The recommendations made in the 2005 federal budget marked a major victory for thousands of disabled Canadians who have been shut out of the disability tax credit system. If the recommendations pass as expected, they will expand the scope of eligibility for tax benefits, which has long been criticized for its exclusion of legitimate cases of disability.
And now, the disability advisory committee, a board created in July by Canada Revenue Agency, is stepping in with a two-year mandate to ensure the new measures are carried through as swiftly as possible, and to keep disabled Canadians from falling through the cracks when the Income Tax Act is applied.
“The committee is aiming to be the direct link between the disabled public and the government,” says Peter Weissman, the committee co-chairman. “Unequivocally, not enough Canadians know about the tax benefits available for the disabled. And the fact that they have to deal with the CRA often intimidates them.”
For Weissman, the mission is personal. The 42-year-old tax lawyer at Toronto-based Fuller Landau LLP suffered a herniated disk in 1993 that severely impaired his mobility. When the CRA announced its plans to create a committee to tackle ongoing tax issues for the disabled, Weissman jumped at the opportunity to contribute. “I think a number of the current tax credit rules are still antiquated. They’re not up to speed with the reality of the times, and they need to be revised,” he says.
The 12-member committee, comprising doctors, lawyers and advocates, met for the first time in Ottawa in the spring to discuss its mandate for the next 24 months. Key objectives include increasing the meagre take-up rate among those who qualify for disability tax credits; educating medical professionals and advisors about who qualifies as disabled or impaired; and clarifying the language in many of the provisions that create “unintended inequities” for those suffering from a disability.
The task is daunting, says Weissman, but there’s a “positive feeling” among committee members that the government is moving in the right direction on this type of tax issue, particularly given the success of the committee that preceded it.
The new committee is building on the victories of the now-defunct technical advisory committee on tax measures for persons with disabilities, which was created by the federal government in 2003 with the purpose of “improving the fairness of the government’s treatment of persons with disabilities” under the income tax system.
In December 2004, the group filed its final report with the federal ministers of finance and national revenue. Virtually all of the committee’s 25 recommendations were adopted in the 2005 budget, including:
> expanding the list of expenses eligible for the disability supports deduction (introduced in the 2004 budget) to include costs such as job coaches, deaf/blind interveners and Braille note-takers;
> adding physiotherapists to the list of health-care professionals who can certify eligibility for disability tax credits;
> extending the contribution period for disabled students with a registered education
savings plan to 25 years from 21 years, and the time limit for liquidating such RESPs to 30 years from 25 years;
> extending eligibility for tax credits to individuals suffering from multiple symptoms that do not individually restrict a basic daily living activity, but do impair daily living on a cumulative basis. This amendment benefits those suffering from multiple sclerosis, for instance, who may suffer from fatigue, depression and imbalance, which combined may restrict activity. Previously, only those with a marked restriction in at least one basic activity of daily living qualified;
> enabling funds from a parent’s RRSP or RRIF to be transferred on a tax-deferred basis to a discretionary trust for the disabled child within an RRSP. (At present, this can only be done if the funds are transferred to an annuity).
The committee is picking up where the technical advisory committee left off, taking aim at the definition of “life-sustaining” therapy, which is defined in the Income Tax Act as therapy that “requires administration at a minimum of three times a week, averaging at least 14 hours a week.” The committee is urging the Finance Department to amend the definition to include therapies such as monitoring blood sugar levels and administering insulin in particular cases of Type 1 diabetes.
Weissman says the committee also intends to improve the process of determining eligibility for the disability or impairment tax credit. At present, those who apply using Form T2201 have no way of tracking the status of their application, and often wait up to eight or nine months to find their application has been denied. Weissman would also like the denial letter issued by the CRA to provide more guidance to those who have been declined.
@page_break@“People get these denial letters, and it’s not clear how they can make an appeal,” he says. “It could be [made] a lot clearer to them that they have a chance to appeal the decision, and how they can go about it.”
Another item on the committee’s agenda is the issue of tax deductions for disability devices. Weissman says the wording of the provision overlooks those who aren’t employed by a corporation but who should be permitted to deduct the cost of such devices: “It’s great to tell Mr. Corporate Employer that it can deduct the cost of a scooter for a disabled employee, for instance. But what about people who are sole practitioners or who work in a partnership, not for a corporate entity?”
Although Weissman is optimistic the recommendations made in the budget will pass, the Finance Department doesn’t make any guarantees. Spokesman David Gamble says the measures concerning the tax treatment of the disabled aren’t controversial, but adds he cannot predict how Parliament will act. IE
Tax benefits broadened for the disabled
Disability advisory committee wants to open door so it’s easier for people to get all available tax credits
- By: Lara Hertel
- November 2, 2005 November 2, 2005
- 12:08