HUMA Committee Report

APPENDIX

 

A COMPARISON OF THE GOVERNMENT’S

REPONSE WITH THE COMMITTEE’S

RECOMMENDATIONS IN THE REPORT

GETTING IT RIGHT FOR CANADIANS:
 THE DISABILITY TAX CREDIT

 

CHRONOLOGY AND BACKGROUND

12 March 2002: The Subcommittee on the Status of Persons with Disabilities unanimously adopted its report, Getting it Right for Canadians: The Disability Tax Credit.

14 March 2002: The Standing Committee on Human Resources Development and the Status of Persons with Disabilities unanimously adopted the Subcommittee’s report without changes.

21 March 2002: The Chair of the Standing Committee tabled the report in the House of Commons as the 7^th report of the Standing Committee on Human Resources Development and the Status of Persons with Disabilities. As authorized by the Committee’s motion, the Chair requested a response within 150 days.

21 August 2002: The Minister of Finance tabled the Government Response to Getting it Right for Canadians: The Disability Tax Credit. Because the House of Commons was not sitting the response was deposited with the Clerk.

30 August 2002: The Department of Finance released proposed amendments to the Income Tax Act to define “feeding oneself” and “dressing oneself” as activities of daily living.

3 September 2002: The Chair of the Subcommittee on the Status of Persons with Disabilities commented on certain deficiencies in the government response in a letter to the Minister of Finance.

COMPARISON OF THE RECOMMENDATIONS

WITH THE GOVERNMENT RESPONSE

                        The Government’s response was prepared in a narrative format without specifically referring to the Committee’s recommendations by number or by addressing them consecutively. Sometimes, the response deals with recommendations without referring to them specifically or by dealing with them inferentially. This analysis, therefore, includes statements in the response that appear relevant to the recommendations.

RECOMMENDATION 1

The Committee recommends that:

(a)The CCRA send a letter to every individual who received the letter dated 19 October, 2001 requesting DTC re-certification. This correspondence should apologize for the tone of the letter and provide a complete explanation as to why the CCRA requested re-certification.

 

(b)All individuals who obtain re-certification as a result of the 19 October letter be compensated upon the production of a receipt for any costs incurred in obtaining the services of a qualified person to complete Form T2201 or for providing the CCRA with any supplementary information.

 

(c)The CCRA inform all recipients of the 19 October letter that anyone who has been reassessed and refused the DTC can reapply once Form T2201 is redesigned (See Recommendation 5). In the meantime, the CCRA should also advise these individuals of their right to appeal the decision.

Government Response 1 (a):

The response maintains that the CCRA made every effort to ensure that the request for re-certification letter had the proper tone and content. Given this position, the response did not specifically address Recommendation 1(a).

Comment:

It is interesting to note that the response does implicitly suggest that the initial letter did not contain the proper content, since individuals who contacted the CCRA after receiving this letter received subsequent correspondence explaining the purpose of the DTC review of eligibility status.

Government Response 1 (b):

The government maintains that in a self-assessment tax system, taxpayers should bear the costs of providing documentation when needed. The government believes that it would be inequitable to compensate only those involved in the DTC review when compensation is not available to others claiming the DTC or other tax credits. In addition, all DTC claimants may be able to receive partial compensation for application costs by claiming them as an allowable medical expense when they file their tax returns.

Comment:

The Medical Expense Tax Credit (METC) reduces the cost of a number of specified medical expenses. It is universally available to Canadian taxpayers and not restricted to people with disabilities. It reduces the federal tax of the claimant by 16 per cent of qualifying non-reimbursed medical expenses in excess of $1,678 or 3 per cent of net income, which ever is less.

Government Response 1 (c):

No response.

RECOMMENDATION 2

The Committee recommends that no new requests for re-certification be sent to individuals who have claimed the DTC in whole or in part during the period 1986 to 1996 until Form T2201 is redesigned (See Recommendation 5).

Government Response:

No specific response.

Comment:

The Response states that file reviews such as the DTC review of eligibility status are necessary to maintain tax fairness and ensure that those who are entitled to this tax credit can continue to benefit from it.

RECOMMENDATION 3

The Committee recommends that the government immediately amend the Income Tax Act to incorporate judicial decisions. For greater clarity, the Committee recommends that the government:

(a)add “breathing” to the list of basic activities of daily living in paragraph 118.4(c) and;

 

(b)amend the wording in subparagraphs 118.4(1)(c)(i) and (ii) to replace “thinking, perceiving and remembering” and “feeding and dressing oneself” by “thinking, perceiving or remembering” and “feeding or dressing oneself.”

Government Response 3 (a):

No response.

Government Response 3 (b):

No response to the changes regarding thinking, perceiving or remembering. The Minister of Finance separately proposed amendments to the Income Tax Act regarding feeding or dressing.

Comment:

On 30 August 2002, the Minister of Finance proposed changes to the Income Tax Act to come into effect for the 2002 and subsequent taxation years that would provide separate treatment to feeding oneself and dressing oneself, and defined these activities as “feeding oneself means the physical act of putting food in one’s mouth or swallowing that food” and “dressing oneself means the physical act of putting on and removing one’s clothes.”

RECOMMENDATION 4

The Committee recommends that following consultations (See Recommendation 6) the government amend the Income Tax Act to:

(a)define “markedly restricted” in the context of each of the basic activities of daily living or some combination thereof. The Committee believes that these changes must clarify the meaning of “all or substantially all of the time” to reflect the reality of living with a disability;

 

(b)redefine “prolonged” in order to capture individuals who have an impairment that is substantial and recurrent, although not necessarily lasting for a period of 12 continuous months;

 

(c)reword subparagraphs 118.4(1)(c)(iii) and (iv) in order to better reflect the everyday situations of individuals with severe speaking and hearing impairments; and

 

(d)add “registered nurse” to the list of qualified persons for those residing in a remote part of Canada where access to other medical professionals, especially a medical doctor, is extremely limited.

Government Response 4 (a):

No specific response.

Government Response 4 (b):

No specific response.

Government Response 4 (c):

No specific response.

Comment:

Instead of addressing the recommendations, the response states that the Committee recommended a number of changes to the DTC’s eligibility criteria. Before these changes can be implemented, they must be further investigated to ensure that the policy intent of the DTC is respected and that the costs of these changes be considered within the context of overall tax and spending priorities. The response did not indicate how, or by whom, this investigation would be carried out.

 

The proposed revisions to the T2201 Form distributed in the summer of 2002 define markedly restricted as “unable or extremely limited.”

Government Response 4 (d):

The government’s response indicated that the Government (no department specified) would consult with the provinces and territories and with medical professional associations to determine whether registered nurses have the necessary qualifications needed to certify some or all types of physical and mental impairments.

RECOMMENDATION 5

The Committee recommends that all forms used to assess eligibility for the Disability Tax Credit be redesigned. The new Form T2201 should conform to the Income Tax Act, be less prescriptive and afford greater prominence to, and space for, a qualified person’s diagnosis. If necessary, the form should be either expanded or separated into different forms so that it (or they) contain questions related to an individual’s specific disability. A revised form should be referred to the Standing Committee on Human Resources Development and the Status of Persons with Disabilities before 1 December 2002 for consideration and study before it is publicly distributed.

Government Response

No specific response.

Comment:

During the past summer, the CCRA consulted groups representing persons with disabilities regarding a modified Form T2201. According to a draft version, dated 28 August 2002, the new Form T2201 affords slightly more prominence to a qualified person’s diagnosis, but it seems to be more prescriptive, too. Severe feeding and dressing impairments are afforded separate treatment. Unlike the current form, the draft form also contains a separate section for applicants with a severe and prolonged mental impairment. As yet, this revised form has not been referred to the Committee. The disability community has stated that the T2201 form used in previous taxations years (including 2001) was better than the current draft form and requested that it be used for 2002.