April 12, 2016

The Honourable Diane Lebouthillier
Minister of National Revenue
House of Commons
Ottawa, ON K1A 0A6

The Honourable Bill Morneau
Minister of Finance
House of Commons
Ottawa, ON K1A 0A6

Dear Ministers Lebouthillier and Morneau:

Re: Request to reinstate the Disability Advisory Committee

Overview

In March 2005, former Minister of National Revenue, John McCallum, appointed a Disability Advisory Committee (DAC) reporting directly to him to advise on administrative aspects of the tax system affecting people with disabilities.

The creation of the DAC was one of the many recommendations of the Technical Advisory Committee on Tax Measures for Persons with Disability. The DAC was comprised of volunteers from across Canada (two of whom are the authors of this letter) and members of the Specialty Benefits Directorate of the Canada Revenue Agency (CRA). A photo from our inaugural meeting is attached along with our biographies.

The creation of the DAC led to an excellent working relationship between senior CRA staff and the committee members. Although we made significant progress on a number of important issues during our first year, our committee was canceled soon after the Conservative government was sworn in on February 6, 2006.
Not only was the DAC's tenure cut short when the government changed but the significant improvements that were made to the administration of the DTC ten years ago by your Liberal government have been all but lost.

Why Reinstate the DAC?

We believe that there is an urgent need to reinstate the DAC The DTC is even more important now for many Canadians then it was when the DAC was cancelled because it is now the basis for eligibility for Registered Disability Savings Plan and Qualified Disability Trust benefits.
Although the CRA has taken steps to improve transparency and tax fairness, implemented the Taxpayer Bill of Rights and the Service Complaints Program, there are serious problems with the current administration of the DTC.

We have observed the following systemic issues regarding applications for the DTC:

• Disregard of policies and procedures as outlined in its Income Tax Folio on the Disability Tax Credit, previously espoused in an Interpretation Bulletin.
• Determination of eligibility by a clerical staff unable to interpret the medical information in Form T2201 Disability Tax Credit Certificate and in follow-up questionnaires referred to as "clarification letters."
• Creating questions in the clarification letters that are not legal tests for eligibility.
• Interpreting negative responses in these clarification letters as conclusive evidence to deny the DTC while disregarding relevant medical information already provided by the doctor.
• Defining "markedly restricted all or substantially all of the time" as being "at least 90% of the time" even though a significant body of case law recognizes that a mathematical formula is not an appropriate measure of the effects of an impairment, especially for people suffering from psychiatric illnesses.
• Requiring doctors to speculate whether or not their patients with mental impairments meet the CRA's narrow interpretation of "all or substantially all of the time" even though there are no specific tests to measure brain activity in a 24-hour time frame.
• Disallowing the tax credit on questionable grounds or fabricated reasons that have no relevance to the applicant.
• Abusing the internal appeal process by withholding documentary evidence, for example, clarification letters that may have formed the basis for disallowing the DTC.

There are numerous Tax Court rulings in which the court has had no choice but to exercise common sense in order to achieve a reasonable and just result.

In our opinion, no judge has made a more indelible contribution to the understanding of the legislative intent of the Income Tax Act as former Chief Justice of the Tax Court of Canada, Donald G. H. Bowman who consistently applied his pragmatic and reasonable approach to DTC determinations while on the bench.
In one of the most important and influential decisions relating to the DTC (Radage v. The Queen 96 DTC 1615), Justice Bowman provided the following "sensible practical and compassionate interpretation" of the legislation:

"The legislative intent appears to be to provide a modest amount of tax relief to persons who fall within a relatively restricted category of markedly physically or mentally impaired persons… The court must, while recognizing the narrowness of the tests enumerated in sections 118.3 and 118.4, construe the provisions liberally, humanely and compassionately and not narrowly and technically."

This jurisprudence has guided the decisions of at least 64 subsequent Tax Court of Canada rulings but has had no influence in CRA's administration of the DTC. Reinstating the DAC will help the CRA align its DTC policies with the approach mandated by the Courts.

Our Experiences

Our concerns are based on our experiences "in the trenches," as one author is a tax practitioner with a disability and with more than 25 years in practice. The other is the spouse of a person with a mental impairment, who has had first-hand experience with the CRA, Parliament, the Tax Court of Canada and the Federal Court of Appeal.

We have seen and been involved with:

• The previous DAC;
• consultations and/or direct experience with individuals and organizations;
• reviews of completed Form T2201 Disability Tax Credit Certificates;
• reviews of Notices of Determination disallowing the DTC;
• formal reviews and appeals to CRA;
• appeals to the Tax Court of Canada; and
• judicial reviews of these decisions by the Federal Court of Appeal.

Our observation is that it is becoming all too common for the CRA to deny eligibility for the DTC on questionable grounds. Although all applicants have the right to appeal decisions to the Tax Court of Canada, the process is time consuming, complicated, and expensive for most applicants to challenge the CRA.

One consequence of the myriad of problems with the administration of the DTC is the growth of a highly profitable industry. Currently, there are approximately 24 companies in Canada charging contingency fees to assist taxpayers in navigating the complex DTC application process.

We applaud Parliament's passing Bill C-462 to limit fees these companies (referred to as "promoters") can charge. However, protecting taxpayers' interests from excessive fees while not addressing systemic problems with the administration of the DTC seems hypocritical to us. Our vision of a reinstated DAC is one that will not only help the CRA administer the DTC more fairly and predictably, but also help the CRA educate the public and medical practitioners.

Conclusion

Now, more than ever, it is of critical importance to create productive dialogue between stakeholders of the special needs community, experienced professionals and the CRA to address problems with the administration of the DTC.

The DAC would better allow the CRA to ensure that all Canadians with severe disabilities are entitled to a just result when applying for this modest but important credit intended as a tax fairness measure.

We would welcome an opportunity to discuss our request with you at your earliest convenience.

Thank you for your consideration.

Sincerely,
Peter Weissman, CPA, CA, TEP
Lembi Buchanan, M.S.M.

Encl.
DTC Backgrounder
Biographies of the authors
Photograph of the previous DAC (2005) with Minister McCallum

c.c.
Right Hon. Prime Minister Trudeau
Hon. John McCallum, Minister of Immigration, Refugees & Citizenship
Hon. Carolyn Bennett, M.D., Minister of Indigenous & Northern Affairs
Hon. Kirsty Duncan, Ph.D., Minister of Science
Hon. Jody Wilson-Raybould, Minister of Justice & Attorney General of Canada
Hon. Carla Qualtrough. Minister of Sport & Persons with Disabilities
Cheryl Gallant, M.P. Renfrew-Nipissing-Pembroke
Murray Rankin, M.P. Victoria