Why is government denying valid claims for the DTC?

February 18, 2019

I have been racking my brains trying to understand why people eligible for the DTC for 5, 10, 20 years are being disallowed the tax credit when asked to reapply.

Inquiring minds want to know now that tens of thousands of dollars are at stake.

I finally found the answer while rifling through some old newspaper clippings.

People living with severe and prolonged physical and mental impairments are starting to cost too much money. Especially if they opened up a Registered Disability Savings Plan (RDSP).

Our Minister of Finance, the Honourable Bill Morneau said so.

After delivering the first Liberal Budget, he sat down for an interview with reporter Bill Curry of The Globe and Mail (March 25, 2016) to discuss the proposed $3 billion a year in savings through a review of tax expenditures.

In the article titled, “Tax credits on the chopping block,” Minister Morneau explains that “tax expenditures” are tax credits that cost the government money. In fact, CRA was "charged" with cracking down on tax cheats.

Unfortunately, subsection 220 (1) of the Income Tax Act also gives CRA staff the "authority" to question the medical evidence provided by health practitioners in applications for the DTC. Even though, disregarding credible medical evidence, without providing a valid reason, with the exception of fraud, is fraudulent activity by our own government. That is, if fraud is defined as "a false representation intended to result in financial gain."

Without a doubt, Minister Morneau has every right to be pleased with the results. Certainly, as far as cutting back on tax expenditures and saving money.

In 2015-2016, approximately 365,274 people applied for the DTC and 30,235 were rejected. The following year, with the new Liberal budget in place, there were fewer applications, 354,798 but the number of rejections increased to 45,157. There was a savings of $250,000,000 in tax credits. It was the first year since 2002 that fewer taxpayers were able to claim the DTC than the year before. 

The rejections were right across the board. Every category was affected. However, people impaired in their mental functions were the main target with an increase of 19% accounting for 21,795 rejections up from 14,199 the year before.

Many of these individuals were reapplying for the DTC. People living with schizophrenia, bipolar disorder, autism, brain injuries and other lifelong disabilities are the most vulnerable since they are asked to reapply, often every three to five years, even though their condition has remained unchanged.

A severely autistic young man, John Doe was asked to reapply in 2016 for the tax credit even though he had received it for 20 years. He had $58,000 in his RDSP account and was at risk of losing $27,000 of government contributions when he was denied the DTC. The appeals officer explained, now that he was an adult and able to bathe himself and look after his personal hygiene needs, he no longer qualified for the tax credit. Nevertheless, John Doe's case was successfully appealed to the Tax Court of Canada.

Thousands of other Canadians with disabilities were not so lucky. And the federal government managed to claw back more than $26 million in its contributions to them since 2010.

Does Minister Morneau really care that a large chunk of the $3 billion in annual savings comes from the most vulnerable members of our society, many of who live in poverty while his own financial future is secure?

Let's not forget John Doe who still has to reapply for the DTC in 2023. And once again, if someone at CRA  discovers that he can bathe himself, then he is at risk of significant losses to his RDSP.

Unless, of course, Minister Morneau is paying attention to Colin of Peterborough who writes:

"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?  This is not only unfair, it is wrong, it is unjust...  Please do the right thing and fix this."  

If you agree with Colin, ask your Member of Parliament to call Minister Morneau and ask him to honour his commitment to Canadians: “We’ll listen to voices that tell us why each part of the tax code makes sense," he said in the interview. "...our objective is to ensure that there’s tax fairness.”

There is no question that the RDSP is a wonderful program ensuring long-term savings to help Canadians with disabilities with future financial needs.

However, income security programs for people, certified by a medical professional to be severely impaired in their physical and mental impairments, do not belong on the chopping block.