Proceedings of the Standing Senate Committee on
Social Affairs, Science and Technology
Issue No. 35 - Evidence - February 1, 2018
OTTAWA, Thursday, February 1, 2018
The Standing Senate Committee on Social Affairs, Science and Technology met this day at 10:30 a.m. to examine and report on issues related to social affairs, science and technology in general (topic: Registered Disability Savings Plan and Disability Tax Credit).
Senator Art Eggleton (Chair) in the chair.
[Translation]
The Chair: Welcome to the Standing Senate Committee on Social Affairs, Science and Technology.
[English]
I’m Art Eggleton, senator from Toronto, and the Chair of the Standing Senate Committee on Social Affairs, Science and Technology. Today we are going to start three meetings on the subject of the Disability Tax Credit and the Registered Disability Savings Plan.
I would like my colleagues to introduce themselves, starting on my right.
Senator Seidman: Judith Seidman from Montreal, Quebec. I’m the deputy chair of the committee.
Senator Raine: Nancy Greene Raine from B.C.
Senator Manning: Fabian Manning, Newfoundland and Labrador.
[Translation]
Senator Poirier: Rose-May Poirier from New Brunswick.
Senator Petitclerc: Chantal Petitclerc from Quebec, deputy chair of the committee.
[English]
The Chair: As we begin this study on the Disability Tax Credit — and Jim Munson from Ontario has just come in — we start with two panels today. We have three on each panel, which is a very tight situation, so we need to keep the questions and answers quite tight to get through this in such a short period of time.
Today we welcome Dermot Cleary, Board Chair for Autism Canada; Kimberley Hanson, Director, Federal Affairs, for Diabetes Canada; and Benjamin Davis, National Vice-President, Government Relations and President, Atlantic Division, for the Multiple Sclerosis Society of Canada.
Welcome to all three of you. Unless you have a preference as to who goes first, I will just go in the order I just read them. I’ll start with Mr. Cleary.
Dermot Cleary, Board Chair, Autism Canada: Good morning.
I would like to start by saying that I’m joined by Dr. Jennifer Zwicker, Director of Health Policy at the University of Calgary, and Dr. Paul McDonnell, a psychologist from Fredericton, New Brunswick. They’re both sitting behind me, and if the questions fall into their areas, I will ask them to sit in this chair and respond to the question. Thank you.
To the Standing Senate Committee on Social Affairs, Science and Technology, it is a pleasure to be here today representing Autism Canada and the autism community. We’re here to speak to you about equitable access to the Disability Tax Credit and the Registered Disability Savings Plan.
In late 2017, Autism Canada asked Canadians about their experience with regard to applying for, or maintaining, their Disability Tax Credit. The responses were heartbreaking. To date we’ve heard from numerous Canadians, including autistic adults, families and caregivers, and professionals responsible for completing the forms.
Here is the feedback we received. The Disability Tax Credit application process is onerous at best. Eligibility criteria are not suited to a neurodevelopmental diagnosis like autism. CRA’s review process lacks rigorous and transparent criteria. It is inconsistent, and responses can take anywhere from weeks to up to a year.
Doctors, clinicians and other health care practitioners are frustrated with the recent increase in application rejections or requests for additional information.
I’d like to note that these rejections are not limited to people with higher functioning autism. There are many reports to us of applications for moderately to severely affected children being rejected.
There is a great concern for individuals and families who opened a Registered Disability Savings Plan for themselves or their autistic children when, after years of qualifying for the Disability Tax Credit, they are now finding themselves rejected and subsequently are no longer eligible for the RDSP.
Autism spectrum disorder, or autism, is a neurodevelopmental disorder that impacts brain development, causing most individuals to experience communication problems, difficulty with social interactions and a tendency to repeat specific patterns of behaviour. There is also a markedly restricted repertoire of activities and interests.
It is typically accompanied by co-occurring medical conditions such as epilepsy, sleep disorders, gastrointestinal abnormalities, immune dysregulation and mental health issues like anxiety and depression.
An important piece of today’s discussion is the prognosis for people on the autism spectrum, specifically what research tells us about the likelihood of these children being able to work and save for retirement, live independently and have sufficient support when family and caregivers pass on.
Studies have shown that among adults with Asperger’s syndrome — a term for those who are highest on the autism spectrum — who received no therapies, 85 per cent were unemployed, 98 per cent never marry and 76 per cent were hospitalized or lived with their parents indefinitely.
The estimated lifetime costs of an autistic individual can be anywhere from $1.4 million to $2.4 million dollars depending on whether or not there is also an intellectual disability.
This lifelong diagnosis has a huge impact on the future for these individuals, as well as repercussions for their families and society at large.
While many autistic Canadians and their families are burdened with the direct cost of treatment, therapies and interventions not covered by medicare, all face a lifetime of hidden costs regardless of where they fall on the spectrum. These hidden or indirect costs can include specialized daycare, double the cost of programs such as swimming lessons, respite, tutors, personal care workers, job and life coaches, mental health professionals and assistive devices like noise cancelling headphones and communications tools.
For many families, one parent is left with no choice but to quit their job in order to care for their child at home, be available to take them to therapies, run home-based programs or simply be available when a child is sent home from school or from another program. These are the substantial economic impacts of autism.
The Disability Tax Credit was designed as a tax fairness measure to promote equity by offsetting the additional costs associated with a person’s disabilities. Why, then, are those with autism spectrum disorder being denied access to this fairness measure at an alarming rate?
The Disability Tax Credit application was designed for individuals with physical disabilities. The current criteria for the Disability Tax Credit are not designed for a person diagnosed with autism or other neurodevelopmental impairments. These people have significant difficulties in all areas of social behaviour, ranging from the family to school and job settings. They also have limited access to professional services tailored to their unique needs. The Disability Tax Credit is a way for them to have some financial security and alleviate prolonged financial dependence on their parents and other relatives.
The current criteria — what CRA calls the effects of the impairment — assess basic daily living activities, which are limited to walking, speaking, hearing, dressing, feeding, eliminating and mental functions necessary for everyday life.
These are extremely shortsighted. It is shocking that this section does not consider a person’s inability to work as an impairment which impacts daily living activities. I would argue that if your disability precludes you from being able to work, secure a pension and contribute to the Canada Pension Plan and/or a Registered Retirement Savings Plan, it’s likely you will not have financial security or a good quality of life.
Canadians who are diagnosed with a disability that precludes them from working should be entitled to the Disability Tax Credit and the RDSP. These are their only two options.
As an aside, I’m going to add it’s important to note that the CRA is effectively the largest administrator of disability in government because it is financial instruments that most affect those with disabilities for better or worse.
By far, the most significant issue for autistic Canadians and their families wanting to plan for their children’s future is accessing the RDSP because of the use by the federal government of the Disability Tax Credit as the eligibility designation. The RDSP is by far the most inaccessible registered savings product supported by the federal government. This is most unfortunate, given who the product is meant to serve — those with the most inability to secure their own financial future due to their disabilities.
I share with you a quote from a Canadian family. This father captures the reality for all families who have a child on the spectrum:
Currently we are impacted by the inability to secure our son’s future. We are his sole social circle, we are his financial backers, we are his transportation — we are his life. My fears keep me awake at night. If we don’t have something in place — a plan, a program, a support network — what will happen to my son when I’m gone? Institutionalized, neglected, or worse, homeless, with no love or supports — I need peace of mind and he needs a future.
As a personal statement, I would say that echoes my experience exactly.
In our written submission to this committee, we recommend the following actions: the creation of a clear, transparent and informed application review and appeal process; clear, consistent and universally accepted classification criteria for disability; uncoupling the Registered Disability Savings Plan from the Disability Tax Credit; federal monitoring and evaluation of population-based disability data; inclusion of the neurodevelopmental community on the Disability Advisory Committee.
We encourage you to review our submission thoroughly. Understanding autism and its lifelong impacts on individuals and their families, we hope, will underscore the urgent and compelling need for immediate action by the federal government to ensure that the financial security of this vulnerable segment of our society is protected. Thank you.
The Chair: Thank you, Mr. Cleary.
Kimberley Hanson, Director, Federal Affairs, Diabetes Canada: Thank you very much for the opportunity to speak with you today. In the latter half of 2017, Diabetes Canada heard from hundreds of Canadians living with type 1 diabetes that their access to the DTC, and consequently the Registered Disability Savings Plan or RDSP, had been severely limited. It was ultimately determined that this was a consequence of procedural change made by the CRA.
Diabetes Canada is very grateful to parliamentarians of all parties and the CRA for having addressed this issue. Their December 8 commitment to revert to pre-May interpretations of the Income Tax Act seems to have resolved the crisis in access that Canadians with type 1 diabetes were experiencing. In consequence, since December 1, Diabetes Canada is aware of more than 400 adults with type 1 who have received the tax credit.
While pleased with this correction, the diabetes community is concerned about the DTC and RDSP in two major areas that I’d like to address here today.
First, eligibility criteria for the DTC need to better reflect the reality of administering insulin therapy. Second, Canadians’ investments in their RDSPs need to be better protected in the event that eligibility criteria for the DTC are changed.
Before I explain these two challenges in greater detail, I would like to take a moment to familiarize the committee with type 1 diabetes. I should note that many Canadians with type 2 diabetes may also be eligible for the DTC and RDSP, but I’ll focus on type 1 because it is this community that has been most affected by recent challenges with this program.
Type 1 diabetes is a debilitating, chronic, progressive autoimmune disorder that threatens its sufferers with death on a daily basis. Its sufferers lack the ability to produce insulin, which is essential to metabolizing carbohydrates, which in turn are essential to sustaining life. While we don’t know exactly what causes it, we do know that there is nothing anyone can do to prevent it.
Type 1 is a painful, invasive, relentless disease, from which no one who lives with it ever gets a reprieve. It puts us all at high risk of serious complications like blindness, kidney failure, amputation and heart disease, and it shortens our lifespan by as much as five to 15 years.
Managing type 1 diabetes has been likened in complexity to flying an airplane. A study in 2009 found that there are 600 steps required to manage it each and every day, and even if people perform each of these tasks perfectly, their blood sugar doesn’t always respond in kind. Its variability means it requires constant vigilance each and every day.
Even with our publicly funded health care system, living with type 1 costs its sufferers up to $15,000 a year for medications and supplies essential to delivering insulin and monitoring blood sugar. Insulin is life-sustaining therapy.
Given those costs and how imperative these drugs and supplies are, the DTC and RDSP offer welcome financial support and security. Although the DTC is only worth an average of $1,500 per year, that’s $1,500 that a person with diabetes can use towards their medical supplies and health.
Longer term there’s a strong chance that a person with type 1 will face periods of disability during their working life and perhaps even have it cut short by the complications of the disease. An RDSP can provide financial security and peace of mind for those with type 1 diabetes and their families.
I would like to offer just one illustration of this. I received a letter not long ago from a young man, aged 25, who has lived with type 1 diabetes for 20 years. He plays competitive hockey, is going through the hiring process to become an RCMP officer, and has recently been laid off from Sears due to its bankruptcy. He really needs the financial support of the DTC to manage his illness. In his words, “I do not have the benefits, so the extra money can significantly help me in ordering supplies and insulin. The DTC will simply allow me to survive, unlike other people who do not need to worry at all about this topic.”
Still, in 2017, despite his doctor’s certification that he meets all the eligibility criteria, he was inexplicably rejected for the DTC. As he says, “It seems like the disability and applications put forth are just skimmed over in a robotic way, not a human angle with compassion and understanding.” Nick is just one of many similar cases.
Notwithstanding the value of the DTC and RDSP in helping Canadians with disabilities cope with associated expenses, we know there are a number of challenges with how these programs operate. A recent study from the University of Calgary School of Public Policy — Dr. Zwicker is with us today — highlighted that the application process is too difficult for patients and health care providers alike, and, in consequence, only 40 per cent of Canadians with disabilities are accessing the DTC. Similarly, a 2014 report of the Senate Standing Committee on Banking, Trade and Commerce found that only 15 per cent of Canadians eligible for RDSPs are investing in this vehicle. We need to continue to simplify and clarify the process for all Canadians with disabilities.
For people with diabetes, there remain two major ongoing challenges with respect to the DTC and the RDSP: inappropriate eligibility criteria and unprotected RDSP investments. The eligibility criteria under the category of “Life-sustaining Therapy,” the category under which people with type 1 diabetes apply for the DTC, allow a person with diabetes to count the time they spend calculating a dose of insulin against the requirements that they spend an average of 14 hours a week administering their insulin therapy. However, while the Income Tax Act does not explicitly exclude it, the CRA’s DTC operations manual of 2013 explicitly disallows applicants from including the time they spend counting carbohydrates.
It is quite simply impossible for a person with type 1 diabetes to calculate a dose of insulin without counting carbohydrates and factoring in things such as exercise, stress, hormonal changes and illness.
The eligibility criteria as currently interpreted do not reflect the realities of administering life-sustaining insulin therapy. Diabetes Canada recommends that the eligibility criteria should be updated to be more explicit and the application process and CRA operations manual made more consistent, fair and reflective of the realities of patients with diabetes and clear for their health care providers.
In addition, there are problems with the RDSP. Since the program was created in 2008, many Canadians with type 1 diabetes have been saving for their future medical costs using this vehicle, which is its intended purpose, but only Canadians who are eligible for the DTC can contribute to RDSPs, and if they become ineligible for the DTC, their investment accounts are closed and the government claws back all of its contributions.
Recent events have highlighted that eligibility can change without notice or consultation. Many Canadians stood to lose tens of thousands of dollars by virtue of that small procedural change the CRA made on May 2, the implications of which are enormous for those families who trusted those funds would be there. The government must take steps to safeguard Canadians’ investments in these important vehicles. Diabetes Canada suggests that the Government of Canada ensure that Canadians are able to keep all contributions made to their RDSPs while they legitimately qualified for the DTC and that they are not clawed back because eligibility criteria or procedures are subsequently changed.
The reinstatement of the Disability Advisory Committee is an important measure to ensure that the needs of Canadians living with disabilities are effectively communicated to the CRA and factored into their operations, but important updates to the Income Tax Act and the mandate of the CRA are required to ensure that the DTC and RDSP work as they were intended to and help to ease the financial burden nearly 300,000 Canadians face by virtue of living with the incurable disease that is type 1 diabetes.
Thank you.
The Chair: Thank you, Ms. Hanson.
And now Benjamin Davis from the Multiple Sclerosis Society of Canada.
Benjamin Davis, National Vice-President, Government Relations and President, Atlantic Division, Multiple Sclerosis Society of Canada: Good morning. Thank you for inviting me to speak here today on behalf of Canadians affected by MS.
First I want to give you some facts about MS and the MS Society. MS is a chronic, often disabling disease of the central nervous system affecting the brain, spinal cord and optic nerve.
Each person living with MS has a different experience, giving way for a wide variability of symptoms which can affect vision, memory, balance and mobility.
Canada has one of the highest rates of MS in the world. It is the most common neurological disease affecting young adults. Most people are diagnosed between the ages of 15 and 40. MS is three times as likely to occur in women as in men.
At the MS Society of Canada, we work to ensure that Canadians living with MS and their families have the opportunity to participate fully in all aspects of life, including being productive and contributing citizens.
For many people living with a diagnosis of MS, the unpredictability and episodic nature of this disease makes it particularly challenging to maintain an adequate quality of life. Along with the challenges of living with a disability which has both visible and invisible symptoms, and the barriers in support programs across all levels of governments, living with MS creates immense financial challenges for Canadian families who struggle to manage the realities of living with the chronic disease.
The reason I’m here today is to give you some context related to the Disability Tax Credit and the Registered Disability Savings Plan and how they align with our work.
The Disability Tax Credit is one source of income support for Canadians living with disabilities. This is an important and valuable program, but for people living with MS and other episodic disabilities there are significant issues that create barriers to access.
Our recommendations would allow for the Disability Tax Credit to fully serve its intended purpose, to provide for greater tax equity by allowing some relief for disability costs.
First, we recommend amending the definition of disability to allow eligibility for people living with disabilities that are episodic in nature. Currently the definition of disability is very problematic for people with episodic diseases. It requires a person’s disability to be severe and prolonged, with prolonged defined as an impairment expected to last for a continuous period of at least 12 months.
The definition excludes individuals living with episodic disabilities such as MS where symptoms can come and go, being very severe and debilitating at some times and then abating for periods of time.
Let me share the story of Geeta, a woman living with relapsing remitting MS. Geeta will have MS for the rest of her life, but her symptoms will come and go. She may experience a relapse for six days, six weeks, or even six months in a year, or her symptoms may become severe and stay that way for several years. Geeta has to rely on a patchwork of supports and services to maintain her health. She incurs additional expenses related to her disability, but because her disability may not be prolonged or permanent, she doesn’t qualify for some of the income supports she needs to maintain a decent quality of life.
Further to amending the definition to accommodate episodic disability, there needs to be coordination and sharing of information between income support programs, including harmonization of eligibility criteria across the range of all income supports available. For example, a person living with a diagnosis of MS, a disease which currently has no cure, is asked to check the box year after year after year, reaffirming their diagnosis with several different support programs.
This unnecessary burden was documented in a recent report called Leaving Some Behind: What Happens When Workers Get Sick, written by the highly regarded think tank Institute for Research on Public Policy.
We also recommend that the Disability Tax Credit be a refundable tax credit and that the income from the credit be treated as exempt for people with disabilities on social and disability assistance.
A big challenge is the income level required to benefit from the Disability Tax Credit. Many Canadians with episodic disabilities, especially women, don’t work enough to generate the minimum income required to gain any benefit associated with this tax credit, even if they would otherwise qualify.
Everyone should benefit equally. If we want to lessen the marginalization of people with episodic disabilities and help move them out of poverty and into empowerment and employment, this change needs to happen.
Finally, I would like to mention that the Registered Disability Savings Plan, for people living with MS, the biggest challenge is that the RDSP requires you to be eligible for the Disability Tax Credit. If you are diagnosed with MS at 20 but aren’t showing any prolonged or permanent disability, you don’t qualify for the tax credit, deeming you unable to establish an RDSP in planning for your future.
Many people with MS live well in the early years of their disease, moving into a more progressive form later in life. They may be in their forties or fifties before they are deemed disabled enough to qualify. An individual who becomes eligible for the tax credit at 50 has only nine years to establish and contribute to an RDSP. We recommend that the eligibility criteria for the RDSP change.
In addition, individuals who established RRSPs prior to becoming eligible should have the ability to roll over RRSP funds into an RDSP, allowing them to access their savings when they need them.
In closing, we want the Government of Canada to improve income supports to make ends meet for Canadian families affected by MS. We know your mandate is to promote equality of opportunity and increase the inclusion and participation of people with disabilities. Working to redefine, simplify and streamline the various disability programs will be the first step. These small but significant changes can and will make a difference in the lives of people living with MS and other chronic diseases.
Thank you for the opportunity to speak today.
The Chair: Thank you, Mr. Davis.
Thank you again to all three of you for being here and for your very compelling presentations.
Normally we would have three panellists in a two-hour meeting, but this is three panellists in a one-hour meeting, and I have a lot of people on the list here, so we’re going to have to do this on the basis of one question per member. You can indicate if you want to go down for a second round if we get the opportunity to get there.
Let me start with the two deputy chairs and then on from there.
Senator Petitclerc: Thank you very much for your presentations.
I want to ask you more specifically on the DTC. I’m trying to understand, because the way I hear you — and we know that on the application process, but I’m trying to figure out, because it seems to me that something has changed or something has not changed enough in the last few years.
I understand that there was a consultation in 2014 and that the form or application process has been technically, supposedly, simplified.
Do you feel it is the philosophy or the approach that has changed, or is the challenge really to do with the process that is not maybe disability-specific enough?
You did touch on it a little bit, but I want to hear you a little more on that. Maybe Mr. Cleary to start.
Mr. Cleary: Thank you for the question.
I will say that the answer lies in a couple of pieces, the first piece being the appropriateness or the comprehensive quality of the Disability Tax Credit criteria when it was first established.
One of those pieces, from our perspective at Autism Canada, is that it did not adequately reflect neurodevelopmental issues, that it was basically a physical disability-focused tax credit.
The second piece would be that the CRA’s position is that there has been no change made in how they’ve operated. That is the position they’ve taken until recently when there was a revelation about diabetes, as we know.
From our perspective, from our lens on this, we’re seeing such an inordinate number of rejections. The ATIP that was provided shows a huge percentage increase, I think a 60 per cent increase, in rejections in recent times. We have some struggles seeing that it’s business as usual in terms of policy.
I would say the last piece is what seems to be not implementing the policy consistently. We have seen individuals, let’s say two boys with the same level of diagnosis in the family. One receives the Disability Tax Credit and one is rejected. We have many examples of this. It’s tough to say where the problems lie.
I think an overhaul of the DTC itself is a huge piece, but also implementing consistently whatever criteria are in place will go a long way as well.
Ms. Hanson: I completely agree with everything Mr. Cleary said.
I would add that efforts to simplify and streamline the application process are most certainly welcome and what we would ask for.
They appear to have been undertaken without broad-based stakeholder consultation and have created a lot of unintended consequences.
I think the biggest problem seems to be that what is in the application forms, the eligibility criteria, is not necessarily what is carried through to the operations manual or the procedural level within the CRA. So the guidance that the analysts who are reviewing these applications are receiving and are required to assess these applications within is not consistent with the spirit of the Income Tax Act or the letter of it or the spirit of the regulations. That seems to be where we experience a lot of the problems in the case of diabetes and where I suspect others with other conditions are experiencing those problems.
I think that also allows some of the wild inconsistency. We have the case of a set of twin sisters, both with type 1 diabetes, same doctor, same treatment protocol. One was approved and one was denied. It’s difficult to understand how that can be.
Mr. Davis: I would quickly echo the comments and state my agreement with the comments made by my colleagues.
I would like to reinforce two points. One, we continue hearing in the MS community that the application process is incredibly burdensome and there’s a general lack of awareness as to the ins and outs of how to access that problem. The second thing I would reinforce is that the criteria with respect to episodic illnesses are critical. A large number of people are excluded from the program because of the timing of when their disability occurs. It’s not right.
Senator Seidman: Thank you to all three of you for what were, as our chair said, compelling presentations.
I would like to address my question to you, Ms. Hanson, if I might.
The question concerns the monitoring and evaluation of population-based disability data as you, Mr. Cleary, referred to so well in your presentation.
I’m interested in Diabetes Canada numbers, as you presented them, according to disability. I look at the “Disability Tax Credit at a glance” information published by CRA, and there’s no delineation here by disability. None.
Ms. Hanson: That’s correct.
Senator Seidman: The data is not categorized by disability.
You have provided us with numbers saying there are 400 adults with type 1 diabetes who have been granted the Disability Tax Credit as of December. So you have those numbers, according to disability.
First of all, I would like to ask you, are those reversals of previously rejected applications?
Second of all, I would like to ask you about this data that you collect that’s disability specific. Why do you think it is that the CRA is not tracking or not able to track such specific population-based disability data?
Ms. Hanson: Thank you for your question, senator. It’s really an important issue and a concerning one as we move forward from the perspective of how are we to be able to assess the effectiveness of this program if we can’t understand how it’s applied to individuals with certain conditions.
I was very dismayed recently to receive responses to Order Paper questions that a number of members of Parliament put to the CRA in the fall asking for specific data about the application of the DTC to people with a number of different conditions. They really got answers that were very vague and obfuscating and did not give any data at all.
As a taxpayer and a citizen, as well as as an advocate for people with a disability, I don’t think that should be.
I can tell you that in the case of diabetes, we apply for the Disability Tax Credit under the category of life-sustaining therapy. We share that category, typically, with people who require kidney dialysis or who live with cystic fibrosis, as well as some others, but those are the three major categories of disease or diagnosis that would fit under that program.
We know that in 2017, 2,200 people applying under that category were denied. I should say that was up until midsummer of 2017, so before we reached the crisis. I’m sure that number got markedly worse thereafter. We can’t get data that is either up to date or specific to underlying condition or diagnosis.
We’ve come up with the number of more than 400 adults have been approved since December 1 really by grassroots communications with people that reached out to us for help in the first place.
So it may well be, it should be, that it’s more than 400. I can point to a list I created of those 400. Many of those were reversals of previous denials. I would say about half of them were cases of first-time applicants, and half of them had previously been approved for the DTC and were reapplying and had been accepted or rejected. A small proportion were first-time applicants that hadn’t been approved or denied before the freeze was put on in the fall.
The Chair: I might add that I have written to the minister, and our researcher, Elizabeth Cahill, has also contacted the CRA to try to get additional data. Senator Seidman outlined some of those pieces of information that we need, so we’re hopeful of getting some information from them.
Next is the member of the committee who proposed that we deal with this study, Senator Munson.
Senator Munson: Thank you for your testimony. You know where the Senate stands on a number of these issues, but we are empowered by your words this morning.
Mr. Cleary, you used the word heartbreaking. I always look at these issues through a human rights lens, the human rights of everybody under our Constitution and Charter in this country, which I think are being denied.
I was just checking again. We had proposed that autism groups be part of the advisory committee. The minister wanted to have a few groups, yet as I look at the groups, autism groups aren’t there.
Mr. Cleary: We’re not there.
Senator Munson: It’s beyond me how the CRA can go about it where they have 12 groups but they exclude autism. It is beyond my thinking.
Do you see any signs, with this public debate taking place, where people are out there hurting in all of your communities and not getting the tax credits they’re due, do you see any signs of a more empathetic or compassionate CRA?
Mr. Cleary: I have not seen any examples of a more compassionate CRA. We have also noted through our grassroots efforts that there has been a little bit more of a flow through of Disability Tax Credit applications being approved. I don’t have a list with me today, but we have been having that conversation. I wouldn’t say that’s coming from an empathetic standpoint. It’s coming from these efforts.
Ms. Hanson: We’ve heard distressing comments rising for people living with other conditions; for example, people with Crohn’s or colitis are noticing that they’re not able to get approved no matter what, or just a number of examples that I’ve heard anecdotally from individual citizens. Maybe diabetes is getting a pass at the moment, but other conditions are, if anything, suffering a little worse than they were before.
Mr. Davis: I would not offer anything contrary to those comments. The grassroots nature of our organization continues to feed us information that says there are challenges with accessing the program, and there are a number of reasons we’ve talked about to support that.
From a broader government perspective, as it relates to episodic illnesses, we are pleased with the federal accessibility legislation being proposed to include episodic illnesses in the definition of disability.
[Translation]
Senator Mégie: I would like to know if a committee has ever addressed the eligibility criteria. The criteria for determining disability for the three diseases in question — autism, diabetes and multiple sclerosis — are totally different. You just told us so. Should we not try to find other types of criteria that could apply to these three issues to avoid any disparity when giving tax credits? Has a committee ever addressed this issue?
Ms. Hanson: That is an excellent question, senator, thank you. I will answer in English to be clear.
[English]
There was a committee that did a stem-to-stern look at the Income Tax Act and how it was applied and the eligibility criteria related to this program back in the earlier 2000s. You’ll hear from one of the members of that committee, Lembi Buchanan, who is here today, in the next hour. She can speak to it more expertly than I can.
I completely understand that the Disability Tax Credit is meant to apply to Canadians with countless diseases and disorders, and one must set up eligibility criteria that cast a relatively broad net and can be applied to individual circumstances.
The troubling thing to me is that wherever possible, it seems that the CRA is tending towards interpreting the criteria or the Income Tax Act in the narrowest way possible in order to justify excluding people from this program. I don’t believe that that was the intention when this program was established.
I would like to see the Disability Advisory Committee that has just been reinstated conduct, again, a study. It’s a lot to ask a committee of volunteers to do that extensive a body of work, and I wonder if we as Canadians should not be re-examining these programs at a fundamental level and checking upon whether we’re really comfortable with the CRA’s mandate and ability to operate at such arm’s length in respect of governing this program.
Mr. Cleary: I think I can speak for all of us. We respect that the mandate of CRA is to vet allowable financial tax applications.
There’s a huge difference between deciding about the debate about a business trying to write down a piece of equipment as an expense and individuals with a disability. It’s not the same conversation, but it’s going into the same culture. I think it’s going into a naturally adversarial conversation.
There needs to be an important philosophical shift where you’re dealing with children, dealing with people who are unable to speak or advocate for themselves who are in a position, often, of financial distress. They’re being treated in the same way as someone who wants to write off a big dinner and whether it was business-related or not. This is a very different thing. It’s being vetted with the same language and philosophy. That needs to shift.
The Chair: Interesting point.
Senator Poirier: Thank you all for being here. This is interesting to see all the debates.
I have actually had a number of discussions with different people from my end of the province on the exact problem you pretty well are all explaining. From the research we’ve been able to find, over the age of 15, approximately 1.8 million people from Canada could have a severe disability or very severe disability. But they’re also finding from the research I’m getting that only about 652,500 Canadians actually claimed or applied for the DTC.
Out of that 652,000 people that put in an application, it would be interesting to know how many people were accepted.
I’m also hearing a lot from people at home that when the program started, at the very beginning it was very easy compared to now for somebody to get approved if they had a walking disability, a hearing disability, or if they were diabetic. Then, all of a sudden, as the years flowed down, that same disability didn’t get any better, it’s the same or worse, but now all of a sudden the application seems to be the same but the criteria at the end seem to be evaluated differently and they are now no longer being accepted.
I went as far as to speak to a doctor in my area to get a little information or feedback on it. The doctor said something surprising. First of all, many doctors charge a fee to fill out the application. Many applicants can’t afford that and so don’t bother to ask the doctor.
Second, many doctors know the chances of them getting accepted and that fee income is limited; they are discouraging them from applying, knowing chances are they will be rejected.
Is that something you’re hearing? Is that an issue? If so, any ideas how it can be resolved and how we can look at it?
Ms. Hanson: I see a continuing problem with clinicians providing care to people with diabetes being unwilling to fill out their forms applying for the DTC, not because they don’t believe their patients are engaged in the therapy required, but because they simply don’t believe the application will be accepted, and doctors or nurses are not compensated by our system for the time they must spend filling out these forms.
Every application, for a long time now, was getting clarifications added, which means not only does the doctor or nurse have to fill the form out once, they then have to respond to vague letters of requests for clarification and more information. They are left to wonder what more information can I provide you that I haven’t already. It feels to many like an exercise in futility.
Diabetes Canada has been engaged recently in an attempt to reach out to clinicians providing support to this community to say this is what the status is, here are the activities that are eligible, please support your patients by filling this out. Many are still reluctant. The fact that some charge for it is very true and a challenge. I can understand that doctors and nurses need to be compensated for their effort and those costs are a financial barrier to many of the patients.
In terms of the numbers of people applying for and being rejected for the Disability Tax Credit, I’m reading right now from data that I received from the CRA in response to an access to information request we made last summer wherein they shared with me that in 2017 they received a total of about 440,000 applications, of which about 10 per cent were rejected overall.
To the senator’s comments, some categories meet with relatively high levels of acceptance. They are relatively sort of flow through. For example, people with speaking impairments tend, relatively speaking, to have a lower rate of rejection than other conditions. I would say there’s been a marked spike in the rate of rejections in recent years under certain categories such as elimination and mental impairment.
While the overall program is maybe holding to about a 10 per cent rejection rate, there do seem to be certain conditions or categories under the program that are experiencing much higher rates of rejection than others.
The Chair: Talking about time allowance, we have an enormous problem here. We have 10 minutes left to go on this panel. Remember, we have another three coming. I have five people to ask questions. It’s never going to happen in 10 minutes with the answers as well.
The only thing I can suggest, and this might run a little bit over, is to ask each of you to just pose your question and if our panellists would make a note and after all five questions have been posed I will then call upon you to answer any or all of them as you so wish and we’ll wrap it up with that.
Let me start with Senator Manning.
Senator Manning: Thank you, and welcome to our guests this morning.
Last fall I had a request to intervene on somebody’s behalf to CRA in relation to the eligibility criteria for type 1 diabetes. I did that and we received an email yesterday, as a matter of fact, from the person whose behalf I was working on to tell me they have received an email from Diabetes Canada saying the CRA has reversed the proposed changes to eligibility criteria.
What were some of the major changes or reversals that took place, and in your opinion, have you gotten far enough to address the concerns that are there?
Senator Bernard: My question can be answered in a follow up. It’s actually looking for more information on type 2 diabetes. You referenced that there was information, and I would appreciate getting that information from you.
The Chair: You can distribute it amongst people. Feel free to answer it when we get there.
Senator Omidvar: I’m interested in understanding if there’s an appeal process. You referenced it, Mr. Cleary, in your remarks. I would like to know if there is not, why not. To every right there is an appeal. Employment insurance, if you get rejected, you can appeal it. I want to understand why there’s no appeal to this benefit. I need to figure that out for myself.
Senator Griffin: The Registered Disability Savings Plans allow individuals with type 1 diabetes to save for increased medical costs later in life through the benefit of compound interest. Currently only individuals who qualify for the Disability Tax Credit are eligible.
Should the government revise its definition so that individuals who have chronic incurable diseases with higher expected medical costs later in life qualify? I think you did touch on that just as I entered the room, but anyway, I’ll ask it to clarify, for sure.
Senator Raine: My question is very similar. Why would they use the DTC as a gateway to the Registered Disability Savings Plan? We want to encourage people to save money for future costs. Where did that come from? Thank you.
The Chair: Okay. Panellists, take them all on. Who wants to start?
Ms. Hanson: Maybe I’ll start and try to be brief. Thank you all for your thoughtful questions.
The reversals we’ve experienced with respect to the type 1 community since December 8 — on December 8, the CRA gave a press conference and said they would revert to the pre-May 2 clarification letter.
On May 2, they introduced new language into their clarification letter and operations manual that basically said they didn’t believe people could possibly spend 14 hours a week managing type 1 diabetes as adults. They’ve stood back from that, which means they have, since December 8, been accepting doctors’ and nurses’ certifications that their patients are spending more than 14 hours.
In relationship to that, a majority of those who had been refused since May seem to have been approved belatedly.
I would be pleased to provide the committee more information about type 2 and how it’s different from type 1, but very briefly, I would say these issues can be very materially relevant to a person living with type 2 if that person is on intensive insulin therapy which requires more than 14 hours for the life-sustaining therapy itself and/or if that person living with type 2 has a complication that would allow them to qualify under some of the other categories of the Disability Tax Credit.
I don’t mean in any way to imply by my remarks that this is exclusive to people with type 1 diabetes, not the other forms, just that it was in particular adults with type 1 who were singled out last year.
There is an appeal process, senator, for the DTC. People can submit an appeal when they are denied, and it goes back for review. I understand that there’s often review by a registered nurse who’s on staff with the CRA at that point. I don’t have any statistics on the rates of approval on appeal, but I do have a lot of anecdotal evidence to suggest that the appeals are onerous, arduous, lengthy and futile.
Definitely, Senator Griffin, people with chronic diseases should absolutely be eligible for the RDSPs. People with MS and diabetes, and I suspect autism, typically experience more complications and challenges managing their disease as they age and absolutely need those long-term savings.
To the final question, the idea that we would disincent people from saving for their future medical costs by making them ineligible for a program designed to promote that defies all reason.
We know the direct costs to our health care system of treating diabetes alone will swamp the entire federal health care budget in 10 years if we don’t change something. It’s crazy. It’s so shortsighted. I don’t know what the better solution is other than using the DTC as a gateway for the RDSP. I shudder at the thought of a whole separate set of approvals that somebody would have to go through to access the RDSP, but what we have right now is not working. It’s not serving the needs of Canadians with disabilities.
Mr. Davis: Thank you. I would certainly agree with that as it relates to the DTC.
For me it comes back to definition. The cumbersome, burdensome nature of trying to apply for these programs. Senator Poirier, you referenced how often doctors are rejecting all those things. Please keep in mind the patchwork issue, that individuals not only have to access the Disability Tax Credit and check a box saying they have an incurable disease every year or so, but if they’re a veteran, they also go through veteran benefits, go through EI programs, six or seven other programs. So harmonizing and making the criteria open, clear and consistent across all these programs would mean so much to so many people.
Mr. Cleary: On the appeal process question, we have this ecosystem growing up around the application and appeal process which includes service providers that will take 30 per cent in order to help you succeed.
The Ontario pediatric association has a tip sheet for their pediatricians on how to successfully complete a review process application for the Disability Tax Credit. That’s how crazy this has become.
So there is an appeal process. It’s onerous. We have learned there’s been fatigue or a sense of resignation on the part of physicians. We did a second survey, a physician and medical professional survey, this fall. We received an avalanche of responses saying, “I’m telling my patients to no longer apply for this, because the likelihood of getting it is next to zero, and I will no longer complete them on behalf of my patient base.” That’s happening across the country.
The Chair: Thank you very much.
Many of the questions that members asked are relevant to the CRA, what it does or doesn’t do. Next Thursday, meeting number 3, we’ll have the Minister of National Revenue here, who is responsible for CRA, along with officials from CRA and other departments that are involved, who hopefully will have some of the answers to the questions that have been raised, and particularly some of the statistics you’ve asked for, at the same time.
I’m sorry we’ve run out of time. I thank the members on this panel.
Honourable senators, we are proceeding with panel 2 in dealing with the Disability Tax Credit and the Registered Disability Savings Plan. Like the previous panel, we have three presenters and we have one hour.
The three presenters are, first of all, from the Canadian Psychological Association, Karen Cohen, Chief Executive Officer. She is also a member of the Disability Advisory Committee, which has now been reinstated.
From the Disability Tax Fairness Alliance, we have Lembi Buchanan, who is also a member of that advisory committee.
By video conference — we can see him, but I understand he can’t see us. But I know it’s Michael Mendelson, whom I have known for a long time. Welcome. Michael is here on behalf of The Maytree Foundation. Previously his work was done under the name of the Caledon Institute, and he continues as a fellow with Maytree.
Thank you to all three of you for being here. I have to emphasize that because of the shortness of the time frame for this panel, I need you to keep your presentations to a maximum of seven minutes.
With that, I’ll ask Michael Mendelson to start.
Michael Mendelson, Maytree Fellow, The Maytree Foundation: Let me know if there is any problem with hearing me. When you were speaking, Senator Eggleton, it was cutting in and out a little bit, but hopefully you can hear me well.
I’m going to be quick. I had the clerk circulate a paper that I wrote in 2015 on the Disability Tax Credit. I did a printout. I believe it was translated as well, and you’ve all had it. My intention today is to very quickly review the paper and to speak to it, and hopefully not take too long to do it. I am here to make one very simple point, but a point that I think would have a substantial impact on persons with disabilities in Canada, and particularly the poorest people with disabilities in Canada.
That point is that we have a Disability Tax Credit which is not a refundable tax credit. That means that people who do not have sufficient income tax payable — or any income tax, often — get no benefit from the tax credit.
As you can probably appreciate, the people who pay little or no income tax are those who are the poorest. Therefore, the Disability Tax Credit ends up going to about one third, at my very rough estimation, of persons who would otherwise be eligible. About two thirds, while they would be eligible on the basis of their disability, they are not eligible for any benefit because they’re not paying income tax. So those two thirds are the two thirds of the persons with disabilities who are the poorest of all.
It’s kind of a perverse way to organize a program. In fact, in Canada, I am pleased to say, we have been moving overtime to make more of our tax-delivered benefits, our tax credits, what we call refundable, so that they go to everyone, regardless of whether or not they have enough income tax payable to pay.
My point is that the Disability Tax Credit should be made refundable, and that’s the very simple point. But, of course, as with everything else in the tax system, there’s some complexity to it. I am going to, as briefly as I can, discuss some of that complexity.
The Disability Tax Credit in the tax system is expressed as an “amount,” but the amount is kind of deceptive because the actual benefit is 15 per cent of the amount. In the paper I wrote in 2015, the 2014 amount was $7,766, but it was actually worth only 15 per cent of that in terms of the actual reduction in income tax that was available, and that was $1,165. So we’re talking about roughly $1,200.
In 2017, the amount is a little bit more. It’s indexed by inflation. Because inflation was low, there is not that much difference. It’s a little over $8,000 in the 2017 tax year, and it is worth about $1,217.
So the numbers that are in my paper of 2015 are roughly correct. We’re talking about a $1,200 benefit that isn’t going to the poorest among those with disabilities, and could be going to the poorest among those with disabilities if it were made refundable.
With the data I have available, I can only roughly estimate. Depending on how it’s done — and there are different ways the federal government could do this — I would say the ballpark cost is around $1 billion, give or take $100 million. Of course, the Canada Revenue Agency or Finance could do a much better job of providing you with a good estimate if you ask them to.
So that is possible. The amount of money it would cost is substantial, but it’s not outlandish. We’re not talking about a $30 billion change.
Now, one of the complexities is that the provinces also add on to the Disability Tax Credit, and the amount that the provinces add on is extremely variable. They call it an “amount” as well in the provincial tax system, and it works the same way, with the lowest rate in the lowest tax bracket. So it’s extremely variable among the provinces, and how the provinces would treat a change in the federal system to a refundable tax credit would be an important factor.
I’m not going to go into all the details of how the provinces could treat the change to a refundable tax credit. The main point is that there would have to be discussion and coordination with the provinces in terms of the change, and they’d have to make important decisions.
In the extreme, if the provinces were entirely uncooperative and, say, just cancelled their programs, the result would be that those with disabilities who are currently entitled to the Disability Tax Credit and the income tax would have somewhat of a reduction, depending on which province they’re in, of the total benefit. However, the two thirds of persons with disabilities who are poorest would still have a substantial increase in their income of about $1,200, about $100 a month, so there would still be a very substantial redistributed benefit. But I don’t think the provinces would be uncooperative. There would be a way to work with the provinces so that they could work out a coordination with the federal government. It wouldn’t be a new precedent. The federal government and the provinces have certainly worked together in coordinating tax changes of this kind before.
That’s the essence of my presentation. It’s very simple. There is an opportunity for the federal government to make a change in the tax system that would be among the best targeted possible changes that could be made. It would result in a substantial benefit going to the poorest among those with disabilities.
There is already a system in place. It might not be perfect, but there is a system in place for administering the Disability Tax Credit and for delivering the benefit. That would have to be changed and adjusted a little bit, and of course the resources that go into it would have to be increased somewhat because there would be two thirds more people eligible, but these are pretty efficient credits to administer. We would be targeting a minimal amount of resources to make the administrative change.
In conclusion, my pitch is that I would like to see your committee recommend that the Disability Tax Credit be made refundable for a well-targeted improvement in income for persons with disabilities in Canada.
The Chair: Thank you very much, and thank you to Caledon and Maytree for all the work you have done on this and other issues over the years.
Next we have Dr. Cohen from the Canadian Psychological Association. Dr. Cohen is the Co-chair of the Disability Advisory Committee.
Karen Cohen, Chief Executive Officer, Canadian Psychological Association: Yes, indeed. I just want to clarify, though, that I’m here today on behalf of the Canadian Psychological Association. I’m a psychologist and the CEO of the CPA, which is a national association for the science, practice and education of psychology in Canada. Psychologists are designated, qualified practitioners who can complete the DTC certificate, or T2201, on behalf of people with disabilities related to mental functions.
By way of background, in 2004 I was appointed to the advisory committee, by the ministers of revenue and finance, which was charged with reviewing and making recommendations on the DTC. Some of the legislative changes made to the DTC in 2006 were based on the recommendations made by our committee.
I was asked to head a subcommittee of that committee whose purpose was to review that part of the DTC that applied to persons with impairments in mental functions. Consistent with the committee’s recommendations, two of the legislative changes made in 2006 included changing thinking, perceiving and remembering to mental functions necessary for everyday life, and providing for the cumulative effects of significant impairments in more than one activity of daily living which combined to produce a marked restriction.
While these changes were an improvement, they did not go far enough and created a higher bar for persons with mental disorders to be deemed eligible for the DTC that continues to this day. The legislation requires that a person has a marked restriction in mental functions defined as follows: adaptive functioning or memory or problem solving, goal setting and judgment taken together. It makes no clinical sense to make eligibility dependent on an impairment in more than one mental function.
Let me explain. It is possible that a person could have a severe and prolonged depression which compromises goal setting and judgment but not problem solving. The person may be unable or may take an inordinate amount of time to set goals and make life judgments all or substantially all the time, but not be eligible for the DTC because his or her problem solving is not also impaired.
Requiring that impairments in problem solving, goal setting and judgment be present together makes the eligibility criteria stricter for mental functions than for physical functions. For example, a person can be deemed markedly restricted in walking if they can’t walk, regardless of which or how many impairments underlie the inability to walk. Yet a person may be deemed markedly restricted in mental functions necessary for everyday life only if they have an impairment in several mental functions.
If a person has an impairment in any mental functions, such that their adaptive functioning is markedly restricted, they should be eligible for the DTC. Mental functions should be defined as memory, problem solving, judgment, perception, learning, attention, concentration, verbal and non-verbal comprehension and expression and regulation of behaviour and emotions taken separately.
In 2014, I drafted a suggested revision of the T2201 which more accurately and more fairly assesses eligibility of persons with impairment in mental functions all the while preserving the program’s requirements that the person be unable to perform adaptive activity or require an inordinate amount of time to perform it all or substantially all the time.
Our redrafted definitions make more clinical sense, which will make it far more straightforward for qualified practitioners to complete the T2201 and for the CRA to make eligibility determinations.
Finally, mental disorders can be severe and persistent with intermittent expression of symptoms. You heard a bit about this earlier. Not all symptoms are necessarily present all the time or even 90 per cent of time. The combination of symptoms, however, as well as their unpredictable and intermittent nature, may render a person markedly restricted substantially all the time, even if not 90 per cent of the time. The same as you’ve heard this morning may be well true of other chronic physical conditions.
CPA has two recommendations. The first recommendation is to revisit the eligibility criteria for persons with impairments in mental functions so that eligibility is based on impairment in any one or more functions that make the person unable or take an inordinate amount of time to perform the basic activities of everyday life all or substantially all the time. Impairments in goal setting, judgment and problem solving should not need to be present together to establish eligibility.
Our second recommendation is that the administration of the DTC should be accountable to the legislation. While the T2201 form requires that the restriction be present 90 per cent of the time, the legislation requires all or substantially all.
To conclude, there must be parity in how mental and physical disorders are treated under all of Canada’s policies and legislation. Thank you.
Lembi Buchanan, Past Co-chair, Disability Tax Fairness Alliance: I’m honoured to be here to present to you. There’s an urgent need for fair tax treatment for all Canadians living with mental and physical impairments.
In the classic novel Alice in Wonderland, Lewis Carroll provides a satirical look at government bureaucracy when Alice is asked to play croquet by the Queen of Hearts. She complains, “I don’t think they play at all fairly. They don’t seem to have any rules in particular. At least if there are, nobody attends to them and you have no idea how confusing that is.”
I’ve been advocating on behalf of people living with mental illness for almost 20 years, helping to ensure that they are not discriminated against by government policies or procedures. Over the years, I have successfully assisted dozens of individuals access the DTC. I do not charge a fee for my services. These are individuals who have no one else to turn to unless they want to sacrifice one third of their refund to companies that charge contingency fees or pay a hefty legal bill.
I also have a website, fightingforfairness.ca, with information about the application and appeal processes as well as guidelines for taxpayers and qualified health care professionals.
I was also a member of the Technical Advisory Committee on Tax Measures for Persons with Disabilities with Karen. We made a number of recommendations which led to major reforms of the Income Tax Act and the creation of the Disability Advisory Committee. We were both on that committee, and despite our role to ensure fairness in tax policy for people with disabilities, the committee was disbanded the following year.
In recent years, it has become evident that individuals who qualified for the DTC for 10 or 20 years or even more and are asked to requalify have been denied the tax credit on questionable grounds.
We are certainly pleased that the Minister of National Revenue, the Honourable Diane Lebouthillier, responded to our request to reinstate the Disability Advisory Committee, which met for the first time last week. She made a brief to our committee and said that to judge fairness we have to follow the letter of the law. That’s why I’m here. If we could just follow the letter of the law, we will make huge advances in fairness.
I have several concerns about the administration of the DTC that need to be addressed without further delay.
Number one: CRA has created an insurmountable barrier for many by imposing the inflexible guideline that defines being markedly restricted in a basic activity of daily living all or substantially all of the time as being at least 90 per cent of the time.
Such a rigid interpretation of the Income Tax Act has no statutory basis. It is not even supported by CRA’s own policy guidelines, and it is not recognized by the Tax Court of Canada as an absolute threshold in both DTC and even GST cases, where a mathematical model might work much better than a physical or mental impairment.
Number two: CRA exercises the right to question the description of disabling effects of the impairment provided by qualified health care practitioners in form T2201 and the follow-up clarification letter.
Number three: The notice of determination when rejecting the claim for the DTC is a form letter that does not always provide a valid reason.
Number four: The notice of determination may refer to additional information provided by the qualified practitioner, but it does not include a copy of the clarification letter, even though this is an essential document if one wishes to appeal the decision.
Number five: The notice of determination when disallowing the DTC does not advise holders of RDSPs that their plan will be terminated unless they take steps to protect their investment during the appeal process.
The unintended consequence of individuals having to reapply for the DTC and being unjustly denied is the loss of a substantial portion of a savings plan designed to assist with their future financial needs. There is no rationale to penalize Canadians with disabilities no longer eligible for the DTC by asking them to repay all of the grants and contributions by the federal government in the previous 10 years.
How can an individual for the DTC for a number of years be eligible and then suddenly treated as if he or she was never eligible for the DTC? These individuals never abused the system. These individuals never broke the rules. Surely these individuals are no less deserving, even though they may no longer qualify for the DTC.
I have some recommendations for the committee.
One, we need to address the systemic problems with the administration of the DTC without further delay.
Two, unless there is clear evidence of fraud, CRA should not have the authority to disregard medical evidence certified by qualified health care practitioners acting in good faith, and I can’t tell you how many of these cases I have personally seen. The reason I help individuals and don’t charge a fee is because we have to right a wrong. Also, this is the only way I have access to documents and see what’s going on.
Three, individuals with lifelong mental impairments should not be required to reapply for the DTC every three to five years.
Four, when the DTC is denied, stop undermining the internal appeal process by withholding documentary evidence.
Five, when the DTC is denied, provide clear information to enable individuals to take proper steps to ensure that the plan stays open during the appeal process.
Six, when individuals are no longer eligible for the DTC, do not claw back contributions made by the federal government.
I want to close with this. In a letter to his MP, Colin of Peterborough wrote the following:
How does the government justify creating a program to help those with disabilities and challenges, and then take back what they have given after the fact? That is not only unfair, it is wrong. It is unjust. . . . Please do the right thing and fix this.
The Chair: Thank you very much. Thank you to all three of you for your presentations. Now, committee members, one question, and I’ll put people down for a second round. Hopefully we’ll get to one. If you could also direct your question. I would say to the panellists that after the directed question is responded to, if the other two want to jump in on any supplementary piece of information, that would be fine.
Senator Seidman: I shouldn’t be speechless but I’m just so horrified and outraged listening to your presentations. It kind of leaves me speechless.
The whole process, as we hear about it, from beginning to end, either is just obfuscation at best or, at worst, exploitative of the most vulnerable in our society.
I would like to start with a quote, Ms. Buchanan, from what you said, if I might. You said, “In recent years, it has become evident that individuals who qualified for the DTC for 10 or 20 years or even more and are asked to requalify have been denied the tax credit on questionable grounds.” That’s really astounding.
There have been some publicity and some questioning around this. What’s the possible explanation for this? Is it that the CRA needs more tax monies, so they’re just going after everyone they possibly can? Or there has been another suggestion that the CRA has stopped relying on input from registered nurses in the approval process, meaning that a medical professional now isn’t involved in reviewing the applications, and it’s just a bureaucrat looking at those applications.
Ms. Buchanan: I’m so glad I’m protected by parliamentary privilege because the word, I think, is malfeasance. I have taken two cases all the way up to the Tax Court of Canada because the Notice of Objection was not even responded to correctly. One had to do with bipolar disorder. The other had to do with a young man with autism. Both of them had received the Disability Tax Credit for over 25 years. Both of those cases were settled out of court. It would have been far too embarrassing for a lawyer to argue in front of a judge. At least our judges have some compassion. Certainly, this is one of the issues that the former Chief Justice of the Tax Court of Canada, Donald Bowman, emphasized.
We always have to follow the letter of the law, and, as I said at the beginning, if we can at least do that, we will have helped so many people. What happens is that doctors provide information in plain language, but, as Dr. Karen Cohen explained, you have to be impaired in so many different areas in order for them to accept that you are getting the DTC.
I just want to quote briefly from my husband’s case that was taken all the way to the Federal Court of Appeal, and Justice Rothstein wrote the unanimous decision. He said that if a mental impairment is of such severity that an individual is unable to perform the mental tasks required to live and function independently and competently in everyday life, they qualify for the tax credit. That’s case law.
If an individual with autism or even MS is not able to live competently and reasonably, they qualify. Please explain.
The Chair: Anything that either Dr. Cohen or Dr. Mendelson would add?
Mr. Mendelson: Not me.
Senator Petitclerc: I will echo Senator Seidman. It is outrageous and overwhelming to hear not only you but the witnesses before.
The only thing that comes to mind is that it’s really overwhelming when you think about all the concerns and issues and problems, whether it is with the non-refundable and the process, the evaluation.
To me, it seems like it’s not only fixing one little thing or the other, it’s really an in-depth challenge and, I want to say, problem, so where do we start? More precisely, do you feel confident in this Disability Advisory Committee? I understand it is volunteer, which I feel is another challenge, maybe, because it seems like there’s a lot of work to do.
Where do we start? If we want to do it right, what will the key elements be?
Ms. Buchanan: I’d like to respond and say that that’s why I’m here. I’m confident that we will fix the system. It’s going to be difficult, but we have so many senators who are supporting us and members of Parliament out there who are supporting us.
Why is this happening now? There was a change in the culture of how we treat people with disabilities. In 2011, this is where we started seeing a lot of changes. The Prime Minister, or the Department of Finance, wanted to have a permanent cutback of CRA payouts of $4 billion a year. So where do you start? You start with the most vulnerable.
The Chair: Any other response?
Ms. Cohen: Yes, I just wanted to speak to that. You raised a really important point. The Disability Advisory Committee was charged with addressing how we could improve the administration of the CRA. The original technical advisory committee was appointed by both Revenue and Finance. I think what you’ve heard in this panel and the previous panel is that some of the changes we need are legislative. They are not administrative. Certainly, the ones I’m talking about are more legislative. The committee has a broad mandate, but it probably has interests and fixes that go beyond its mandate.
Mr. Mendelson: If I can just add, we should remember that no matter how, the administration of the DTC, its application, appeals and so on does have to be improved, as we heard. But we should always remember that two thirds of the poorest of those who otherwise are eligible for the DTC get nothing out of it as long as it is non-refundable.
Senator Munson: Thank you for being here. The two questions that were raised really trouble me in terms of the experts at the other end of the chain in terms of establishing the criteria. It almost begs the question, who are they?
Public servants do try to do their jobs well. We have to recognize that. But there doesn’t seem to be anybody within CRA who has the same expertise as the doctors who are filling out these applications and understanding it from a medical, mental or whatever point of view. And that troubles me immensely.
Perhaps you can’t answer this question. You do sit on the advisory groups. There’s a crisis in autism in this country and there’s desperation out there, yet there’s no representation from this community on this advisory group. I do applaud the minister for having the committee, but on a volunteer basis. You can say whatever you want, but at the end of the day, I think we’re still ignoring the autism community, and we’re not getting a real picture of the disability community without having them at the table.
Ms. Cohen: Perhaps I’ll speak to that. I think one of the charges of the committee is going to be reaching out to the various stakeholder communities so that any recommendations we make are in fact based on the problems that members of the communities are facing.
I think it would be challenging. If I think within mental disorders alone, there is a range of conditions of people potentially eligible for the credit, let alone the physical disorders that present themselves. I think it’s important that we don’t lose perspective — and sometimes there’s some misunderstanding out there — of the fact that this is not a disease-based credit. It’s the impact of the disorder on a person’s functioning. There’s sometimes misunderstanding there that some kinds of disorders are categorically ineligible, and that’s not the case, and it shouldn’t be the case.
Ms. Buchanan: The autism group, Parkinson’s and MS are all part of the Disability Tax Fairness Alliance that I co-founded last August. They’re all members of our alliance, so as an individual representing that group I do sincerely try to bring their needs to the table as well.
Mr. Mendelson: Few people with autism would actually be eligible for any financial benefit in any case. You would have to make $25,000 to $30,000 before you would be eligible. To me, that’s probably a more significant barrier.
Senator Poirier: I’ll actually follow a little bit along the same line as Senator Munson’s question. You mentioned in your recommendation that CRA should not have the authority to disregard medical evidence from certified and qualified health care practitioners acting in good faith. That was a statement you made.
I’m curious to know, once the application comes into CRA, is the person looking at the application to see if they qualify or not the same person who will look at the application to see if a certain business expense is eligible? Or do we have, at CRA, a board of doctors that understand the medical procedures here that can actually evaluate and seek follow up? If not, should there be, like we have at CPP and Workers’ Compensation? Should we have a board of doctors who know and can evaluate the applications to see whether they fall into the criteria?
Ms. Buchanan: The DTC used to be adjudicated by Health and Welfare Canada in the 1990s, and they did have medical doctors on staff. They are not the same people who are looking at GST cases and other business expenses. They are trained. They have a training manual.
As for not accepting what the doctors say, I have a letter from the manager of the DTC giving the sections of the Income Tax Act that allow them to disregard the information. I will provide that to the chair so that it can be distributed.
The Chair: Thank you.
Senator Bernard: Thank you all for your presentations and helpful recommendations. I have just one clarification on a point by Dr. Cohen.
You mentioned that you drafted a suggested revision to T2201 in 2014. We’re now in 2018. I’m wondering what happened with that and if you can provide us with any additional information.
Ms. Cohen: I’m sorry to say, not much. I have submitted it several times to Revenue and Finance. I think there’s a conceptual problem with how the legislation was written as it concerns eligibility criteria for mental disorders. It’s a challenging set of disorders to make decisions about, as Ms. Buchanan will certainly attest.
I think there’s a way around it and a way that will make it clearer for qualified practitioners, but it hasn’t been adopted. Legislative change is hard, and that’s basically what would be required.
Senator Bernard: Did you have a recommendation for this committee on that?
Ms. Cohen: Good point. The committee has met once and we have this administrative mandate, but one of the things that for me was very important be included in the terms of reference is that if there are legislative or policy recommendations our committee wanted to make, we are able to make them, even though our mandate and the reason we were appointed was to address the administration.
Senator Raine: Thank you very much. We’re just starting this study, and I would like to thank Senator Munson for putting it on the table because we can see it’s very important.
What I don’t understand is how the Disability Tax Credit became the gateway for the RDSP. I would assume everyone would like to see people have an incentive to save for their ongoing future costs. The families, of course, are very interested in that as well.
If we have a DTC that you don’t get any benefit from unless you’re making $30,000 a year, we’re closing the door on a lot of people who have ability to save for their future, perhaps, and they can’t do it. I’d like to hear your comments on that.
Ms. Buchanan: I would like to correct something. If an individual, like someone with autism, is living at home, the parent or family member can declare the tax credit, so it’s not just the individual.
Also, for the RDSP, you do not have to have a taxable income in order to participate in the program. The government will make contributions for you. This has created a huge issue with the indigenous population because they don’t have a taxable income. Now they’re discovering there’s this gateway to other income support benefits like the Child Disability Benefit and the RDSP. So now they’re also trying to understand how this can work for them.
Senator Omidvar: Thank you to all three of you.
I’m not sure whom my question goes to, so I leave it up to the panellists to decide.
I’m thinking about tax benefits and tax credits. Once they’re designed and implemented, they’re supposed to be blind to demographic features unless there’s something particular like, in this case, disability.
You have a lot of statistics on take-up and refusal, but have you done a gender lens on these? Are we able to understand that, first of all, this is largely a poor community, and within that poor community there are women? And I wonder if you have insight into the take-up of benefits or refusal of benefits for women and, even beyond that, intersections of gender with race. I would be interested in that.
Ms. Buchanan: I don’t have that information. It’s certainly something that our Disability Advisory Committee can look into. We’ve already asked for data in terms of those over 65 and under 65 because I’m concerned that the results for people over 65 with mental impairments are going to skew the accepting applications. Because, obviously, they’re older and there is dementia and their applications aren’t scrutinized to the same degree.
Certainly, as far as women and a lot of the poor and, let’s say, disadvantaged individuals are concerned, these are the individuals that these companies for profit — we call them promoters — go after. They take a third, maybe a bit less, but a percentage of their refund. They advertise that they can get up to $50,000 in refunds because we can go back 10 years. A lot of people have said 70 per cent is better than nothing, and I think these companies are preying now.
The Senate also made recommendations on Bill C-462 back in May 2014. This was passed to create regulations for these companies. We have not yet seen any regulations from CRA on this issue.
Mr. Mendelson: To try to respond in terms of gender analysis, I haven’t done that analysis, but while this is the community of people who would, by virtue of their disability, be eligible for the tax credit, certainly a poor community, it’s only the wealthiest, the best off, among that community that are actually getting any financial benefit. Seeing as how women usually have a lower income than men, it’s probably the case that gender analysis would show that women with disabilities who would otherwise be eligible are more likely to not get any financial benefit out of a non-refundable credit.
I haven’t done that analysis. I’m not sure how to do it, but I think it could be done. That’s the probable result.
The Chair: We will now go to the second round.
Senator Seidman: Ms. Buchanan, just a little aside to your last point about Bill C-462. Indeed, that bill was called the Disability Tax Credit Promoters Restrictions Act, and that referred to Disability Tax Credit consultants, I believe, who were charging 30 to 40 per cent commission in exchange for their help in filling out these absolutely dreadful application forms. That is outrageous. The regulations haven’t been written, at least as far as we know. That’s something we might have a look at.
I did want to ask you about your organization’s website. You list a number of systemic problems with CRA’s administration of the DTC. Specifically, you say that the CRA abuses the internal appeal process by withholding documentary evidence.
You also mentioned this in your presentation and recommendations. I wouldn’t mind if you could clarify this for the committee and if you could tell us what recourse candidates have when their claims are rejected, please.
Ms. Buchanan: First of all, the website is my personal website. I call it the Disability Tax Fairness Campaign. That’s been online for about a year now.
The way they do this is unconscionable. I don’t know how some of these individuals at the CRA sleep at night; I don’t. I’m speechless. There aren’t enough words in the English language to qualify how I feel sometimes.
What they do is you get the Notice of Determination in the mail, and they refer to additional information. The additional information is in the clarification letter that’s sent to the doctors. However, they don’t send this copy to you, so you don’t know what other information your doctor has provided.
Now, going back, when we had the technical advisory committee, we requested that a copy of that letter, with the questions, be sent to the individual at the same time so that they were aware the doctor was being asked for additional information. I have brought this up again with senior management at CRA, and their policy is not to send it out at this point.
Now, they’re clever, too, because when you file a Notice of Objection, you can request this letter. They don’t tell you that, but you can request it. I always request it on behalf of the individuals I’m assisting.
When they deny the DTC on the second round, when they deny the appeal after the objection, they will send you what’s called a Notice of Confirmation, which confirms the initial decision to deny the tax credit. That’s when they send out this clarification letter, because they have to provide you with all the documents if you appeal to the Tax Court. But, you see, it’s too late for people, because who is going to appeal to the Tax Court of Canada? Talk about a difficult process.
Ms. Cohen: I just wanted to add to the point about promoters. When we presented, I believe it was to a Senate committee, on that bill on promoters, one of our points was that if the legislation and the definitions in the legislation were clear, and the administration of the credit were easier to do, there would be less need for promoters.
Mr. Mendelson: There’s a larger context here which I think might be of interest to the committee, because you’re dealing not only with the Disability Tax Credit but with all the other tax credits and so on. I’ve been involved in all of this, including the Child Disability Benefit.
We hear a lot about the problem of administering benefits. Just to speak a little bit in defence of the CRA, they weren’t set up to administer social benefits, and they’re not necessarily adapted to it administratively or culturally. I think the larger context is that perhaps we have to look at the CRA and the question of administering social benefits through the tax system and how the administration can be better designed in many ways, including the appeal mechanism, which is very much adapted to the Income Tax Act and administering the income tax.
I think it might be of interest to the committee to look at that larger context, namely, how the CRA could adapt better to the reality that we’re administering social benefits through the tax system. It’s a very good thing that we are doing it, I would say, but we might not yet have fully accommodated the realities that are involved in administering those kinds of benefits.
The Chair: Good point.
You had something to add, Ms. Buchanan?
Ms. Buchanan: I would like to thank Michael for that. I never thought of it in that way, but he’s absolutely right. It used to be Health and Welfare Canada that dealt with the DTC back in the 1990s. Perhaps addressing social benefits should go to Employment and Social Development Canada, because they’re the ones that administer the RDSP also.
Senator Munson: I’m just wondering, how did we get to this? Here we are. This has been making news headlines in the last year and a half. It seemed to me that things were working. How did it evolve into this? Dr. Mendelson has me thinking, of course, of those who live in poverty and the benefits they get. The idea of tax benefits? That’s not going to happen.
As a society, how did we get to this point, and how do we change it? Through legislation? We can only recommend probably what most of you recommended to us this morning. But is there more to push the government to get to that place where CRA may not be part of this? They can implement it, but to have other minds working on further programs in this regard.
The Chair: While you’re pondering your response to that, I will ask Senator Omidvar to put her question.
Senator Omidvar: I’m actually appalled by the sharks involved in all of this, the application sharks, whatever you may call them. I wonder if you can give us your point of view. Would you ban them? Would you fine them? Would you want to set up a not-for-profit agency that is funded to help people access benefits and appeal mechanisms? What’s your preferred solution to the shark problem?
The Chair: Okay. So sharks and how did we get into this mess? I think that was Senator Munson’s question.
Ms. Buchanan: One of the members of our alliance, Michael Campagne, helps families with children with learning disabilities and autism, and he charges a very modest fee for his services. He came up with why we’re in this mess and why we have this super increase in rejections. In almost every single category, the rejections are almost twice in 2017 what they were in 2016.
The RDSP was established in 2008. There’s a holdback for 10 years of the contributions provided by the government. That holdback is up this year. The Government of Canada is on the hook for billions of dollars. It’s like a promissory note, but it’s better than a promissory note because the money is actually in the account.
Thank you for parliamentary privilege. How best to stem this huge tide — not that anybody can pull out the money all at once; it’s not designed to do that — other than by starting to deny the DTC to some people who already have the RDSP? I can’t think of any other answer.
Ms. Cohen: As I mentioned earlier, the mandate of the Disability Advisory Committee isn’t going to address all the problems and the changes needed. Systemic and legislative changes are needed to address the important points that Mr. Mendelson raised, and they cannot be addressed by the Disability Advisory Committee.
In relation to the second question, if we did some of that, it would impact on the need for promoters.
The Chair: We’ll finish with Michael Mendelson.
Mr. Mendelson: Maybe it’s my 50 years of working in this field, but I don’t think it’s a big mess. There’s work to be done to improve things, and I hope your committee will do that, but it’s doable.
In terms of, for example, the question about the sharks, I think that’s part of the issue of the administration of social benefits by CRA. In my view, whoever is administering the benefits should be helping to fund non-profits to assist people in ensuring that they can take advantage of all the social benefits that are available. That’s the kind of normal thing that should occur, part of the evolution and improvement of the systems we have.
For me, the most important issue remains that no matter how good we make the administration of the program, unless it’s refundable, the people who need it most aren’t going to get it or benefit from it, and therefore I think the question of refundability has to be paid serious attention.
The Chair: Thank you very much to all three of you. You have advanced our knowledge and understanding of this big, complex situation that we seem to be facing at the moment. You’re helping us to sort all through that.
With that, thank you to our panellists here and Michael Mendelson by video conference.
We will adjourn the meeting and resume our discussion on this next Wednesday and Thursday. We have two further days of this particular study.
(The committee adjourned.)