December 24, 2018
All I want for Christmas is for the Canada Revenue Agency to follow the letter of the law.
It’s a big ask… I know.
While the medical profession or individuals applying for the DTC are not expected to be familiar with the legislation, there is every expectation that Canada Revenue Agency (CRA) must follow the letter of the law. But that is no longer the case.
In 2012, the CRA imposed the narrow and inflexible mathematical model in the determination of the Disability Tax Credit (DTC) by introducing the parenthetical notation following “all or substantially all of the time” as being “at least 90% of the time” even though:
In November 2016, I received a detailed policy statement from the legislative branch of the CRA that stated the following:
While the words “substantially all” cannot be rigidly interpreted as referring to a specific percentage in all cases, the CRA will consider that the test is met if the 90% threshold is reached. This position does not rule out the possibility that in a particular case, depending on the facts and circumstances, a level of something less than 90% could still meet the “substantially all” requirement.
Imposing specific mathematical models and timelines that are not supported by the rule of law is an abuse of power. CRA’s narrow interpretation of the legislation in recent years robs thousands of Canadians with disabilities of their entitlement to important income support programs that are critical for their well-being.
Doctors are faced with an ethical dilemma. How does one assess whether a patient living with a mental impairment, and other “invisible” diseases, is markedly restricted with a simple mathematical formula? Unlike blindness, and many physical impairments, there are no tools to determine such a precise assessment of disability.
And who can blame doctors and other qualified practitioners if they are reluctant to complete the Form T2201 Disability Tax Credit Certificate that has become so restrictive in recent years? This has become a major concern for individuals who have been asked to reapply for the DTC, even though the severity of their condition remains unchanged. Many doctors simply refuse to complete the form for their patients. Others are stymied when CRA asks them to complete a follow-up questionnaire called the “clarification letter” requesting “yes/no” answers to questions that do not address the complexity of their patients' medical conditions.
In Watts v. The Queen, Justice Bowman decided that the “all or substantially all” clause in a GST case was satisfied by an amount varying from 76% to 81% of the Appellant’s income. In his ruling, Judge Bowman noted that:
“There has been a fair amount written about the somewhat imprecise term ‘all or substantially all’. The unofficial departmental position is 90% but the meaning of the expression should not be decided on the basis of an arbitrary percentage…this mechanical exercise runs counter to common sense.”
It should not come as a surprise that a doctor might also believe that an estimate of 70% to 80% might be close enough to 90% to certify that the patient meets the eligibility criteria of “all or substantially all of the time” when a precise measurement is not possible. Under these circumstances, a doctor’s professional judgement is based on the patient’s descriptions of symptoms, and even these may be skewed to some extent condition when the symptoms are not always present.
The disabling effects of many medical conditions, including multiple sclerosis, epilepsy, bipolar disorder, schizophrenia and fibromyalgia, are impossible to quantify, when the intensity of symptoms varies from day to day,
Just as incomprehensible, is CRA’s narrow interpretation of an “inordinate amount of time” as being at least three times as long. Once again there is no legal basis for such a restrictive mathematical model. Prior to 2012, Form T2201 noted that “An inordinate amount of time means that your patient takes significantly longer than the average person who does not have the impairment.”
The policy change, imposing a precise mathematical model, has made it impossible for some individuals who previously qualified for the DTC to continue to qualify for the tax credit, even though there has been no legislative change or tax court rulings to support an increasingly rigid interpretation of the legislation by CRA.
The word "significantly" refers to a noticeable difference and is not tied to a specific number in any dictionary that I can find.
Nevertheless, in the section, "Cumulative effect of significant restrictions," the CRA has complicated the assessment of disability even further by stating that two or more significant restrictions must exist together at least 90% of the time for an individual to qualify for the DTC. CRA does not acknowledge that the disabling effects of some severe and prolonged impairments are impossible to quantify.
In its report, Disability Tax Fairness issued in December 2004, the Technical Advisory Committee on Tax Measures for Persons with Disabilities addressed a major concern raised by the disability community. Although an individual may not meet the markedly restricted threshold for eligibility for the DTC, but may be significantly restricted in two or more basic activities of daily living, when taken together, is the equivalent of being markedly restricted in one or more basic activities of daily living.
“For example, individuals with multiple sclerosis who experience fatigue, depressed mood and balance problems may not be markedly restricted in a single activity of daily living such as walking. However, the combination of symptoms may create a marked restriction because several activities like walking, dressing and mental functions are affected, even if each single activity is not markedly restricted.”
It is difficult to comprehend how a government that has a commitment to ensure that Canadians with disabilities benefit from important income support programs but makes it virtually impossible for a specific class on individuals to access them because of the episodic nature of the manifestation of their symptoms despite the severity of their condition.
Although the signs and symptoms may be perceived to be intermittent, the Tax Court of Canada has ruled that, an individual is markedly restricted all of the time because of the risk of resurgence of their symptoms. These individuals are no less deserving of the DTC and so many other benefits now that are dependent on their eligibility for the tax credit.
TAGS - DTC, CRA