The disability tax credit was an explosive issue for the Liberals. Will the next government fix it?
The disability tax credit (DTC) turned into a political hot potato for the Trudeau government in late 2017 amid reports the Canada Revenue Agency (CRA) had quietly tightened access to it for diabetics. Conservative critics and some health groups decried the move as a stealth tax grab by the Liberal government at the expense of Canadians with disabilities.
But with the 2019 election campaign almost over, the DTC has so far failed to return to the forefront of the political agenda.
Conservative Leader Andrew Scheer has promised to expand some of the eligibility criteria for the credit, which lowers the amount of income tax individuals with disabilities may have to pay. The Liberals, for their part, have promised to double the amount of the child disability benefit. But no party platform contains a commitment to the broad shakeup of the DTC that experts say is needed.
“The disability tax credit continues to be way too challenging for many Canadians with disabilities, including diabetes, to access,” Hanson said.
“It’s inscrutable. It’s inconsistently and inaccurately applied or adjudicated. It is opaque.”
Less than half of Canadians with severe disabilities have accessed the tax credit
A 2018 study by the University of Calgary found that only 40 per cent of the more than 1.8 million people who live with a severe disability in Canada use the DTC, likely because of how difficult it is to apply and be approved for the credit.
The report noted that even physicians have trouble interpreting the forms, which require them to certify that applicants require “life-sustaining therapy” for a total of at least 14 hours a week or are “markedly restricted in performing a basic activity of daily living all or substantially all of the time.”
The eligibility criteria are not only difficult to understand but out of step with what the evidence shows about the nature of many disabilities, critics say. CRA guidelines, for example, require that impairment due to mental illness must be present continuously most of the time.
With schizophrenia and psychosis, there are good days and bad days or even good months and bad months, Boudreau said. But over the long term, the disability can affect a person’s earning potential or even their ability to work.
Being turned down for the DTC isn’t just about losing out on a tax credit that amounted to up to $8,235 for adults in 2018.
The credit is “a gateway to access to a host of other supports and services,” said Jennifer Zwicker, program director of health policy at the University of Calgary and co-author of the 2018 report. Those services include the child disability benefit, the Registered Disability Savings Plan (RDSP), which helps Canadians with disabilities save for the future, and provincial disabilities benefits, which are sometimes linked to eligibility to the federal credit, she said.
Much of the rethink has already been done
The disability tax credit needs a major rethink, but much of the rethinking has already been done, Zwicker said.
While the CRA quickly backtracked on its administrative change affecting diabetics, the public outcry also spurred two efforts to study how the DTC could be improved. The Liberal government also reinstated the Disability Advisory Committee (DAC), a body tasked with providing advice to the national revenue agency that was disbanded by the Harper government in 2006. The committee published a report earlier this year with detailed recommendations for an overhaul of the DTC, including rewriting the eligibility criteria, streamlining the application process and making the tax credit refundable.
With two reports making “very clear and well-thought-out recommendations,” there is a clear path to move forward, Zwicker said.
“To me, the obvious next step is implementation.”
And yet, none of the federal party platforms includes a pledge to implement the recommendations put forth by either report.
Instead, the Conservatives are proposing to lower the qualifying threshold for the credit from 14 hours per week spent on life-sustaining therapy to 10. The measure would expand eligibility to another 35,000 Canadians with disabilities, the party said.
That would be “a step in the right direction,” Zwicker said. However, she added: “There’s certainly a lot more that could be done beyond the minor changes they’re suggesting.“
Diabetes Canada’s Hanson also said the Conservatives’ proposal would help. The change would likely make more Canadians with Type 1 diabetes eligible for the DTC, according to Hanson.
“But we actually think that a better approach would be to follow the recommendation of the Disability Advisory Committee,” she said.
The committee, for example, recommended that Canadians who require lifelong therapy in order to sustain a vital function automatically qualify for the credit. That would include intensive insulin therapy for Type 1 diabetes.
The Liberal Party has promised to double the child disability benefit, which it says would increase the tax-free benefit for family caregivers of children with severe disabilities by around $2,800 every year. The change would boost financial support for more than 150,000 children, according to the party’s platform.
That is “a nice idea,” said Zwicker, but the problem is that eligibility for the benefit is tied to eligibility for the DTC.
Simply boosting the child disability benefit “is not going to help a large majority of people who could potentially benefit, simply because of the very poor administration of disability tax credit,” she said.
While the Liberal platform says a re-elected Liberal government would “work closely with families and experts as the benefit is increased to ensure children get the help they need,” it does not mention the recommendations of the Disability Advisory Committee or those of the Senate committee.
The NDP and Green Party platforms contain a number of pledges focused on Canadians with disabilities but do not specifically mention the DTC.
The Green Party told Global News via email it would “insure [sic] all the benefits and tax credits are made available.” The party also said that in the long term, “we need to review the entire tax system and all social supports and develop a better, more humane system.”
The Conservative Party, the Liberal Party and the NDP did not respond to a request for comment by deadline.
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