Special payment coming for people with disabilities

Last week, the government announced some support to help people with disabilities deal with the extra expenses they’re facing during the COVID-19 pandemic. Of particular note is a special one-time, tax-free payment of $600, which will be automatically paid to individuals who qualified for the Disability Tax Credit (DTC) as of June 1, 2020.

Let’s review some of the details of the special payment, take a look at how an individual qualifies for the DTC, and review a recent case that illustrates the difficulty some taxpayers have in qualifying for the credit.

Special COVID-19 payment

While the one-time payment of $600 will be paid automatically to those who qualify for the DTC, seniors who are eligible for the DTC and for the Old Age Security pension who are already getting the special $300 one-time seniors payment announced last month, will only receive an extra $300, for a total of $600. Low-income seniors who qualify for the DTC and the Guaranteed Income Supplement and who will be getting the special one-time seniors payment of $500, will get an additional disability payment of $100, also for a total of $600.

For children under the age 18 who qualify for the DTC, the special payment will be made to the parent (or guardian) who is considered primarily responsible for the care and upbringing of the child for the purposes of the Canada Child Benefit. In cases of shared custody, each parent gets half the payment (i.e. $300).

Qualifying for the DTC

The key to qualifying for the special one-time disability payment is being eligible for the DTC itself, which can sometimes prove challenging. In order to qualify for the DTC, an individual must have “one or more severe and prolonged impairments in physical or mental functions,” as certified on Canada Revenue Agency Form T2201, the Disability Tax Credit Certificate, by an appropriate health care professional. The impairments must be such that the individual’s ability to perform a basic activity of daily living is “markedly restricted.”

The ability to perform a basic activity of daily living is markedly restricted if “all or substantially all of the time,” the individual is either unable, or “requires an inordinate amount of time,” to perform the activity. The basic activities of daily living are: mental functions necessary for everyday life, feeding or dressing oneself, speaking, hearing, bowel or bladder functions and walking.

If no single basic activity of daily living is markedly restricted, an individual can still qualify for the DTC if their ability to perform more than one basic activity of daily living is “significantly restricted,” and the “cumulative effect of these restrictions is tantamount to being markedly restricted in one’s ability to perform a basic activity of daily living.” It’s this latter condition that landed an Ontario woman in Tax Court in late 2019, fighting for her right to claim the DTC for the 2014 through 2017 tax years.

The case

The taxpayer had been diagnosed with bipolar disorder and with irritable bowel syndrome (IBS). She also suffers from severe chronic pelvic pain and testified that in 2017, she was also diagnosed with psoas syndrome, a condition in which the psoas muscle (a long muscle in the back) is injured.

In Form T2201, her doctor explained that the effects of the taxpayer’s bipolar disorder was that, although she was on medication, she had concerns with memory loss, attention and concentration, making it more difficult for her to complete tasks and process information, compared to other people. The effect of her IBS diagnosis was that she always needed to be close to a washroom, otherwise her abdominal pain would worsen. Finally, the doctor explained that the taxpayer’s severe chronic pelvic pain required her to walk slowly, making it harder for her to complete tasks or get anywhere.

The taxpayer’s doctor certified on the T2201 that although she was not markedly restricted in any single basic activity of daily living, she had more than one severe and prolonged impairment.

Cumulative effect of being significantly restricted

The issue to be decided in the case, therefore, was whether or not the cumulative effect of being “significantly restricted” (as opposed to be being “markedly restricted”) in more than one basic activity of daily living is “equivalent or tantamount to being markedly restricted in one such activity.”

Under the Income Tax Act, an individual’s ability to perform a basic activity of daily living is markedly restricted only “where all or substantially all of the time, even with therapy and the use of appropriate devices and medication, the individual is … unable (or requires an inordinate amount of time) to perform a basic activity of daily living.”

To correctly interpret this rule, the judge stated that one must focus “primarily on time, whether the cumulative effect of more than one significantly restricted ability collectively requires an inordinate or excessive amount of time, all or substantially all of the time.” The terms “inordinate” and “excessive” imply unreasonable or disproportionately large amounts of time that are far more than usual or expected or appropriate. Administratively, the CRA considers that an impairment must restrict a person’s ability to perform a basic function at least 90 per cent of the time in order to satisfy the “all or substantially all of the time” requirement.

While acknowledging that “an inordinate amount of time is a judgment call based upon a recognizable difference in the time it takes a person to complete the activity as compared with a person without the restricted ability,” the CRA usually considers “inordinate” to mean taking at least three times as long as an unaffected person.

The taxpayer’s doctor’s explanations of the time the taxpayer needed to complete her basic daily living activities, were that “she took longer than other persons, walked slowly, and completing tasks and getting places were harder for her.” In court, the taxpayer testified that she had five bad days a month in 2014 and 2015, eight to 18 bad days monthly in 2016, and was effectively housebound only for the first six months of 2017.

Unfortunately, this was not considered to be enough time to meet the qualifications of the DTC.

As the judge wrote, “(While) there is no doubt that (the taxpayer) faces several physical and mental health challenges … I am unable to conclude on the evidence presented that collectively these caused her to require an inordinate or excessive amount of time to complete her basic activities of daily living all or substantially all of the time in the years in question.”