This is the second instalment in a series examining the disability tax credit and related support programs for eligible Canadians. Read the first article here.
Advocates are welcoming a federal government proposal to create a disability benefit program, which could be a first step to improving access to federal support programs and solving some of the existing regime’s problems.
Advocates say the current federal disability support regime, with the disability tax credit (DTC) as its focus, is difficult to navigate and badly in need of reform.
“Current federal programs like the DTC pose too many barriers to access and leave too many Canadians with disabilities unsupported,” said Kimberley Hanson, executive director of Diabetes Canada in Ottawa, who is nevertheless “pleased to see the government take an inclusive approach to establishing a new benefit program for Canadians with disabilities.”
Ron Malis, a financial advisor with Reegan Financial in Toronto who serves clients with disabilities and their families, said federal disability programs “are founded on eligibility and enforcement rather than on access and support.”
“So much of it is [about] who qualifies and ‘let’s make sure that people who don’t qualify don’t get it,’ that that becomes the overriding focus,” he said.
On June 22, Employment, Workforce Development and Disability Inclusion Minister Carla Qualtrough introduced Bill C-35, the Canada Disability Benefit Act, in the House of Commons to establish a framework for the Canada Disability Benefit (CDB).
The CDB would be directed to working-age Canadians “with a goal of lifting hundreds of thousands of persons with disabilities out of poverty,” according to an Employment and Social Development Canada (ESDC) release, and “would supplement, not replace, existing federal and provincial-territorial supports.”
Also in June, the ESDC launched the Disability Inclusion Action Plan, a public engagement process to help the government develop a “robust” employment strategy for Canadians with disabilities; improve the process to determine eligibility for federal disability programs and benefits; and design the CDB. The public survey closes Aug. 30.
In the 2021 federal budget, the government proposed $11.9 million for the ESDC over three years to undertake consultations to reform the eligibility process for federal disability support and to work toward a CDB. In the September 2020 throne speech, the government indicated it would create a CDB modelled on the guaranteed income supplement (GIS) for seniors.
In a news release, March of Dimes Canada applauded the government’s CDB initiative: “If designed well, [the CDB] has the potential to increase financial security and enable economic empowerment, quality work, independence and equality for many members of the community.”
The Canadian Labour Congress also welcomed Bill C-35 but expressed concern that the legislation lacked specific details such as eligibility guidelines for the CDB or implementation timelines.
In addition, a possible federal election in the fall would delay the legislation’s progress even further, said Larry Rousseau, executive vice-president of the CLC, in a release: “This means that people with disabilities will continue to experience high rates of poverty and marginalization, with little hope of relief in the near future.”
Bill C-35 was tabled a day before MPs left Ottawa for the summer recess, and a fall election would mean the legislation would have to be reintroduced in a new Parliament. The government didn’t include the disability measures in its budget implementation bill, which received royal assent in June.
Conservative Senator Don Plett, the opposition leader in the Senate, accused the government of foot-dragging by waiting until the day before the end of the parliamentary session to introduce Bill C-35. “With no time left to deal meaningfully with this bill and a federal election looming, this legislation is coming far too late … for millions of Canadians and their families,” he said in a June 22 debate.
Senator Marc Gold, the government representative in the Senate, attributed the delay to the lengthy consultations the government undertook with representatives of disabled communities before it introduced the bill. “It is the hope of the government that when work resumes after the summer that progress will be made in moving that bill through [Parliament],” Gold said.
Malis said the CDB’s success will depend on how much financial support it provides and how receiving the benefit will affect an individual’s access to other disability support programs. For example, someone living in Ontario receiving the Canada Pension Plan disability benefit sees their benefit under the Ontario Disability Support Program reduced dollar for dollar. “You don’t end up ahead at all,” Malis said.
On July 21, Qualtrough co-chaired a virtual meeting with provincial and territorial ministers responsible for social services to discuss improving collaboration between the federal government and the provinces and territories to support people with disabilities. According to a release, the ministers agreed to meet again before the end of the year.
Advocates suggest that a disability benefit could alleviate some of the issues they say plague the current disability support system and the DTC.
One key issue is that as a non-refundable tax credit, the DTC is of little value to Canadians living with disabilities who have low income and no family member caregiver to whom they can transfer the credit, advocates say. “There are a lot of independent adults living with disabilities without any income,” Malis said.
David Truong, senior consultant, financial planning and advisory services with National Bank Private Banking 1859 in Montreal, said it’s possible the CDB would be directed to those with modest or no income because of disability, “since the objective of the new Canada Disability Benefit is to overcome persistent barriers to full economic and social participation.”
Another issue is that the DTC application process can be complex and lack transparency, particularly for individuals with mental disabilities, said Peter Weissman, partner at Cadesky and Associates LLP in Toronto and a former co-chair of the federal government’s disability advisory committee (DAC). If an individual’s application for the DTC is turned down by the Canada Revenue Agency (CRA), they can’t access more than a dozen other disability support programs that are linked to the credit, including the RDSP.
“The DTC is an antiquated tax credit that should be replaced by something [that operates] outside of the tax statutes,” said Weissman, who hopes current discussions toward a disability benefit could signal a shift away from a support system focused on the DTC.
“There’s a huge argument to be made that CRA is just not designed to administer a social program,” Hanson said. “It should be the ESDC.”
The CDB should be structured like the GIS, she said, which is easier to access and “integrated with any other tax filing that you’re already doing, so it’s not such a laborious process to apply for.”