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Mentally Ill Deserve Fair Access To Disability Tax Credits

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The Canada Revenue Agency (CRA) "has abdicated its mandate for fairness by denying the Disability Tax Credit (DTC) to eligible Canadians with disabilities" and particularly those with psychiatric disabilities according to advocate Lembi Buchanan of Victoria. "It has become virtually impossible for the majority of people living with severe psychiatric illnesses to access the DTC without appealing to the Tax Court of Canada," she said.

Ms. Buchanan is lobbying the new Liberal government to restore the accountability that was lost during the Harper government. She added in an email that "there has been a slow erosion of fair treatment of taxpayers with disabilities and no one has really paid attention to it. And of course, no one really seems to care."

Ms. Buchanan won a significant victory in Tax Court in 2001 when she represented her husband who suffers from bipolar disorder. In Buchanan vs. Her Majesty the Queen, Judge Diane Campbell recognized that "disability" did not mean "inability." The judge ruled that Ms. Buchanan's husband's bipolar disorder was severe enough to meet the restrictive criteria of the Income Tax Act even though he was able to maintain many of his intellectual capabilities.

For her work on this, Ms. Buchanan received the Access Award for Disability Issues in Toronto in 2003. In 2016, Ms. Buchanan received the Meritorious Service Medal from Governor General David Johnson for her "crucial role in income tax reformation by creating the Fighting for Fairness campaign. Through her intense lobbying, the need to broaden the eligibility criteria for the Disability Tax Credit received national attention and led to persons with mental and episodic disabilities benefiting from the federal tax credit."

CRA's behaviour administering the DTC, however, resulted in the House of Commons censuring them for their lack of humanity in 2002. In 2003, the government set up a Technical Advisory Council to help improve fairness. Then, in 2005, a Disability Advisory Committee was established comprised of experts including Ms. Buchanan to report directly to the minister of revenue.

Its mandate was to provide "a forum to identify the needs and expectations of the disability community" as "an important consultative forum through which members can provide helpful advice, comments and suggestions on tax measures for persons with disabilities."

At the time, Minister of National Revenue John McCallum said that "it is crucial that persons with disabilities be treated equally and fairly, and I am confident that the members of the committee will help us achieve this."

But then, in 2006, according to Ms. Buchanan, the Harper government disbanded the advisory committee. Since then, it has again become increasingly more difficult for people with mental illnesses to qualify for the DTC partly because the tax form is so complicated. The form asks if activities are markedly restricted and adds in parentheses "at least 90 per cent of the time."

It is based on this that many claims are rejected. Because of the 90 per cent or above threshold, many doctors are unwilling to fill out the form in the first place. Upon rejection, many applicants give up while some appeal to the Tax Court, which often rules in favour of the taxpayer.

An example is the case of Steele vs. The Queen, 2002. The judge in that case stated in S 15 that "I remain just a bit sceptical that the medical profession has advanced to the point that the complexites of the brain's receipt, storage and retrieval of data can be identified with such an accuracy that would allow a psychiatrist to proclaim that an individual is unable to remember 25 per cent, 50 per cent or 90 per cent of the time."

The judge went on to say that he is bound by the decision of Associate Chief Judge Bowman in the Radage decision that:

  • a) 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 intent is neither to give the credit to everyone who suffers from a disability nor to erect a hurdle that is impossible for virtually every disabled person to surmount. It obviously recognizes that disabled persons need such tax relief and it is intended to be of benefit to such persons.
  • b) 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.
  • c) If there is doubt on which side of the line a claimant falls, that doubt should be resolved in favour of the claimant.
However, so many claims for the tax credit have been rejected that an industry of consultants has grown up in the past few years who promise to help get the claim through the system. One such company, The National Benefit Authority in Toronto, has 160 full-time staff and charge 30 per cent of the amount their clients recover from CRA. It is estimated that there are 24 different companies offering services.

In 2014 Bill C-462, The DTC Promoter's Restrictions Act, was passed to limit the amount these companies could charge disabled taxpayers, but then the government failed to enforce it. Ms. Buchanan has just heard from CRA that they are now going to draft the regulations for this act so that it can be enforced.

However, one positive piece of legislation brought in for those with disabilities by the Harper Government is the Registered Disability Savings Plan to help people save for the future. The government will donate up to $20,000 over a lifetime to people as well as to provide grant money for low-income Canadians with disabilities up to a $70,000 limit.

The catch-22, however, is that a Disability Tax Credit is a prerequisite to qualify. Unless Ms. Buchanan's lobbying is successful, few will.

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