Especially since it is now the proposed gateway for the Canada Disability Benefit
Amidst Canada’s social support systems, which often falter in meeting the needs of people with disabilities, the Disability Tax Credit (DTC) stands out as a key area demanding reform. The DTC is a nonrefundable federal tax credit meant to help people with disabilities and their families offset some of the additional costs of disability by reducing their income tax. This is not its only function — it’s also an exclusive gateway to important financial security programs like the Registered Disability Savings Plan (RDSP) and the Child Disability Benefit.
The DTC has long been a thorn in the side of disability advocates. Designed to alleviate the financial burden on individuals with disabilities and their families, the DTC is plagued by low uptake rates and complex and often misunderstood eligibility criteria, leaving many in need without adequate support.
That’s why the recent report from Canada Revenue Agency’s Disability Advisory Committee (DAC), which illuminates the DTC’s ongoing failures and underscores the need for change, provided a glimmer of hope for improvement.
But this need — always pressing — has now become urgent. The recent federal budget announced that the forthcoming Canada Disability Benefit (CDB) — a new monthly benefit initially touted as a means to lift people with disabilities out of poverty approved with unanimous support in Parliament last year but not yet rolled out — is set to be delivered in 2025, with the DTC as the gateway. No DTC, no benefit.
Reform is more crucial now than ever.
When the budget announced the intention to tie the CDB through the DTC system, it was greeted with dismay. This scenario was feared amongst the disability community and discouraged loud and clear through multiple public consultations. The CDB is meant to help lift some of the most vulnerable members of our community out of poverty — but how can it do that when it’s delivered through a system that is notoriously difficult to access and riddled with bureaucratic hurdles?
Some estimates suggest that only 40 per cent of working-age adults with a “severe” disability in Canada have been approved for the DTC. The recent DAC report indicates that only 25 per cent of the most “severely” disabled complete the application, receive the DTC certificate, file an income tax return, and claim the DTC. This stark reality underscores the pressing need for a system overhaul.
One and half million of the eight million people in Canada who have a disability live in poverty. The situation is even worse for people with an intellectual disability, the population we support. Seventy-three per cent of working-age adults with an intellectual disability who live on their own live in poverty.
People with intellectual disabilities are far less likely than others to have access to things like safe and affordable housing, inclusive education, and paid employment, leaving them to disproportionately rely on government sources of income assistance.
The DAC’s 26 recommendations point to cracks in the DTC’s foundation and paint a troubling picture of a system that frequently fails to meet the diverse and complex needs of those it intends to support. Many recommendations offer hope, with some being particularly important for helping people on their path to access the CDB.
These are among recommendations from the report that require immediate action.
Recommendation: Increased education and awareness
In 2019, a majority 60.6 per cent of DTC beneficiaries were under 18 or over 64 years, highlighting a significant gap among the working-age population (18-64 years old). This discrepancy is particularly concerning given that the CDB primarily targets this demographic.
The root of this issue often stems from widespread misinformation and a lack of awareness surrounding the DTC. Many people and their healthcare practitioners mistakenly believe eligibility is tied to employment status or taxable income. This is not the case.
Applying for the DTC even if you don’t work or make money is beneficial. As the DAC recommends, it’s more important than ever to develop clear messaging on why filing taxes is so important to get the DTC, even without taxable income. In light of the government’s choice to use the DTC as the gateway to the CDB, widespread, easy-to-understand, and plain-language education on the DTC must be delivered by the government itself, as well as a wide range of community-based stakeholders.
Recommendation: Support healthcare providers to fill out DTC applications
This lack of understanding of the DTC also extends beyond the general public to healthcare providers. For those with an intellectual disability, it can be a challenge to get a healthcare practitioner to fill out a DTC application due to their own confusion around eligibility requirements. The delivery of the CDB through the DTC system exacerbates this concern.
Often when a healthcare practitioner lacks a comprehensive understanding of DTC eligibility, specifically around intellectual disability, they might hesitate or decline to even complete the application, leaving their patient unable to access the DTC and other important supports they may very well be entitled to. Healthcare practitioners, rather than supporting people in accessing the benefits to which they are entitled, act as gatekeepers, often erroneously.
As the DAC suggests, this systemic issue underscores the urgent need for the government to improve resources, knowledge, and training to support healthcare providers in completing DTC certificate applications. Proper guidance and education targeted toward healthcare practitioners would help create a healthcare community committed to supporting people with disabilities in accessing all their eligible benefits, including the new CDB.
Recommendation: Expand the range of professionals qualified to provide DTC certification
To further support working-age people with disabilities in accessing important disability supports, including the CDB, the DAC proposes widening the scope of professionals authorized to complete DTC applications. By expanding the accepted range of professionals to include various licensed health and social services providers, the DAC aims to dismantle the substantial barriers many face in accessing healthcare professionals, particularly those with limited financial means or without regular access to primary care providers.
Many families we support are constantly challenged with these issues, and many give up on the idea of applying for the tax credit as a result.
Recommendation: Automatic eligibility
In advocating for streamlined access to the DTC, the DAC proposes an examination of the alignment between eligibility criteria for provincial/territorial programs and the DTC. This initiative would recognize equivalencies and facilitate automatic eligibility for the DTC among recipients of disability benefits from other levels of government.
Currently, disparities in eligibility requirements among federal, provincial, and territorial disability support programs lead to confusion and undue administrative burdens for applicants, who must repeatedly substantiate their disability status across multiple systems. By harmonizing these processes and eliminating duplicative efforts, particularly in accessing the CDB, administrative burdens can be alleviated.
The DTC serves as a critical entry point for people with disabilities to embark on their path to financial security, but it falls short. The DAC’s report presents some good solutions for transforming the DTC into a more equitable and inclusive system that better serves the needs of individuals with disabilities.
With the government’s plan to utilize the DTC as the gateway to the CDB, it is imperative that the CRA take heed of these recommendations and work towards implementing meaningful reforms that are long overdue. Anything less would be a disservice to the people it’s meant to serve.
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