MENTALLY DISABLED IN TAX CLAWBACK

Uproar after many cut off from tax credit

OTTAWA • Sufferers of autism, bipolar disorder, schizophrenia and other mental health issues are the latest victims of a clampdown on access to the disability tax credit by the Canada Revenue Agency, according to several accountants, mental health associations and other advocacy groups.

Sources told the National Post that some lifelong sufferers of mental disabilities have been cut off from the disability tax credit, or DTC, in the past two or three years after having received the credit for decades.

The statements come after an uproar in Ottawa earlier this week over restricted access to the DTC for sufferers of diabetes, which caused a firestorm of accusations toward the Trudeau Liberals from the opposition NDP and Conservatives. The Liberals have in recent months faced widespread criticism over proposed tax changes directed at private corporations.

Advocates say similarly restricted access to the DTC has occurred for mentally disabled people, largely due to a change in the language used to determine whether they are adequately disabled to be eligible for the tax credit. That has led to a higher number of people appealing rejections for DTC funding, advocates and tax consultants say.

“What the CRA has done is set that bar so high that it is almost impossible for people to apply,” said Lembi Buchanan, head of the Disability Tax Fairness Campaign.

Buchanan represents several severely disabled people who have recently been denied access to the credit. One such person, a woman with bipolar disorder who Buchanan declined to name, had been receiving funding under the DTC for 23 years before being cut off in 2015, she says. Another person, an autistic male who had been receiving DTC funding for 27 years, was cut off in 2016.

Buchanan recently began representing mentally disabled people who have lost eligibility for the tax credit, and has taken several cases to The Tax Court of Canada.

The revenue ministry acknowledged that there has been criticism about access to the DTC for mental health patients, but could not verify whether it was a systemic problem.

“This is a long-running issue,” said John Power, the press secretary to Revenue Minister Diane Lebouthillier, in a phone interview Thursday.

Power said that the ministry has taken steps to make easier access to the DTC, particularly by making application forms shorter. Both the number of people accessing the credit and the total money put toward the DTC have been steadily growing, he said. The office could not confirm whether access for mentally disabled people specifically has also been growing.

The CRA did not respond before publication time.

Critics say tougher access to the DTC is part of a tightening at the CRA, which, a number of tax consultants allege, has been forcing higher numbers of people into lengthy and sometimes expensive appeals processes in a bid to boost revenues.

“This is a symptom of something that seems to be going on in the CRA which is trying to collect more money — and not just collect from people who owe it, but create more people who owe it,” said Peter Weissman of Cadesky Tax in Toronto.

“What they’re doing, it seems, is trying to squeeze every last dollar out of the system without necessarily looking at who in fact is getting caught in the crossfire.”

Weissman and Buchanan are both currently lobbying to reintroduce the Disability Advisory Committee, a body that used to monitor CRA’s access to tax credits for mentally and physically challenged people that was scrapped by the Harper government in 2006.

The pair has asked to reinstate the DAC through letters to the Department of Finance. The department said in response in a June 02, 2016 letter that it was “seriously considering” comments from Canadians about improving CRA access to tax credits, but hasn’t yet brought back the committee.

Observers say part of the trouble for mentally disabled people is that their DTC eligibility often expires without the person’s knowledge, usually without a notice letter warning them to reapply. After reapplication, many are denied and then forced to appeal the CRA decision.

The number of people going into appeals has increased a lot,” said Ella Huang, the executive director of the Richmond Centre for Disability in B.C.

Huang said the number of people being rejected for DTC funding has risen from roughly one in 10 to something closer to five in 10, though she stressed that it was difficult to put hard numbers on the levels of reapplications and rejections. The Richmond Centre assists disabled people in applying for tax credits like the DTC.

Observers say that people who are deemed ineligible for the DTC also lose access to the registered disability savings plan (RDSP), a program introduced by former finance minster Jim Flaherty in 2008.

Losing access to the plan means that recipients of the DTC often have to pay back government grants and bonds that were awarded when they were deemed eligible for the credit.