Questions and answers to the proposed Disability Tax Credit Promoters Restrictions Regulations
Q1: What is the purpose of the Disability Tax Credit Promoters Restriction Act (DTCPRA)?
The DTCPRA (the Act) was enacted to limit the fees that can be accepted or charged, directly or indirectly, by a promoter who makes a disability tax credit request under the Income Tax Act on behalf of a claimant. The policy intent of the Act is to ensure that the income tax refunds generated by claiming the disability tax credit (DTC) and any other DTC related credits or benefits, which are intended to compensate for some of the additional expenses assumed as a result of living with a disability, leave more money in the hands of persons with disabilities and their supporting family members.
A claimant is an individual who is the subject of a DTC request or who has a dependant on behalf of whom a DTC request is made. The maximum fee that a promoter can accept or charge for these services is to be set by the proposed Regulations.
Q2: What is the purpose of the proposed Regulations?
The proposed Regulations set the maximum fee that can be charged by a promoter for assisting in the making of a disability tax credit request under the Income Tax Act.
Q3: Do the regulations apply to the Quebec provincial form?
No. The CRA regulations apply only to the federal DTC program and form. For the purposes of the Disability Tax Credit Promoters Restrictions Act, a DTC request relates to requests for the federal disability-related tax credits and to the provincial-territorial credits (excluding Quebec where residents have to file a separate Certificate Respecting an Impairment directly with Revenu Québec).
Q4: How do I submit my comments?
Your comments may be submitted in writing by either:
- sending an email to: LPRAREGULAG@cra-arc.gc.ca
- sending a letter to: Denyse Bertrand, Senior Policy Analyst, Legislative Policy Directorate, Canada Revenue Agency, 320 Queen Street, Place de Ville, Tower A, 6thFloor, Ottawa, Ontario, K1A 0L5
Q5: How long do stakeholders have to comment on the proposed Regulations?
The proposed Regulations and the Regulatory Impact Analysis Statement were published in Canada Gazette, Part I, on June 1, 2019. Stakeholders have until Monday July 1, 2019, to comment.
Q6: Will the CRA respond to comments and questions about the proposed Regulations?
As part of the development of regulatory submissions, the CRA must consult on its proposal. We published our proposal in Canada Gazette, Part I, and invite people to provide their feedback. The CRA will review the comments received and will adjust its regulatory proposal accordingly. Please note that individuals may not receive a reply, but all comments will be considered.
Q7: What will be done with the comments received through the consultations?
Once all feedback has been analysed, the CRA will determine if any changes need to be made to the regulatory proposal to incorporate the feedback. If approved, the Regulations will be published in Canada Gazette, Part II. We expect this to take place in early 2020.
Q8: Has the Disability Advisory Committee been consulted on the proposed Regulations?
Yes. The Disability Advisory Committee (DAC) was consulted on the proposed Regulations in October 2018. The Regulations respond to the DAC’s recommendation that there be a cap placed on the fees that promoters can charge for assisting a person to make a DTC request.
The DAC was reinstated by the Minister of National Revenue, the Honourable Diane Lebouthillier, in November 2017 after being disbanded in 2006, to provide advice on issues like these.
Q9: Why a flat rate instead of applying a percentage?
The decision to apply a flat rate was based on the comments and feedback received from stakeholders in previous consultations. To arrive at this decision, the CRA analyzed various options, including: a fee based on a percentage of the tax refund; an hourly rate; and fixed dollar amount fee. After considering the advantages and disadvantages of each, the DAC indicated it preferred the fixed dollar amount, or flat rate option.
Q10: What does the $100 include?
The proposed Regulations would establish the maximum fee that a promoter can accept or charge in respect of a DTC request as:
- $100 for a request made for a determination of disability tax credit eligibility – helping to complete the T2201 – Disability Tax Credit Certificate; and
- $100 per taxation year for assisting the individual or a family member request a reassessment, for up to nine prior taxation years, in addition to the current taxation year, should they wish to amend a prior year’s tax return, which may result in a refund of taxes paid in these previous years. This can be done by submitting either a T1 Adjustment Request – T1ADJ or a signed letter to the CRA.
It is important to note that the cap does not impact how much tax preparers charge for preparing taxes and providing advice, beyond the adjustments that are required for claiming the DTC.
Q11: If an individual is denied eligibility for the DTC, does the $100 fee include help from the promoter to appeal the determination (once the Regulations come into force)?
No, the maximum fee is only for assistance provided to make an application for a determination of eligibility for the DTC or for assistance in requesting a reassessment, for up to nine prior taxation years, in addition to the current taxation year. It does not include fees associated with help with appealing a determination.
Q12: Are the proposed fees fair value for the work and services provided by the promoter?
The Disability Tax Credit Promoters Restriction Act 2014 consultations determined these proposed fees to be fair. They were based on consultations with tax preparers, accountants and on the general fee charged by a multitude of tax preparers and tax professionals.
The Regulations respond to the DAC’s recommendation that there be a cap placed on the fees that promoters can charge for assisting a person to make a DTC request.
Q13: Can a promoter still charge me for their services after I receive my refund or will I be required to pay up front?
The Regulations do not limit which pricing policy approach is used – either upfront fees or contingency fee pricing can be used as long as it is within the proposed fee structure.
Q14: What are the penalties/sanctions for overcharging?
Per section 3 of the Act, promoters who charge more than the fees outlined in the Regulations are liable to a penalty in respect of the fee equal to the total of $1,000 and the amount determined by the formula A – (B + C)
A is the fee in respect of a disability tax credit request;
B is the maximum fee; and
C is the amount of the fee in respect of the disability tax credit request that is repaid to the claimant within 120 days after notification is given to the Minister in accordance with section 4 or any longer period that is acceptable to the Minister.
For example, a client pays a promoter $3,000 for a determination of DTC eligibility and to claim the current and nine prior taxation years. Per the proposed regulations, the client should have paid the promoter $1,100 :
A = $3,000 (the fee the promoter chooses to charge)
B = $1,100 (what the CRA is proposing as a maximum fee)
C = $1,900 (the difference between what the promoter charged and what the regulations allow for)
Assuming the promoter re-paid the client the difference of $1,900 within the 120 days and notified the Minister, the promoter would be subject to a penalty of $1,000.
$1,000 + $3,000 (A) – ($1,100 (B) + $1,900 (C)) = $1,000
A promoter who fails to notify the Minister under section 4 or who contravenes section 5 of the Act is guilty of an offence and, in addition to any penalty otherwise provided, is liable on summary conviction to a fine of not less than $1,000 and not more than $25,000.
Q15: What can be submitted as proof that an individual was overcharged (once the Regulations come into force)?
Once the Regulations come into force, if an individual is overcharged and the promoter does not reimburse the individual, the individual can send the CRA a statement of account or a receipt that shows the amount paid to the promoter.
Q16: If an individual is overcharged and the promoters are fined, will they get their money back (once the Regulations come into force)?
Any fee that an individual has paid over and above the prescribed amount will be reimbursed by the CRA.
Q17: If an individual reports a promoter who has overcharged them, how long before they get reimbursed (once the Regulations come into force)?
The promoter will have 120 days to return the over-charged funds to the CRA, at which time, steps will be taken to reimburse the individual in a timely manner.
Q18: When does the clock start on the 120 days (once Regulations come into force)?
Once the Regulations come into force, the 120 days will start either:
- the day the promoter notifies the CRA that they overcharged a client, or
- the day the CRA contacts the promoter with proof from their client that they have been overcharged.
Q19: How can an individual notify the CRA that they have been overcharged (once the Regulations come into force)?
Once the Regulations come into force, they can send a letter to:
National Leads Centre
Canada Revenue Agency
200 Town Centre Court
Scarborough ON M1P 4Y3
Office hours: 8:15 am to 4:45 pm, Eastern time
Q20: How will the promoters self-report to the CRA that they have charged a fee higher than the amount prescribed by the Regulations (once the Regulations come into force)?
Once the Regulations come into force, promoters can:
- send a letter to:
National Leads Centre
Canada Revenue Agency
200 Town Centre Court
Scarborough ON M1P 4Y3
- phone 1-866-809-6841 during office hours: 8:15 a.m. to 4:45 p.m., Eastern time
- submit a form (currently in development by the CRA and available once the Regulations come into force)
Q21: Do the proposed Regulations affect the fees that medical practitioners can charge?
Contrary to other professionals who assist their clients/patients in completing various forms for making a DTC request, medical practitioners who only assist in the completion of Part B of the Form T2201, Disability Tax Credit Certificate are not considered to be promoters for the purpose of the Act. The fees that medical practitioners can charge are set by provincial regulations and medical associations.
Medical practitioners include medical doctors, nurse practitioners, speech-language pathologists and audiologists, occupational therapists, psychologists, optometrists and physiotherapists – who are all recognized under the Income Tax Act as qualified to attest to the claimant’s effects of impairment.
Q22: Is the CRA concerned about the impact these proposed Regulations will have on promoters?
The CRA is aware that the proposed Regulations may have an impact on the annual revenue of some promoters. The Act requires that the Regulations prescribe a maximum fee, and based on consultations with stakeholders, it is understood that the proposed maximum fee could in some instances, be lower than what some promoters currently charge.
The policy intent of the Act is to ensure that the income tax refunds generated by claiming the DTC and any other DTC related credits or benefits, which are intended to compensate for some of the additional expenses assumed as a result of living with a disability, leave more money in the hands of persons with disabilities and their supporting family members.
Applying for the disability tax credit
Q23: What steps are involved in making a disability tax credit request?
- Completing Part A of Form T2201 Disability Tax Credit Certificate (non-medical portion);
- Claiming the various disability-related tax credits and benefits by filing and / or amending an income tax return;
- Claiming the disability amount for self (T1 - line 316) for current or prior taxation years;
- Claiming the disability amount transferred from a dependant (T1 - line 318) for current or prior taxation years;
- Claiming the disability amount transferred from a spouse (T1 - line 326) for current or prior taxation years; and
- Claiming any other DTC related credits or benefits (lines 214, 215, 365, 369, 370, and 453) for current or prior taxation years.
Q24: Can an individual ask the CRA for help with an application instead of asking a promoter (once the Regulations come into force)?
The CRA is available to answer all questions related to the DTC, including questions pertaining to the application process. This service has been improved with the recent launch of a telephone service specifically designed to address complex DTC-related questions. The enhanced telephone service (1-800-959-8281) allows Canadians to connect with call centre agents who can address complex DTC-related questions in one phone call.
Q25: How long will it take for the Regulations to be published in Part II of Canada Gazette after the consultation period is closed?
Once the consultation period has ended on Monday, July 1st, 2019, work will be completed to take into account the feedback received and to revise our proposal accordingly. If approved, the Regulations will be published in Canada Gazette, Part II. We expect this to take place in early 2020.
Q26: When will the legislation be in force?
As per section 12 of the Act, the Act will come into force on the date fixed by the Order in Council. The Regulations will come into force on the date that the Act comes into force, or the date on which they are registered, if later.
Once the consultation period is over and the comments received have been analysed, the proposed Regulations and the Regulatory Impact Analysis Statement will be amended as required.
The Regulations are not retroactive and will not apply to prior taxation years. Any enforcement of the Regulations will begin on the day the Regulations come into force.
Q27: Will the Regulations be retroactive to when the Act was passed in Parliament?
No. Any enforcement of the maximum fee set by the Regulations will come into effect on the day they come into force. This date will be identified in Canada Gazette, Part II, when they are posted.
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