on Tax Measures for Persons with Disabilities had encouraged the federal government to focus more actively on work-related tax measures and relevant programs. That committee’s 2004 report Disability Tax Fairness discussed this issue. At the time, there was a list of capital expenses for accommodation that could be fully deducted by employers. These expenses included (but were not limited to):

  • renovations or alterations to a building to enable individuals with a mobility impairment to gain access to the building or to be mobile within it (for example, the installation of interior and exterior ramps, hand-activated electric door openers and modifications to bathrooms, elevators and doorways)
  • visual fire alarm indicators
  • phone devices for individuals having a hearing impairment

The TAC noted that the full deductibility of these expenses encouraged businesses to make these essential economic and social investments. Even back then, there were concerns that employers were not taking advantage of these provisions in a significant way.

The TAC recommended that the CRA take steps to make employers aware of these provisions to encourage the accommodation of persons with disabilities in the workplace. It also had proposed the introduction of a tax credit for employers who hire persons with disabilities.

We recognize that the suite of incentives for hiring persons with disabilities is a broader issue that goes beyond the mandate of the CRA. This package of concerns is more appropriately addressed by Employment and Social Development Canada. There is a need to scope out the current programs and provisions in this area.

Finally, the committee was pleased to learn about the 2020 Throne Speech announcement of a disability inclusion plan, which will include a “robust employment strategy for Canadians with disabilities.” We will monitor any tax-related measures that may be introduced as part of this important new initiative.

Appendices

Appendix A: Disability Advisory Committee Terms of Reference

1. Mission statement

  1. To advise the Canada Revenue Agency (CRA) on interpreting and administering tax measures for Canadians living with disabilities in a fair, transparent and accessible way.

2. Mandate of the Committee

  1. To provide advice to the Minister of National Revenue and the Commissioner of the CRA on the administration and interpretation of laws and programs for disability-related tax measures administered by the CRA;
  2. To provide advice on how the needs and expectations of the disability community can be considered by the CRA as they interpret and administer disability-related tax measures. This may involve recommendations for information gathering and collaboration between the CRA and the disability community;
  3. To provide advice on how the CRA can increase:
    1. Overall awareness of tax measures for persons with disabilities; and
    2. Take-up of tax measures for persons with disabilities.
  4. To provide advice on how the CRA can best:
    1. engage persons with disabilities and their support communities; and
    2. deliver information, education and outreach initiatives about disability-related tax measures and important administrative changes to:
      • persons with disabilities;
      • those who support persons with disabilities;
      • professionals who advise persons with disabilities;
      • health practitioners; and
      • not-for-profit agencies and various levels of government;
  5. To review and make recommendations for improvement to the CRA’s administrative practices in order to enhance the quality of the services and products the CRA provides to persons with disabilities;
  6. To provide the CRA with a formalized means of consulting with various stakeholders; and
  7. While legislative change is beyond the mandate of the Disability Advisory Committee and the role of the CRA, recommendations for legislative change to disability tax measures may be made by the Committee for consideration and will be forwarded to the Department of Finance Canada.

3. Composition

Membership on the Committee will be determined on the following basis:

  1. The Committee consists of a blend of service providers (e.g. health, tax professionals, lawyers, accountants), advocates of the disability community and persons with disabilities;
  2. The Committee will be composed of 12 members and 2 co-chairs, appointed for a term not to exceed 48 months (starting with the first meeting of their appointment);
  3. One of the Committee members will act as vice-chair, to support the private sector co-chair and provide activities at the discretion of co-chairs such as;
    • help setting the agenda for the in-person meetings; and
    • participate in discussions with co-chairs as to the progress of the Committee and the work that needs to be undertaken.
  4. The Minister and the Commissioner appoint the members and determine the length of their terms;
  5. In order to have some continuity of membership, during the first four years of the Committee, the members will be given different terms:
    • Four (4) members will be appointed for 48 months;
    • Four (4) members will be appointed for 36 months; and
    • Four (4) members will be appointed for 24 months.
    • Thereafter, members will be appointed for terms of 36 months.
  6. Should a member not be able to serve his or her full term of appointment, the Minister jointly with the Commissioner will then appoint a suitable individual to complete the remaining portion of the term of appointment created by that vacancy;
  7. Membership is voluntary and members will not be paid to attend meetings. However, reasonable travel and accommodation expenses to attend meetings will be reimbursed according to the CRA Travel Policy, and meetings will be held in accordance with section 9 (below); and
  8. Other federal departmental representatives (e.g. Sport and Persons with Disabilities, Finance, Employment and Social Development) may be welcomed in the role of observers or resource people.

4. Role of Committee members

  1. The roles and responsibilities of Committee members include:
    1. Awareness of the needs and experiences of persons with disabilities to inform the Committee’s deliberations and recommendations to the CRA on its disability-related tax measures;
    2. Identifying topics for consideration or presentation to the CRA;
    3. Offering advice, comments and recommendations on CRA services, products, and administrative policies and other issues and initiatives that are presented to the Committee;
    4. Undertaking activities to inform its advice and recommendations to the CRA such as mechanisms for stake-holder engagement and collaboration (e.g. surveys, focus groups);
    5. Committee members have been selected to represent the views of their respective communities and associations. The members agree not to use the Committee as a means to advance their own personal interests or further the sole interests of the associations they represent;
    6. Committee members agree not to act as advocates to address the tax situations of specific taxpayers or to raise cases with the Committee that are before the courts; and
    7. Committee members are expected to participate in a collaborative and constructive manner that promotes tangible outcomes and upholds public confidence in the Committee’s mandate, advice, and recommendations. Members are asked to address any individual concerns through dialogue with the co-chairs and, as appropriate, the Committee as a whole.
  2. Committee members are not spokespersons for the CRA. Each member is a stakeholder, representing themselves as an expert or as an advocate of persons with disabilities;
  3. Any information developed in consultation with other groups or shared by Committee members will become part of the formal and public proceedings of the Committee upon consensus of the Committee; and
  4. Members may discuss consultative initiatives of the Committee with their communities and colleagues unless expressly advised that they should not do so for reasons of confidentiality.

5. Establishment of co-chairs

  1. The Assistant Commissioner, Assessment & Benefit Services Branch (ABSB) of the CRA, will serve as co-chair of the Committee alongside a co-chair from the private sector;
  2. The private sector co-chair must be a Committee member;
  3. The term of a private sector co-chair will be twenty-four months (starting with the first meeting of his/her appointment);
  4. After the initial appointment of a private sector co-chair by the Minister and the Commissioner for 24 months, the private sector co-chair can be renewed by the Minister and the Commissioner for a subsequent term of twenty-four months, or a new private sector co-chair can be appointed by the Minister and the Commissioner;
  5. Members of the Committee can be eligible for appointment as co-chair after serving a term of 24 months or more;
  6. Should the private sector co-chair not be able to serve his or her full term of appointment, an appointment will take place according to 5. b), c) d) and e); and
  7. The outgoing co-chair will have the opportunity to remain a member of the Committee for an additional 12 months to ensure continuity between the co-chairs. This could mean that the Committee will be composed of 13 members on some occasions.

6. Roles of co-chairs

  1. Ensure that the Committee adheres to its mandate and the members fulfill their roles;
  2. Develop meeting agendas in concert with the Committee’s mandate and roles;
  3. Facilitate meetings and lead the discussions, including during video or teleconferences;
  4. Ensure that all members are heard, engaged and respected in the work of the Committee;
  5. Report on the progress made by the Committee to the Minister and the Commissioner; and
  6. Serve as spokespersons for the Committee.

7. Responsibilities of the co-chair from the CRA

  1. To be the liaison between CRA and the Committee; and
  2. To provide secretariat services to the Committee which includes, but is not limited to providing the Committee with data necessary to informing their work and any recommendations such as:
    • how the CRA currently liaises with disability stakeholder groups;
    • how the CRA handles inquiries regarding disability;
    • processes the CRA uses to decide on DTC eligibility;
    • requirements of persons to maintain their DTC eligibility;
    • rates of acceptance and rejection by activity; and
    • appeal processes and data.

8. Responsibilities of the co-chair from the Committee

  1. To be the liaison between the 12 members of the Committee and the CRA in its secretariat function;
  2. To represent the views of the Committee as a whole; and
  3. To guide the Committee in its advisory function.

9. Meetings

  1. Upon initial formation, the Committee will meet three times per year. The frequency of meetings will be periodically re-examined to ensure best use of Committee members’ time;
  2. The meetings will be held in Ottawa at location(s) that are accessible to those participants who are persons with disabilities. Other methods of meeting may also be utilized in order to keep costs at a reasonable level, such as videoconferences, teleconferences or on-line consultation in lieu of face-to-face meetings, in accordance with section 3. g); and
  3. In order for a meeting to take place, a quorum is necessary and will be met when a minimum of 7 members are in attendance.

10. Topics of discussion

  1. The co-chairs are responsible for setting meeting agendas in consultation with Committee members. Any member of the Committee can submit relevant topics for discussion to the co-chairs;
  2. An agenda item presented for discussion or activity that is not aligned with the mandate and role of the Committee and/ or that does not meet with the consensus of the Committee will not be pursued;
  3. In the event of dissent arising about whether an agenda topic or activity is aligned with the mandate and role of the Committee, the co-chairs and/or the Minister and the Commissioner will have the authority to rectify the dissent;
  4. The Minister or the Commissioner may request the Committee discuss and analyze a specific topic; and
  5. The Committee can request information as defined in 7.b) necessary to informing a topic of discussion.

11. Reporting

  1. A record of meeting proceedings will be kept and submitted to the Minister and Commissioner as well as made publicly available;
  2. The Committee may report on a specific topic to the Minister and the Commissioner in the format of a letter sent to the Minister and the Commissioner indicating the summary of the findings and the recommendations of the Committee;
  3. In the event that the Minister or Commissioner requests the Committee to discuss and analyze a specific topic, the Committee will report on this discussion and analysis will be sent to the Minister and the Commissioner in the format of a letter indicating the summary of the findings and any attendant recommendations;
  4. At the end of each year (following three meetings per year), the Committee will report to the Minister and the Commissioner with a summary of all topics discussed as well as recommendations for all topics; and
  5. Meeting proceedings (a), specific reports (b) and annual reports (c) will be reviewed and approved upon consensus of Committee members.

The CRA will assist the Committee in ensuring that all meeting materials and Committee reports are fully accessible.

12. Secretariat

  1. The Committee co-chair is the Assistant Commissioner of the ABSB or as an alternate, the Director General of Benefit Programs Directorate; and
  2. The Assessment, Benefit, and Service Branch will provide secretariat services for the Committee, performing functions such as:
    1. Maintaining membership lists and coordinates of each member;
    2. Circulating agendas, minutes and documentation to Committee members;
    3. Organizing materials and all logistics for Committee meetings; and
    4. Supporting the co-Chairs in their roles and responsibilities communicating with the Commissioner, the Minister and other stakeholders.

Appendix B: Description of Federal Measures for Persons with Disabilities

Disability tax credit

The disability tax credit (DTC) is a non-refundable tax credit that helps individuals with disabilities or their supporting individuals reduce the amount of income tax they may have to pay. To be eligible for the DTC, an individual must have a severe and prolonged impairment in physical or mental functions, as defined in the Income Tax Act, and has to be certified by one of the following medical practitioners:

  • medical doctor;
  • nurse practitioner;
  • optometrist;
  • audiologist;
  • occupational therapist;
  • physiotherapist;
  • psychologist; or
  • speech-language pathologist.

Eligibility is not based on a diagnosis, but rather on the effects of the impairment on the ability to perform the basic activities of daily living.

Once the individual with a disability is eligible for the DTC, they may claim the disability amount of $8,416. If the individual qualifies for the disability amount and was under 18 years of age at the end of the year, they may claim an additional supplement of up to $4,909.

A supporting individual or the spouse or common-law partner of the eligible individual with a disability may be able to claim all or part of an unused disability tax credit.

Registered disability savings plan

A registered disability savings plan (RDSP) is a savings plan that is intended to help parents and others save for the long-term financial security of an individual who is eligible for the DTC.

Contributions to an RDSP are not tax deductible and can be made until the end of the year in which the beneficiary turns Contributions that are withdrawn are not included as income to the beneficiary when they are paid out of an RDSP. However, the Canada disability savings grant (grant), the Canada disability savings bond (bond), investment income earned in the plan, and the proceeds from rollovers are included in the beneficiary’s income for tax purposes when they are paid out of the RDSP.

The grant is an amount that the Government of Canada pays into an RDSP. The Government will pay a matching grant of 300%, 200%, or 100%, depending on the beneficiary’s adjusted family net income and the amount contributed. Up to $3,500 in matching grants can be paid into an RDSP in one year, and up to $70,000 over the beneficiary’s lifetime. A beneficiary’s RDSP can receive a grant on contributions made until December 31 of the year in which the beneficiary turns 49.

The bond is an amount paid by the Government of Canada directly into an RDSP. The Government will pay a bond of up to $1,000 a year into the RDSPs of low-income Canadians with disabilities. No contributions have to be made to get the bond. The lifetime bond limit is $20,000. A bond can be paid into an RDSP if an application is made on or before the end of the year in which the beneficiary turns 49.

Amounts paid from a registered retirement savings plan or a registered retirement income fund upon the death of an annuitant

If an individual was a financially dependent child or grandchild of the deceased annuitant or member who depended on a annuitant or member because of an impairment in physical or mental functions, they may contribute to their registered retirement income fund (RRIF) any amounts they receive or are considered to have received from a deceased annuitant’s or member’s:

  • registered retirement savings plan (RRSP);
  • pooled registered pension plan (PRPP); or
  • specified pension plan (SPP).

An individual can roll over the proceeds of a deceased annuitant’s or member’s RRIF, RRSP, registered pension plan, SPP or PRPP to the registered disability savings plan of a financially dependent child or grandchild who has an impairment in physical or mental functions.

Medical expense tax credit

The medical expense tax credit is a non-refundable tax credit for individuals who have sustained significant medical expenses for themselves or certain of their dependants.

These expenses include a wide range of products, procedures, and services, such as:

  • medical supplies;
  • dental care; and
  • travel expenses.

An individual may claim the total of the eligible expenses minus the lesser of the following amounts:

  • $2,352;
  • or 3% of the individual’s or dependant’s net income for the year (in respect for whom the credit is claimed).

Certain medical expenses have to be certified by a medical practitioner. Medical practitioners include a wide range of individuals in the medical profession, such as doctors, pharmacists, and nurses.

Refundable medical expense supplement

The refundable medical expense supplement is a refundable tax credit available to working individuals with low incomes and high medical expenses. An individual may be able to claim this credit if all of the following conditions apply:

  • They made a claim for medical expenses or for the disability supports deduction;
  • They were resident in Canada throughout 2019; and
  • They were 18 years of age or older at the end of 2019.

They must also meet the criteria related to income.

Disability supports deduction

The disability supports deduction provides tax relief for individual taxpayers who have paid for certain medical expenses to enable them to do one of the following:

  • perform the duties of an office or employment;
  • carry on a business, either alone or as a partner actively engaged in the business;
  • attend a designated educational institution or a secondary school at which the taxpayer is enrolled in an educational program; or
  • carry on research or any similar work for which the taxpayer received a grant.

Only the individual with the disability can claim this deduction.

There is a list of the specific types of expenditures that will qualify for the disability supports deduction. In many cases, a medical practitioner must prescribe the particular device, equipment or service, or must certify that the individual requires the device, equipment or service because of their impairment.

Students with disabilities

Certain education-related benefits that require an individual to be a full-time student, such as the scholarship exemption, may be claimed by a part-time student if they meet one of the following criteria. The student:

  • is eligible for the DTC for the year; or
  • has an impairment in physical or mental functions, and a medical practitioner has certified in a letter that the impairment would not reasonably allow the student to be enrolled full-time.

Business expenses for employees with disabilities - related modifications

Business owners can deduct expenses they incur for eligible disability-related modifications made to a building in the year paid to them, instead of adding them to the capital cost of the building.

Eligible disability-related modifications include changes made to accommodate wheelchairs, such as:

  • installing hand-activated power door openers
  • installing interior and exterior ramps
  • modifying a bathroom, an elevator, or a doorway

They can also deduct expenses paid to install or get the following disability-related devices and equipment:

  • elevator car-position indicators (such as braille panels and audio indicators)
  • visual fire-alarm indicators
  • listening or telephone devices for people who have a hearing impairment
  • disability-specific computer software and hardware attachments.

In addition, they may be able to deduct expenses for disability-specific computer software and hardware attachments.

Disability-related employment benefits

If a business owner is providing benefits or allowances to an employee who has a disability, such as transportation costs or attendant services, the benefits may not be taxable.

Reasonable transportation costs between an employee’s home and work location (including parking near that location) are not taxable if paid to them or for an employee to whom either of the following applies:

  • is legally blind
  • has a severe and prolonged mobility impairment, which markedly restricts the individual’s ability to perform a basic activity of daily living–generally, someone who is eligible to claim the disability tax credit

These transportation costs can include an allowance for taxis or specially designed public transit and parking that provide or subsidize for these employees.

Business owners may have employees with severe and prolonged mental or physical impairments. If the business owners are providing reasonable benefits for attendants to help these employees perform their duties of employment, these benefits are not taxable for the employee. The benefits can include readers for persons who are blind, signers for persons who are deaf, and coaches for persons who are intellectually impaired.

Payroll deductions

A disability-related employment benefit excluded from income is not a taxable benefit. Do not deduct Canada Pension Plan contributions, Employment Insurance premiums, or income tax.

Reduce the EI premium rate if providing employees with a short-term disability plan

Some employers provide a wage-loss replacement plan for short-term disability to their employees. If the plan meets certain standards established by the Employment Insurance Regulations, the employer’s EI premiums could be paid at a reduced rate (less than 1.4 times the employee’s premiums).

To benefit from a reduced employer premium rate, register with the EI Premium Reduction Program.

Appendix C: List of Committee Members

The Committee is composed of voluntary members including persons with disabilities, health providers and professionals from a variety of fields, such as tax professionals and lawyers. The Committee is co-chaired by Dr. Karen R. Cohen, Chief Executive Officer, Canadian Psychological Association, and by Frank Vermaeten, Assistant Commissioner, Assessment, Benefit, and Service Branch, Canada Revenue Agency (CRA). A 10th member of the Committee, Ms. Sherri Torjman, former co-chair of the TAC, serves as vice-chair. Ms. Torjman has been retained on contract by the CRA to support the Committee in co-ordinating its activities and fulfilling its reporting obligations.

The Committee’s work is independent and impartial. Mr. Vermaeten, as co-chair of the Committee, functioned as the liaison between the Committee and the CRA. Under Mr. Vermaeten’s leadership, the CRA assisted the Committee in its work, providing secretariat services as well as research and communications support.

The Committee members whose work produced this report are:

Dr. Karen R. Cohen, Co-Chair of the Committee, CEO, Canadian Psychological Association, residing in Ontario

Frank Vermaeten, Co-Chair of the Committee, Assistant Commissioner with the Canada Revenue Agency, residing in Ontario Footnote 1

Sherri Torjman, Vice-Chair of the Committee, former vice-president, Caledon Institute of Social Policy, residing in Ontario

Laurie Beachell, Bakerlaw, former National Coordinator Council of Canadians with Disabilities (CCD), residing in Manitoba

Gary Birch, Neil Squire Foundation, residing in British Columbia

Dr. Jeff Blackmer, Canadian Medical Association, residing in Ontario

Lembi Buchanan, Disability Tax Fairness Alliance, residing in British Columbia

Michael Edgson, RBC Financial, residing in British Columbia

Roberta Heale, Nurses Practitioner Association of Canada, residing in Ontario

Sharon McCarry, La Fondation Place Coco, residing in Quebec Footnote 2

Ray McGuire, British Columbia Aboriginal Network on Disability Society, residing in British Columbia

Marie Ryan, Goss Gilroy, residing in Newfoundland and Labrador Footnote 2

Karen Wiwchar, H&R Block Canada (retired), residing in Alberta

Appendix D: Disability Measures Linked to Disability Tax Credit Eligibility

Appendix E: Form T2201, Disability Tax Credit Certificate

Appendix F: Disability Tax Credit Client Experience Survey Results

Disability Tax Credit Client Experience Survey Results - Q1/Q2 - 2020-2021

Disability Tax Credit Client Experience Survey Results Q1/Q2 - 2020-2021 - Cover page

Image text description

Background and Objectives

Background and Objectives

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Most survey respondents are applying for themselves

Bar chart of the percentage of those who applied for the DTC for themselves vs for someone else another showing the breakdown by percentage of whom respondents applied for when not for themselves

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Impairments certified on DTC application

Two bar charts of the eligible impairment categories

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The majority of survey respondents had a medical doctor complete the form

A bar chart showing which type of medical practitioner certified the DTC form for respondents

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Awareness of medical practitioners that can certify impairments

= A stacked bar chart showing the awareness of respondents as to which type of medical practitioner can certify certain impairments

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Awareness of medical practitioners that can certify impairments (Continued)

A stacked bar chart showing the awareness of respondents as to which type of medical practitioner can certify certain impairments

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Slightly over half of respondents found it easy to get a medical practitioner to complete the t2201 form

A bar chart showing the ease at which respondents were able to get a medical practitioner to certify the form

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Over half of the applicants paid a fee to their medical practitioner to have the DTC form completed

A bar chart showing the percentage of respondents who had to pay a fee to their medical practitioner for the form and another showing the breakdown of what respondents had to pay the fee for

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The majority of respondents did not pay anyone other than a doctor to help them complete the application

A bar chart showing that the majority of people (90%) did not pay a fee to someone other than a doctor

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Majority of survey respondents are now eligible after applying for the DTC

A bar chart showing that the majority of respondents (86%) are no eligible for the DTC after submitting their application

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Need to increase knowledge about claiming fees, file review, and tax adjustments

A stacked bar chart showing the level of awareness about claiming fees

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Majority of respondents found the notice easy to understand

A bar chart showing the ease at which respondents were able to understand the notice of determination

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Application processing time

A bar chart showing the different timeframes of how long it took for respondents to have their application processed

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Majority of survey respondents had not contacted the CRA about the DTC

A bar chart showing the percentage of respondents who had contacted the CRA about the DTC and another showing the breakdown of how respondents contacted the CRA

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Satisfaction with service

A stacked bar chart showing the overall satisfaction with the level of service provided by the CRA

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Awareness of the DTC

A bar chart showing how respondents first learned about the DTC

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Satisfaction with DTC process

A stacked bar chart showing the overall satisfaction with the DTC process

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Additional comments

A word cloud of the most common words found in the additional comments provided by respondents

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Additional comments - Positive

Additional comments - positive

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Additional comments - Negative

Additional comments - negative

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Additional comments – Mixed or neutral

Additional comments – mixed or neutral

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Demographics

Demographics

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Respondent profile - Majority of survey respondents are 55+

A bar chart showing the demographic breakdown of respondents by age

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Respondent profile - By gender

A bar chart showing the demographic breakdown by gender

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Respondent profile - By ethnic group and demographic breakdown by area type

Chart describing respondent profile by ethnic group and demographic breakdown by area type

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Appendix G: Information Sheets

Medical Expense Tax Credit information sheet

Medical Expense Tax Credit INFORMATION SHEET page 1

Medical Expense Tax Credit INFORMATION SHEET page 2

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Attendant Care Expenses information sheet

Attendant Care Expenses information sheet page 1

Attendant Care Expenses information sheet page 2

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Disability Supports Deduction information sheet

Disability Supports Deduction information sheet page 1

Disability Supports Deduction information sheet page 2

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Canada Caregiver Credit information sheet

Canada Caregiver Credit information sheet page 1

Canada Caregiver Credit information sheet page 2

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Appendix H: Updated Tables for the Disability Tax Credit Statistical Publication

Tables in PDF format

Appendix I: Jordan’s Principle

What is Jordan’s Principle?

Named in memory of Jordan River Anderson, Jordan’s Principle aims to ensure that ALL First Nations children, regardless of their place of residence or condition, have access to the services they require to support their development and meet their needs.

Jordan’s Principle is administered by the Government of Canada, which prioritizes the best interests of the child by covering the costs for services in the areas of health, social services and education to meet the needs that current programs do not meet.

Jordan’s Principle is applied on the principle of substantive equality to enable First Nations children to receive additional assistance when necessary to obtain adequate services. This makes it possible to go beyond provincial services when these are insufficient. For example, if a waiting list is too long for a given service, Jordan’s Principle allows the child to access this service in the private sector without delay.

In summary, if a child has a need in the areas of health, social services and education, Jordan’s Principle can cover the costs of services up to 18 years of age.

Jordan River Anderson was a First Nation child from Norway House Cree Nation in Manitoba. Born with complex medical needs, Jordan spent more than two years unnecessarily in hospital while the Province of Manitoba and the federal government argued over who should pay for his at home care. Jordan died in the hospital at the age of five, never having spent a day in his family home. Click here to read more: https://fncaringsociety.com/jordans-principle.

Eligibility

Jordan’s Principle targets all First Nations children in Canada under the age of 18 years, regardless of where they live.

In Quebec, persons under the age of 21 years who are studying full-time at the high-school level (for example, adult education, vocational school diploma) may also be eligible.

First Nations children are entitled to services covered by Jordan’s Principle:

  • individually, for a service intended for one child
  • in groups, if a service is intended for more than one child

Note that it is not necessary for a child or student to have an official diagnosis [for example, autism, attention deficit hyperactivity disorder (ADHD)] to be eligible for these services. All First Nations children in Canada are eligible. The services covered vary according to a child’s condition and the nature of their needs.

Examples of what is covered

Depending on the condition and nature of a child’s needs, different services can be covered by Jordan’s Principle.

For information purposes, here is an overview of the generally eligible services:

Health

  • Screening assessments and tests (for example, ADHD, autism, fetal alcohol spectrum disorder)
  • Professional services (for example, speech therapy, physiotherapy, occupational therapy)
  • Pharmaceuticals
  • Ramps for wheelchairs
  • Mental health services
  • Transportation to an appointment location
  • Medical supplies and related equipment
  • Long-term care for children with special needs, including respite and assistance

Social services

  • Hiring resources (for example, social workers)
  • Activities for the development of parenting skills
  • Home assistance
  • Specialized summer camps
  • Respite care (for individuals or groups)
  • Staff support and training

Education

  • Special education services
  • Psycho-educational assessments
  • Specialized school transportation
  • Teacher assistants
  • Technical or electronic assistants

How to apply

The applications can come from different people (parent, guardian, community co-ordinator, foster family, etc.).

There are two ways to apply and to get more information regarding services covered by Jordan’s Principle:

Contact the Jordan’s Principle co-ordinator in your community

Most communities have a Jordan’s Principle co-ordinator, whose mandate is to inform the public and stakeholders regarding the services available and to support those who want to apply. To reach a co-ordinator, please contact the health centre or band council of your community.

Contact the Call Centre for Jordan’s Principle

The mandate of this centre, which offers service in French and English, 24/7, is to be the first point of contact and support parents who want to fill out an application for services.

1-855-JP-CHILD (1-855-572-4453)

Retro payments

Parents who have covered the costs of services for their children in the areas of health, social services and education could be reimbursed retroactively to 2007.

To do so, they must send the following information:

  • a completed application form: The parent can contact their community co-ordinator or use the 24/7 call centre at 1-855-JP-CHILD (1-855-572-4453) to receive support for this step
  • proof of payment for services (invoice or receipt)
  • proof that the service was referred by a professional (for example, physician, teacher, childcare educator). This information is sometimes found in the report of the professional who provided the service or in the notes of the file

History of legislation

February 23, 2007

The Assembly of First Nations and the First Nations Child and Family Caring Society of Canada file a complaint with the Canadian Human Rights Commission. Their complaint alleges racial discrimination by Canada against First Nations children because it provides less funding for child protection on the reserves, meaning that fewer services are offered to children on the reserves. The commission transfers this file to the Canadian Human Rights Tribunal in October 2008.

December 12, 2007

The House of Commons unanimously passes Motion No. 296 in support of Jordan’s Principle, as tabled by the New Democratic Party.

“That, in the opinion of the House, the government should immediately adopt a child-first principle, based on Jordan’s Principle, to resolve jurisdictional disputes involving the care of First Nations children.”

2008

The federal government adopts a definition of Jordan’s Principle, narrowing it to apply only to cases of children with complex medical needs and multiple service providers, even though there is no wording that authorizes a limiting of Jordan’s Principle in Motion No. 296.

June 24, 2011

The Pictou Landing First Nation and Maurina Beadle (mother of a child with health needs) take the federal government to court to enforce the application of Jordan’s Principle.

April 4, 2013

The Federal Court rules in favour of the Pictou Landing First Nation and Maurina Beadle in their case against the federal government.

June 10, 2015

The chiefs of the Assembly of First Nations Quebec-Labrador pass a resolution calling on the federal and provincial governments to recognize Jordan’s Principle and to adopt a joint statement indicating their commitment to “resolve any jurisdictional or funding dispute that may jeopardize the health of a First Nation’s citizen, without discrimination based on geography, language, severity of concurrent needs, etc.”

This resolution calls for an expanded vision of Jordan’s Principle, by stipulating that no conflict of jurisdiction should limit a First Nation member’s access to care.

January 26, 2016

The Canadian Human Rights Tribunal releases its ruling in which it finds that the federal government has been discriminating against First Nations children. It orders the federal government to:

  • cease its discriminatory practices and reform the First Nations Child and Family Services Program
  • cease applying its narrow definition of Jordan’s Principle, and take measures to immediately implement the full meaning and scope of the principle

From this point on, Jordan’s Principle must be applied to all First Nations children in order to resolve all inter-governmental or intra- governmental disputes arising in all areas of services.

For more information on this topic, visit the website of the First Nations Child and Family Caring Society of Canada at https://fncaringsociety.com/welcome.

Other related links

Appendix J: New Recommendations

Life-sustaining therapies

That the Canada Revenue Agency (CRA) replace the current eligibility criteria for life-sustaining therapies as set out in Form T2201 with the following:

Individuals who require life-sustaining therapies (LSTs) are eligible for the disability tax credit (DTC) because of the time required to administer these therapies. These are therapies that are life-long and continuous, requiring close medical supervision. Without them, the individual could not survive or would face serious life-threatening challenges. Close medical supervision is defined as monitoring or visits, at least several times annually, with a health provider. These therapies include, but are not necessarily limited to: intensive insulin therapy for type 1 diabetes; chest therapy for cystic fibrosis; renal dialysis for chronic and permanent renal failure; and medically prescribed formulas and foods for metabolic conditions that prevent the safe breakdown of proteins by the liver, including phenylketonuria (PKU) and maple syrup urine disease (MSUD).

Registered disability savings plans (RDSPs)

We recommend that:

In light of the decision to eliminate the requirement to close an RDSP when a beneficiary no longer qualifies for the DTC, the federal government should pay retroactively the RDSP grant and bond portions for which an RDSP holder might be eligible.

We recommend that:

The federal government set up an advisory body, consisting of RDSP applicants and account holders, to resolve long-standing concerns and to address emerging issues with respect to the RDSP and its interface with the DTC. To help address complex issues such as legal capacity, the advisory body should include or consult regularly with selected organizations representing persons with disabilities.

Indigenous issues

That the CRA develop an educational program for leaders, employees and committees in relation to Indigenous peoples, Indigenous disability issues, and funding and government initiatives to promote a better understanding of Indigenous systems in Canada and how the CRA and DTC interact with them.

That the CRA seek financial authority and obtain funding to support community organizations with strong ties to Indigenous peoples, to engage and assist individuals and communities in their efforts to understand and apply for the DTC and other benefits, once DTC eligibility has been confirmed.

That the CRA develop an assessment package, similar to the one used for the Canada Pension Plan application for disability benefits, which speaks to Indigenous peoples and can be:

  • completed by the individual or an assessor, which considers how a person’s disability affects them “all, or substantially all, of the time” or an “inordinate amount of time”
  • confirmed by a designated health care provider and attached to the main application

That the CRA, in consultation with Indigenous peoples and disability organizations, develop mechanisms for collecting data related to age, gender, type of disability similar to other DTC databases, while respecting the confidentiality of the individual and community. Any new DTC application form should include an option for applicants to identify as an Indigenous person, Métis, Inuit or member of a First Nation (status or non-status).

Work-related disability tax measures

That the CRA forward to the Department of Finance Canada for their consideration the following items to be added to the disability supports deduction list:

  • ergonomic work chairs
  • bed-positioning devices for work
  • mobile computer cart for sit/stand work at home
  • alternative input devices (keyboards/ mice)
  • digital pens
  • navigation devices for low vision
  • memory or organizational aids to assist someone with a brain injury or problems with executive function
  • trained and certified service animals to enable participation in education, training or work

That the CRA: (proposed change to Recommendation #40)

  • raise awareness about the disability supports deduction, including special information sessions to inform disability organizations, post-secondary educational institutions and student networks, unions, employer organizations, training programs and the general public about the availability, purpose and provisions of this tax measure
  • in collaboration with the disability community, inform the Department of Finance Canada of the need to review, on an annual basis, the list of allowable items within the disability supports deduction, to ensure it keeps pace with technological updates and changes

Appendix K: First Annual Report Recommendations

Recommendations

1

That in the determination of DTC eligibility, the CRA ensure that the principle of parity guides its actions with respect to physical and mental functions including, but not limited to, the removal of multiple screens of eligibility for persons with impairment in mental functions.

2

That the CRA amend the list of mental functions on Form T2201 as follows:

  • attention;
  • concentration;
  • memory;
  • judgment;
  • perception of reality;
  • problem solving;
  • goal setting;
  • regulation of behaviour and emotions (for example, mood disturbance or behavioural disorder);
  • verbal and non-verbal comprehension; and
  • learning.

3

That the CRA replace on page 5 of Form T2201 the term “effects of the impairment” with the following:

“The effects of the individual’s impairment must restrict their activity (that is, walking, seeing, dressing, feeding, mental functions, eliminating, hearing, speaking or some combination thereof) all or substantially all of the time, even with therapy and the use of appropriate devices and medication.”

4

That the CRA delete the reference to “social activities” on page 5 of Form T2201 due to the contradiction on page 3 of the form. Page 5 states that one is ineligible on the basis of social and recreational activity, while page 3 states that the inability to initiate and respond to social interactions makes one eligible, as does the inability to engage in common simple transactions.

5

That the CRA change the question on page 5 of Form T2201 about the likelihood of improvement to ask health providers whether the individual’s illness or condition that is responsible for the impairment in function, such as walking or cognitive functions, is likely to improve, as in the following example:

“In thinking about the individual’s impairment, please consider whether the condition that causes the impairment (for example, blindness, paraplegia, schizophrenia or bipolar disorder) can be expected to last for a continuous period of at least 12 months.”

6

That the CRA no longer interpret all or substantially all as 90% of the time and no longer interpret an inordinate amount of time as three times the amount of time it takes a person without the impairment.

7

That in the DTC assessment process, the CRA employ the following definition to deter- mine marked restriction in mental functions:

“The individual is considered markedly restricted in mental functions if, even with appropriate therapy, medication and devices (for example, memory and adaptive aids):

  • all or substantially all the time, one of the following mental functions is impaired, meaning that there is an absence of a particular function or that the function takes an inordinate amount of time:
    • attention;
    • concentration;
    • memory;
    • judgment;
    • perception of reality;
    • problem solving;
    • goal setting;
    • regulation of behaviour and emotions (for example, mood disturbance or behavioural disorder);
    • verbal and non-verbal comprehension; or
    • learning; OR
  • they have an impairment in two or more of the functions listed above none of which would be considered a marked restriction all or substantially all the time individually but which, when taken together, create a marked restriction in mental functions all or substantially all the time; OR
  • they have one or more impairments in mental functions which are:
    • intermittent; AND/OR
    • unpredictable; AND
    • when present, constitute a marked restriction all or substantially all the time.”

8

That the CRA remove specific references to activities in the T2201 section on mental functions and include examples of activities in the current Guide RC4064 to help health providers detail all the effects of the markedly restricted mental function(s), as in the following illustration:

“The individual is considered markedly restricted in mental functions if they have an impairment in one or more of the functions all or substantially all of the time or takes an inordinate amount of time to perform the functions, even with appropriate therapy, medication, and devices. The effects of the marked restriction in mental function(s) can include, but are not limited to, the following (this list is illustrative and not exhaustive):

  • with impaired memory function, the individual cannot remember basic information or instructions such as address and phone number or recall material of importance and interest;
  • with impaired perception, the individual cannot accurately interpret or react to their environment;
  • with impaired learning or problem solving, the individual cannot follow directions to get from one place to another or cannot manage basic transactions like making change or getting money from a bank;
  • with impaired comprehension, the individual cannot understand or follow simple requests;
  • with impaired concentration, the individual cannot accomplish a range of activities necessary to living independently like paying bills or preparing meals;
  • with impaired ability to regulate mood (for example, depression, anxiety) or behaviour, the individual cannot avoid the risk of harm to self and others or cannot initiate and respond to basic social interactions necessary to carrying out basic activities of everyday life; or
  • with impaired judgment, the individual cannot live independently without sup- port or supervision from others or take medication as prescribed.”

9

That the CRA consider a child and an adult version of Form T2201, with eligibility criteria tailored as necessary.

10

That the CRA revise the list of functions on Form T2201 to the following:

  • vision;
  • speaking;
  • hearing;
  • lower-extremity function (for example, walking);
  • upper-extremity function (for example, arm and hand movement);
  • eliminating;
  • eating/feeding; and
  • mental functions.

11

That the CRA, in respect of the parity principle, create a list of examples of activities for each impaired function for inclusion in the current Guide RC4064 to help health providers detail all the effects of markedly restricted function(s), as in the following proposed guidelines (this list is illustrative and not exhaustive):

  • with impaired lower-extremity function, the individual cannot walk;
  • with impaired upper-extremity function, the individual cannot feed or dress themselves, or cannot attend to basic personal hygiene; or
  • with impaired eating/feeding, the individual cannot swallow or eat food.

12

That the CRA review the current eligibility criteria for hearing, which are out of date.

13

That the CRA work in collaboration with the Department of Finance Canada to consult with relevant health providers and stakeholders before introducing any legislative changes to the Income Tax Act with respect to the definition of mental or physical functions.

14

That the CRA replace the current eligibility criteria for life-sustaining therapies as set out in Form T2201 with the following:

Individuals who require life-sustaining therapies (LSTs) are eligible for the DTC because of the time required to administer these therapies. These are therapies that are life-long and continuous, requiring close medical supervision. Without them, the individual could not survive or would face serious life-threatening challenges. Close medical supervision is defined as monitor- ing or visits, at least several times annually, with a health provider. These therapies include but are not necessarily limited to: intensive insulin therapy for type 1 diabetes; chest therapy for cystic fibrosis; renal dialysis for chronic and permanent renal failure; and medically prescribed formulas and foods for phenylketonuria (PKU).

15

That the CRA:

  • consider whether some conditions, such as a complete paraplegia or tetraplegia, schizophrenia or a permanent cognitive disorder with a MOCA below 16, should automatically qualify for the DTC in the way that blindness does. (MOCA is a mental status examination of cognitive functions used commonly to assess impairment that results from conditions such as dementia, head injury or stroke.); and
  • examine the eligibility criteria employed in other federal and provincial/ territorial programs, such as the Ontario Disability Support Program and the programs for Canada Pension Plan disability benefits

and, veterans disability pensions, to identify the conditions/diagnoses that establish automatic eligibility for those programs.

16

That the CRA examine the new eligibility form being used for Canada Pension Plan disability benefits to identify areas in which there might be synergies regarding eligibility for the DTC, such as including the presenting condition or diagnosis as supplementary information to identifying functional limitations.

17

That the CRA test or pilot various approaches that would remove the gate- keeper role from health providers. One such approach would be for community tax clinics to take on a screening or advisory function. Another would be to establish a CRA call centre explicitly for this function.

18

That the client experience survey on the DTC and other disability tax measures to be carried out by the CRA include a question as to whether the individual or recipient had any difficulty accessing a health provider for the purposes of completing Form T2201 and, if so, for which activity. Clients should also be invited to provide any additional comments on this question. Special attention should be paid in this survey to the needs and concerns of Indigenous Canadians.

19

That the CRA develop a process for expanding the list of health providers with the appropriate expertise who can assess eligibility for the DTC.

20

That in the case of determining DTC eligibility for persons with impairment in mental functions, the CRA include relevant specialized health providers, including, but not limited to, psychiatrists and psychologists, in the review process when applications are disallowed.

21

That the CRA:

  • copy to the applicant all clarification letters sent to the health provider;
  • let the health provider know that all communication to a health provider about an applicant will be copied to the applicant and that any communication the health provider submits to CRA will also be made available to the applicant;
  • encourage the health provider to contact and consult the applicant as necessary when providing any clarification to the CRA; and
  • extend the time for a health provider to file a clarification letter with the CRA from 45 to 60 days and note this timeline on the first page of the questionnaire.

22

That the CRA:

  • provide in notice of determination letters a relevant reason as to why a DTC application was denied;
  • include in notice of determination letters a copy of the clarification letter and the health provider’s clarification response. This information is vital in case of an appeal; and
  • move the consumer survey request to the bottom of the notice of determination letters.

23

That the minister of national revenue review the current appeals process with a view to creating a straightforward, transparent and informed process where the applicant has access to all relevant information (including the precise reason their application was denied) and documents (including copies of all information submitted by health providers that pertain to their application).

24

That the CRA include a document (one- page, two-sided information sheet) entitled “Your Rights When a Notice of Determination Denies a Claim for the DTC” that would:

  • explain the requirements, timelines and details for filing the following:
    • review;
    • notice of objection with the Appeals Branch; and
    • notice of appeal with the Tax Court of Canada;
  • inform taxpayers that other persons (that is, family members, friends or professional advisors) can act on their behalf by submitting Form T1013, Authorizing or Cancelling a Representative, or writing a letter;
  • inform taxpayers that they have access to all documents in their files, including a copy of the follow-up questionnaire and any clarification letter completed by the health provider;
  • inform taxpayers that they can contact the CRA for a copy of Pamphlet, P148, Resolving your dispute: Objection and appeal rights under the Income Tax Act, if they do not have access to the Internet; and
  • provide the correct contact information and mailing addresses for the submission of any required materials.

25

That the CRA consult on a regular basis with selected community organizations to:

  • ensure that all its communications and materials (including letters of correspondence with individuals) are easily accessible by persons with disabilities and are available in plain language. Organizations such as People First can assist with ensuring plain language; and
  • determine whether its communications and materials are keeping pace with technological change and with the technologies in common use by communities of persons with disabilities.

26

That CRA web content, which outlines disability tax measures, link to relevant provincial and territorial websites that identify disability-related provisions in those juris- dictions, as well as the range of federal and provincial/territorial disability measures that require DTC eligibility in order to qualify.

27

That the CRA provide and make publicly available relevant data on the DTC, including number of applications, approvals, rejections, and appeals; durations of eligibility by function; and a demographic profile of current beneficiaries by age and gender.

28

That the CRA provide an option for the electronic submission of Form T2201 and related materials that:

  • is convenient and accessible for both taxpayers and tax preparers; and
  • permits submission of those materials at the same time as, or after, the filing of an income tax and benefit return.

29

That the CRA develop, in collaboration with the Disability Advisory Committee, a client experience survey that would align with the health provider survey, but be modified as appropriate to suit the needs and concerns of the target group comprising a representative sample of current and former DTC beneficiaries.

30

That the CRA provide dedicated support to ensure call centre agents are accessible and have the expertise to answer enquiries related to the DTC form and eligibility.

31

That the CRA, through the Community Volunteer Income Tax Program, which supports voluntary organizations to provide and train volunteers, run community tax clinics and raise awareness about the DTC. There should be a special focus on Indigenous communities.

32

That the CRA revisit and restate the purpose of the DTC in order to reflect its multiple roles.

33

That the minister of national revenue work with the minister of families, children and social development to ensure that individuals are able to keep all contributions they made to, and any and all grants and/ or bonds they may have received for, their registered disability savings plan for periods during which they qualified for the DTC.

34

That, as a short-term measure, the federal government should ensure continued eligibility for related DTC-gateway programs, at least at the federal level, even if DTC eligibility has been revoked. This interim measure would allow for the development of secondary screening processes to determine whether individuals or households can continue to remain eligible for gateway-related services and supports.

35

That the CRA, in collaboration with the Province of Quebec, determine a single eligibility process for the DTC in order to avoid separate eligibility at different levels of government.

36

That the CRA cap the fee that consultants can charge to assist with an initial DTC application and act as expeditiously as possible to draft the regulations introducing this cap.

37

That the CRA reimburse an applicant or provider at a reasonable rate in accordance with the provincially recommended fee for the time involved in responding to CRA clarification letters in support of a DTC application or reassessment.

38

That the minister of national revenue work collaboratively with the minister of finance, minister of families, children and social development, and the minister of sport and persons with disabilities to:

  • identify ways of addressing the disproportionate poverty of Canadians with disabilities, or alternatively, that the minister of national revenue request the establishment of a parliamentary com- mittee to address this issue and bring forward recommendations;
  • transform, as a first step, the current DTC from a non-refundable credit into a refundable credit in order to recognize the non-itemizable costs incurred by lower-income Canadians with disabilities; and
  • ensure that the poverty alleviation of Canadians with disabilities is a focus of all relevant federal-provincial/territorial ministers’ meetings and that there be no provincial/territorial clawback of any new or improved federal measures.

39

That the CRA, in partnership with the Department of Finance Canada, Statistics Canada and the disability community, undertake a study of the current data needs regarding the DTC and identification of appropriate new ways of tracking needed DTC information, including the estimated number of Canadians who potentially would be eligible for the DTC but are unable to benefit because of its non-refundable status.

40

That the CRA:

  • raise awareness about the disability supports deduction, including special information sessions to inform disability organizations, post-secondary educational institutions and student networks, unions, employer organizations, training programs and the general public about the availability, purpose and provisions of this tax measure; and
  • in collaboration with the disability community, review on an annual basis the list of allowable items within the disability sup- ports deduction to ensure it keeps pace with technological updates and changes.

41

That the CRA take steps to raise awareness among employers about any tax measures that provide incentives for hiring persons with disabilities and/or that help offset any of the costs of accommodation.

42

That the CRA:

  • amend the disability supports deduction to allow the deduction of any form of disability-related technical aid, equipment and service required for education, employment and participation in the community; and
  • study and report on the implications of converting the current disability supports deduction from a deduction to a credit.
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