ARCH reports Canada Customs and Revenue Agency targeting Canadians with disabilities
Part of a series reporting the ten years of harassment of Canadians with disabilities by Canada Revenue Agency.
In November 2001, ARCH sounded the alarm that the tax man was trying to eliminate the Disability Tax Credit (DTC) for hundreds of thousands of Canadians with taxpayers.
“The Disability Tax Credit is geared to Canadians who, due to severe and prolonged impairments in physical or mental functions, are markedly restricted in their ability to perform basic activities of living… The maximum value of the Disability Tax Credit in federal income tax savings was $1,079.” Caledon Institute
By Harry Beatty, ARCH
The Canada Customs and Revenue Agency (“CCRA”) is conducted a sweeping audit of Disability Tax Credit (“DTC”) eligibility. They are sending out form letters to taxpayers who have disabilities, or who have dependants with disabilities, and who have been allowed the DTC claim for previous taxation years. While no official figures are available, government officials have provided an estimate of 70,000 to 90,000 as the number of letters which have been sent out. The form letter reads as follows:
“Dear :
Subject: Disability Tax Credit claim for [insert yourself or dependant] – Form 2201
We are currently updating our records and have noted that you were allowed the Disability Tax Credit (DTC) in previous years. After reviewing your file, we have determined that we do not have enough information to continue to allow your claim for the 2001 and future tax years. Please note that this review does not affect any DTC claims we approved for you in 2000 and earlier years.
In order for us to re-evaluate your eligibility for the DTC, you need to send us a new Form T2201, Disability Tax Credit Certificate.
If you feel that you still meet the requirements for the DTC, please complete Part A of the enclosed certificate. Part B, including the section called Duration, must be completed by a medical doctor or other qualified person (as defined on Form T2201). Without this information, we cannot confirm your eligibility for the DTC.
Once the form has been completed, we encourage you to submit it to us at the address provided with this letter. If you meet the eligibility criteria, we can update our records before you file your 2001 tax return. This will enable you to take advantage of our electronic filing services. If you wish, you can wait and submit the completed certificate with your 2001 income tax return.
In reviewing you new Form T2201, we may need to contact you, the medical doctor or the qualified person who certified your form to get additional information.
We appreciate your co-operation and understanding in this matter.
We regret any inconvenience this review may have caused. If you have any questions about this issue, please call us toll free at 1-800-959-8281. [Reference to local CCRA fax # omitted.]”
The current 2000 Disability Tax Credit form, T2201 (2000), is enclosed with the form letter.
If you receive the above letter from CCRA, or are representing or advocating for someone who has, the following preliminary observations may be of value:
1. The DTC review described in the letter refers to eligibility being reconsidered for the 2001 taxation year. So it relates to returns which will be prepared and filed next spring. Past returns are not being considered retroactively through this initiative.
2. It is possible, however, that some DTC recipients will have claims reviewed and/or disallowed retroactively. For example, their claim for the taxation year 2000 may be challenged by CCRA. They would receive a letter different from the form letter set out above. In that case, they should pursue their appeal rights, as described in the General Income Tax Guide from CCRA.
3. Recipients of the form letter should be aware that persons with a wide range of disabilities have received it, including persons who have had CNIB identification numbers, or who have used wheelchairs, for decades. The “file review” referred to in the form letter was evidently a perfunctory one at best. The fact that someone receives it in relation to themselves or a family member does not necessarily mean that the DTC claim that they made in the past was unfounded or unjustified. Nor does it mean that they cannot succeed in making the claim successfully for 2001 and subsequent taxation years. They should not be discouraged from pursuing the claim.
4. The most important aspect of this initiative relates to the changes made in the T2201 form over the years. It has gradually been made more restrictive in its wording, so that the scope for judgmental assessment by a person’s doctor or other qualified health professional has been drastically reduced, being replaced by a small number of “Yes/No” questions which create a very restrictive test. It is very likely that many persons with disabilities who were certified as being eligible for the DTC using earlier versions of the T2201 will not be able to qualify using the current version. This is an obvious administrative means of controlling or reducing the numbers of taxpayers eligible to make DTC claims.
Persons with disabilities and their families across Canada, and many disability organizations, have objected strongly to this mass DTC review. Most acknowledge that CCRA is able to, in general, audit income tax claims. They are wondering, however, why the DTC claim in particular has been singled out for this type of mass audit.
Because of concerns expressed to Members of Parliament, the Sub-Committee on the Status of Persons with Disabilities of the House of Commons (a sub-committee of the Committee on Human Resources Development) is conducting 4 days of hearings into the DTC and the form letters. I participated as an invited witness in the first day of Sub-Committee hearings on November 20th, together with representatives of national disability organizations. Sub-Committee proceedings (Hansard) for this session are not yet available to the public. While Parliamentary Hansard is available the next day, Committees and especially Sub-Committees take several weeks.
Because of widespread concerns regarding this initiative, ARCH ALERT will be providing further information about the DTC during the next year.
We are starting with an excellent article by Lembi Buchanan, a disability advocate, which discusses the implications of a successful DTC appeal to the Tax Court of Canada regarding her husband.
The Government of Canada has applied to the Federal Court of Appeal for judicial review of this decision. The noted tax law firm, Thorsteinssons, is counsel for Mr. Buchanan. ARCH has been approached by national disability organizations interested in intervening in this case.
Section 18.25 of the Tax Court of Canada Act provides that in cases heard by the Tax Court under its informal procedure, if the Government of Canada subsequently applies for judicial review in the Federal Court, then the Government is responsible for paying the “reasonable and proper costs of the tax payer.”
ARCH Disability Law Centre, as a specialty legal clinic with an Ontario provincial mandate, undertakes to achieve this Vision by identifying and removing systemic barriers have an impact on low income people with and empowering people with disabilities. ARCH is recognized as an expert in the law as it affects people with disabilities. (From the ARCH mission statement.) disabilities, including the root causes of poverty,
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