Government response is nothing to brag about

February 24, 2019

The Government has finally responded to the Senate’s June 2018 report Breaking Down Barriers: A critical analysis of the Disability Tax Credit and the Registered Disability Savings Plan.

The Standing Committee of Social Affairs, Science and Technology “undertook the study after hearing of a sudden spike in the number of Disability Tax Credit applications that had been rejected.”

The letter, addressed to Senator Chantal Petitclerc, the Chair of the Committtee, was signed by the Minister of Finance, the Honourable Bill Morneau, the Minister of National Revenue, the Honourable Diane Lebouthillier and the Minister of Public Services and Procurement and Accessibility, the Honourable Carla Qualtrough.

It took these three Ministers and their staff six months to carefully craft a six-page letter without a single firm commitment to address any of the 16 recommendations made by the Committee after listening to several witnesses and studying all that is wrong with the administration of the Disability Tax Credit (DTC) and the Registered Disability Savings Plan (RDSP).

It is not as if the work of the Senators doesn’t have any value.

It is not as if the Ministers couldn’t take matters into their own hands. Concerns about systemic porblems with the administration of the DTC had already been brought to their attention on April 12, 2016.

It is not as if their constituents haven’t urged them to take action, especially when faced with an alarming increase in the number of rejections for the DTC in the 2016/2017 tax year and the risk of losing their RDSP.

It is not as if the media hasn’t investigated: “Sources say that some lifelong sufferers of mental disabilities have been cut off from the disability tax credit after having received the credit for decades.”

It is not as if the opposition hasn’t addressed these concerns in Parliament.

It is not as if the Tax Court of Canada hasn’t criticized the Canada Revenue Agency’s administration of the DTC. 

It is not as if these Ministers haven’t done anything since taking control of the government in 2015 to improve tax measures for persons with disabilities.

We learn in the letter addressed to Senator Petitclerc that the Budget of 2018 expanded the Medical Expense Tax Credit for costs related to service animals to include psychiatric service animals to better support individuals living with post-traumatic stress disorder and other severe mental illnesses. Nevertheless, it is another example of how much more difficult it is for people living with invisible disabilities to achieve parity with those living with physical disabilities

People living with severe and prolonged mental impairments, including schizophrenia, bipolar disorder, autism and serious brain injuries are not viewed by many politicians and policy-makers as being as disabled as individuals living with physical impairments. And there is the expectation that their condition may improve within their lifetime and then, they have no further rights to the DTC. or other government programs such as the RDSP.

We cannot fault the Government for its generosity when describing the RDSP to support long-term financial security for persons with disabilities. Over the first ten years, the Government has paid over $42 billion in grants and $989 million in bonds to eligible RDSP beneficiaries.

Instead of a gift that keeps on giving, it has become a liability when an individual ceases to be disabled. The plan is terminated and the government wants its money back. To add insult to injury, unlike TFSA accounts, the government also wants part of the investment income which is subject to tax.

Thousands of individuals who have been asked to reapply for the DTC have had substantial savings in their RDSP, an average of $27,000. Even though their condition has remained unchanged according to their health care provider, CRA exercises its authority to disregard the medical evidence and disallow the DTC without a valid reason.They may as well be dead.

A New Beginning, a report issued in December 2006 on the financial security for childen with severe disabilities, proposed a number of recommendations to ensure the long-term financial sustainability of the RDSP, including 9(e): "In the event of a cessation of a disability, that event give rise to a Refund of Contributions and that the same rules apply to such an event as apply upon the death of a Beneficiary."

More than $26 million has already been withdrawn from their savings accounts. As far as the Government is concerned, these individuals no longer need the money.

Now it is up to the Disability Advisory Committee to “advise the Minister of National Revenue on next steps… The recommendations of this Committee will help to guide the way forward as we continue to explore ways to improve tax measures and financial stability and security for Canadians with disabilities.”

The Committee’s First Annual Report is due next month.