Proposed regulations to limit fees put on back burner

June 17, 2020

The CRA has put the proposed regulations to limit fees charged by companies assisting with DTC applications on the back burner

After six years in the works, COVID-19 has further delayed implementation of new rules limiting what third-party companies can charge to help people access the DTC. 

"At this time, the Canada Revenue Agency is unable to confirm when priorities will shift back to non-COVID-related matters," CRA spokesperson Dany Morin wrote in an email to Nova Scotia CBC reporter Yvonne Colbert. According to the CBC news report, a Nova Scotia doctor and two national organizations are calling for federal officials to implement the proposed regulations.  "For a lot of people," explains Dr. Joe Gillis, a family physician in Yarmouth, "it's a significant amount of money, and I don't think that's fair."

On June 1, 2019, the CRA published proposed regulations in the Canada Gazette to limit the fees that these consultants can charge when assisting with the application process for the DTC to $100.

The backlash was immediate.

No one disputes early reports of predatory practices and excessive fees of a few companies that ultimately led to the proposed regulations.

On the other hand, if applying for the DTC was a simple matter, Canadians with disabilities would not need to engage professional consultants to assist them. It is not uncommon for them to spend 40 hours and more on a file trying to right the wrongs by CRA decision-makers who fail to follow their own published guidelines and the rule of law as it is interpreted by the Tax Court of Canada.

It had been five years since Parliament passed Bill C-462, creating the Disability Tax Credit Promoters Restrictions Act on May 29, 2014 to restrict the fees of companies charging contingency fees ranging from an average of 15 to 35%. 

Although the CRA has held consultations over the years that supported change, the $100 is not based on a credible business model as requested by the Disability Advisory Committee “to ensure that promoters are adequately compensated for their time to ensure legitimate businesses can continue to operate and provide affordable services to this vulnerable community.”

Peter Weissman, co-chair of the Disability Tax Fairness Alliance, has noted the difficulties of navigating the tax system: “Despite the perception that the DTC application process is simple and efficient, for many people it is not. If the DTC were easy to access, the Senate Standing Committee on Social Affairs, Science and Technology would not have concluded the opposite in its June 2018 report, Breaking Down Barriers. DTC consultants play an integral part in maintaining the integrity of the DTC by challenging a CRA that holds all the power.”

It is just as well that the proposed regulations have ended up on the back burner. 

As it stands, measures to undermine the value of professional expertise as far as navigating the complexities of the Income Tax Act will hurt the very people they are designed to help.

Surely the CRA can do better as far as protecting access to the DTC for the most vulnerable people in our society without pulling the rug from under them.