Bill C-462

The Chair James Rajotte

I call this meeting back to order, colleagues, to deal with our second subject matter here this morning.

Again, this is the 120th meeting of the Standing Committee on Finance, and pursuant to the order of reference of Wednesday, March 6, 2013, we are starting our study of Bill C-462, An Act restricting the fees charged by promoters of the disability tax credit and making consequential amendments to the Tax Court of Canada Act.

Colleagues, we have an hour or less than an hour this morning, as we do have a motion that we have to deal with as well, prior to the end of the meeting. You do have clause-by-clause consideration on your lists, but as your chair, I'm going to suggest that we deal with clause-by-clause at a later date, simply because we want to hear from our witnesses who are here and we want to have the opportunity for members to ask questions.

In terms of witnesses, we have the mover, the presenter of the bill itself, Ms. Cheryl Gallant, the MP for Renfrew—Nipissing—Pembroke.

Welcome, colleague, to the committee.

Representing the Canada Revenue Agency, we have Mr. Brian McCauley.

Welcome.

We also have with us Ms. Gail Beck, from the Canadian Medical Association, and Dr. Karen Cohen, from the Canadian Psychological Association.

From the Council of Canadians with Disabilities, and representing the DisAbled Women's Network of Canada, we have Ms. Carmela Hutchison, member at large of the first organization and president of the second one. From the National Benefit Authority, we have Mr. Akiva Medjuck, the president.

From Edmonton, we were supposed to have, by video conference, from the Multiple Sclerosis Society of Canada, the president, Mr. Neil Pierce. We are still waiting for Mr. Pierce to appear there.

We will start with the mover of the bill, Ms. Gallant.

Each of you has about five minutes for an opening presentation. Then we'll have questions from members.

Ms. Gallant.

The Chair James Rajotte

Okay, thank you.

Ms. McLeod, I apologize. I did take your time.

I want to thank our witnesses very much for being here, and for responding to questions from the members as well.

Colleagues, I'm going to clarify the calendar.

As you know, the calendar did say we were going to start the budget implementation bill on Thursday, but some members have strongly suggested that we not start that bill until it has been referred to us by the House, until it is voted on at second reading. Therefore, I am recommending, as your chair, that on May 2 we deal with main estimates 2013-14, and on Tuesday, May 7 we deal with a private member's bill, Bill C-462, the Disability Tax Credit Promoters Restrictions Act. I'm hoping we can start the budget implementation bill with officials from the Department of Finance on May 9.

I'm looking around for nods and I hope I have agreement to do that, as your chair.

Cheryl Gallant Renfrew—Nipissing—Pembroke, ON

Mr. Speaker, as the member of Parliament for Renfrew—Nipissing—Pembroke, it is my pleasure to rise today to conclude the second hour of debate on my private member's bill, Bill C-462, An Act restricting the fees charged by promoters of the disability tax credit and making consequential amendments to the Tax Court of Canada Act.

As I stated when I last spoke to this bill, my intention in bringing this legislation before the House is very straightforward: I want increased protection for disabled Canadians from the predatory practices of certain disability tax credit promoters, some of whom see the tax credit as an opportunity to profit from the reduced circumstances of others.

The disability tax credit is a non-refundable tax credit that reduces the amount of income tax that either a person with a disability or a person supporting that person has to pay.

The need for this legislation was demonstrated to me once again as recently as last week, when a constituent of mine shared some correspondence from a promoter of the disability tax credit. The promoter asked her to travel seven hours from our rural constituency in eastern Ontario to Toronto to have the house doctor fill out her CRA form after her application was rejected based on her own family doctor's assessment.

The promoter charges a percentage of the refund, and if there is no refund, there is no profit. The potential for abuse is too great, considering the amount of money involved, particularly in cases in which the credit can be claimed retroactively for 10 years.

I am pleased to acknowledge the statements and support from all sides of the House in the first hour of debate and today. I listened very carefully to my hon. colleagues regarding the details and clarifications they will be seeking on Bill C-462 when it is referred to committee for consideration, and hopefully I will be able to answer all the members' questions.

As a friendly observation, some concerns raised are beyond the scope of what Bill C-462 would seek to accomplish. Those concerns represent an opportunity for some other member of Parliament to propose a remedy in their own private member's bill. I look forward to working in committee with all members of Parliament to do the best we can to assist Canadians with disabilities. In conclusion, I thank all members for their support of Bill C-462 and I look forward to their input and recommendations in committee.

Sylvain Chicoine Châteauguay—Saint-Constant, QC

Mr. Speaker, I am pleased to be speaking today to an important bill, namely Bill C-462, which addresses disability tax credits.

Each year, Canada Revenue Agency receives 200,000 disability tax credit applications. In 2010 alone, the government paid out refunds or assigned non-refundable credits worth $700 million.

A CBC story revealed that promoters were charging exorbitant fees to people asking for help and advice in order to obtain the disability tax credit.

Like many of my colleagues, I will be supporting this bill because I think there should be a limit to the fees charged by disability tax credit promoters. People with disabilities need to be protected so that they do not fall prey to certain promoters' scams.

The member sponsoring this bill hopes to accomplish that by reducing the fees charged by consultants when someone applies for the disability tax credit.

I, for one, feel that this needs to be studied in committee in order to clarify certain clauses of the bill so that they better respond to disabled people's financial goals. Disabled people have said that their most significant tax credit issues are unfortunately not addressed in this bill.

The disability tax credit application process is not entirely transparent, and disabled people have a hard time obtaining the tax credit because of the difficulty they have in filling out the certificate. The process needs to be simplified so that the disabled can have fair and equal access to the tax credit.

The application process is complex, and the tax credit remains very difficult to obtain. In my opinion, we must simplify the application process. Unfortunately, some unethical consultants prey on these people because they know the application process is complex and difficult. The terminology and definitions used in the paperwork are restrictive, unfair and result in inconsistency and discrimination. People find that the process for obtaining the tax credit is difficult, lengthy and overwhelming. They find the form difficult to understand and, consequently, often do not complete the process. They give up because, unfortunately, they often believe that it is pointless.

Eligibility for the credit requires a substantial change that prevents an individual from taking part in basic activities of daily living. I believe that the scope of this tax credit is too narrow, because people dealing with episodic disabilities all too often are not eligible for the tax credit. It is difficult for them to prove that their daily activities are significantly altered by their disability. Some days, they are less affected and they can do certain activities. However, on other days, they are not able to do them at all. The assessment criterion of basic activities of daily living is quite often a problem. The definition is too restrictive and, above all, contradictory. It is not in keeping with provincial and territorial definitions that doctors use, or those of other programs such as the Canada pension plan disability benefits.

The other problem is that it requires understanding and good will on the part of the doctors who must fill out the required forms. They find it very difficult to complete the certificate mainly because some disabilities are very complex and cannot always be assessed based on the definitions of daily activities.

Some people have missed out simply because their doctors gave them incorrect advice, based on an incorrect interpretation of the eligibility criteria. Any kind of family support could make the person ineligible for the tax credit, since this support helps make their lives easier.

Many participants and doctors are seriously questioning the reliability of the eligibility certificate.

This bill will prohibit a promoter from charging or accepting more than the established maximum fee.

A promoter is defined as a person who, directly or indirectly, accepts or charges a fee in respect of a disability tax credit request. I have to wonder how these fees will be determined by the Governor in Council and how the public and promoters will be informed about the tax credit.

An exemption is still possible, but promoters will have to inform the Minister of National Revenue if they are charging more than the maximum. This provision makes me wonder how the minister will determine whether the higher amount is acceptable. Promoters who are found guilty of charging more than the established maximum or of providing false or misleading information to the minister will be liable on summary conviction to a fine ranging from $1,000 to $25,000. These offences will be set out in the Criminal Code and could result in a criminal record.

We are obviously not against all promoters, since many of them have integrity and provide important assistance to the people who could benefit from this credit but who do not understand the eligibility criteria and process, as I mentioned. However, we have some serious concerns about the less scrupulous consultants who tend to try to exploit these people.

In 2005, this government changed the criteria and began offering retroactive tax refunds. So promoters began offering taxpayers their services to help them maximize their refunds. However, some promoters abused the system by charging exorbitant fees for their services. This is quite problematic and certainly unacceptable because these fees can be up to 30% of the tax credit, which can add up to thousands of dollars because this tax credit refund is retroactive.

It is important to prevent promoters from abusing the system, while keeping in mind that not all promoters take advantage of their clients. It is therefore important to make a distinction between promoters who abuse the system and promoters who act as consultants by helping disabled individuals get this tax credit, which they probably would not have received were it not for the help of a promoter.

By limiting these billable fees, the bill will protect disabled individuals from these abuses. It is a good provision, which is why we support this bill.

The Conservatives' budget cuts to the Canada Revenue Agency has made the situation even worse. Unfortunately, disabled individuals now have limited access to certain services that they could have gotten from the Canada Revenue Agency. The situation is utterly appalling.

Last year, I was able to hold one last information session for disabled people in my riding on the disability tax credit, and the Canada Revenue Agency took part. It was unfortunately the last time we were able to provide this service to our constituents because the cuts made to the Canada Revenue Agency will mean that CRA will no longer be able to help us with the information sessions.

I would like to thank my colleague from Burnaby—New Westminster, who continues to support us when it comes to this tax credit. He has been providing this information in his riding for several years now. So he is used to these kinds of information sessions, which my colleagues also greatly appreciate.

The assistance that the government is supposed to be offering to Canadians is being jeopardized by the cuts that the government is making to the Canada Revenue Agency. As a result of a lack of resources, the agency will no longer be able to adequately inform the public in question about the tax credit and meet demand by providing information sessions and other services. We are therefore seeking better protection against financial abuse and we want the government to place restrictions on the fees promoters charge people with disabilities. We also believe that additional information is required to make the bill more user-friendly in that regard.

Since my time is up, I would like to say in closing that we will support this bill and will thoroughly examine it in committee in order to improve it.

Phil McColeman Brant, ON

Mr. Speaker, I am thrilled to stand today in support of this important legislation. I want to thank and compliment my friend from Renfrew—Nipissing—Pembroke for undertaking the initiative, which aims to reverse a trend that has seen a vulnerable segment of our society, Canadians with disabilities, increasingly taken advantage of. It is a phenomenon that has left many Canadians rightly outraged.

The disability tax credit, or DTC, for short, is a non-refundable tax credit. It reduces the amount of income tax that either individuals with disabilities or those who support them have to pay. People who qualify for the credit must have a severe and prolonged impairment of mental or physical function as defined by the Income Tax Act and as certified by a qualified practitioner. This means that they must be unable to perform one or more of the basic activities of daily living, even with therapy and the use of appropriate devices and medication. Basic activities of daily living include things like speaking, hearing or eating.

Parliament brought in this tax credit recognizing that Canadians with disabilities face particular financial challenges for which they should receive tax relief. The maximum federal amount that could be claimed last year was $7,341, resulting in tax savings of up to $1,101 for the tax year 2011. The credit will be worth even more when people file their taxes this year. In 2012, federal tax savings will be up to $1,792 for a child under the age of 18 and $1,132 for remaining eligible individuals, or their supporting families, when they file their tax returns. A corresponding credit is also available for the calculation of provincial tax.

For the one in five Canadians with disabilities living on low incomes, this tax saving can make a major difference in the quality of their lives. We should not forget that people with disabilities are often seniors. It was shocking to learn that some of these individuals were being asked for and charged 20%, 30% or as much as 40% of the tax credit owing to them. That amounts to over $20 million a year earmarked for people with disabilities that instead goes to the private sector promoters that help to prepare their claims.

These fees are being paid to promoters to complete part A, the first step in the application process to obtain a disability tax credit certificate. There is usually no need to get outside help to fill out this paperwork. Either the individual applying or someone in his or her family can generally complete it without assistance. If someone does need help filling out the forms, the CRA's call centre employees provide assistance by phone. Of course, this service is provided free of charge.

Once this step is out of the way, the applicant has a qualified health practitioner complete part B. After the form is filled out, it needs to be submitted to the CRA, which determines if the person is eligible for the tax credit, based on the information supplied by the medical practitioner. If the CRA concludes that the person qualifies, he or she only needs to include the disability amount on his or her income tax return. That is all there is to it.

Bear in mind that the CRA receives, on average, 200,000 new disability tax credit applications per year. It is estimated that roughly 9,000 of these requests are received from taxpayers who use the services of a disability tax credit promoter. Consider that last year alone, $800 million in credits were issued. That is a lot of money, money intended to help the person with a disability, not a promoter.

If adopted, Bill C-462 would restrict the fees that can charged for or accepted by promoters preparing a DTC application on behalf of someone with a disability.

A maximum fee will be established, and anyone who fails to respect this fee will face penalties. A minimum penalty of $1,000 would apply when the maximum fee is exceeded. Just what the maximum fee should be will be determined following public consultations.

The bill also introduces a requirement that promoters notify the CRA when more than the maximum fees have been charged. Failure to inform the agency when an excess fee is charged would be an offence, and the promoter would be liable to a $1,000 to $25,000 charge. These provisions would come into force on a day to be fixed by the order of the Governor in Council, at which time the proposed maximum fee would be made public.

I remind the House that our government offers a very generous range of tax credits and benefits for Canadians with disabilities. These include the child disability benefit, a portion of the working income tax benefit and certain expenses eligible for the medical expense tax credit, among others. These valuable tax credits are among the many ways we are advancing our government's economic action plan, a plan for jobs, growth and prosperity, which is working for Canadians even as they face challenging times.

I want to be clear. This is not an attempt to crack down on the individuals legitimately claiming the credit or an attempt to deny anyone's claims. On the contrary, Bill C-462 is meant simply to make sure that those who qualify for the tax credit are able to receive it without paying unfair charges.

I want to be equally clear. Our goal is not to hinder businesses that operate above board. We believe firmly in a fair and functioning marketplace. We recognize that there are legitimate businesses, doing good tax preparation work, that are charging reasonable fees. The new provisions in Bill C-462 would apply only to those who take advantage of Canadians with disabilities by taking a huge cut of the tax credit they are due. We want to be sure that the price Canadians with disabilities pay for these services reflects the real value of the services they receive.

Tax discounters are guided by the Tax Rebate Discounting Act, and the fees they can charge for their services are capped. Tax professionals also have organizations that promote ethics and peer review of business practices. Once this act becomes law, the same standard of professionalism would apply to currently unregulated promoters that offer their services related to the disability tax credit, because we expect the same level of accountability and assurance of fairness for people with disabilities that all other Canadians enjoy.

This is a necessary and worthy step and is legislation that deserves the unanimous support of the House.

Christine Moore Abitibi—Témiscamingue, QC

Mr. Speaker, I am pleased to rise to speak to Bill C-462, Disability Tax Credit Promoters Restrictions Act.

This bill was introduced by my hon. colleague from Renfrew—Nipissing—Pembroke, with whom I sit on the defence committee. Thus, I was pleased to read her bill very carefully.

The purpose of Bill C-462 is to restrict the amount of fees that can be charged by promoters of the disability tax credit. I would like to back up a little bit. This bill is being introduced because the Liberal government changed the eligibility criteria for these tax credits in 2005. That change made retroactive payments possible for up to 10 years.

For those who do not know, I would add that thousands of people with disabilities in our community could be eligible for this tax credit, which generates a significant tax refund from the Canada Revenue Agency. I urge everyone who has a disability to see if they qualify for this tax credit. They could be eligible for up to $1,380 a year, which can be claimed retroactively for up to 10 years. Given that the government introduced retroactive payments, this can mean significant sums of money for people with disabilities.

This explains why some people have become promoters of this tax credit. People have begun offering their services to help eligible people apply for and receive their refund. Some of these promoters do a very good job, but others have unfortunately abused their position. For instance, some promoters charge exorbitant fees, sometimes as much as 30% of the refund received.

This sort of thing defeats the purpose of the tax credit. When the government creates a tax credit for people with disabilities, it wants those people to benefit from it, not the promoters. Furthermore, charging such high fees is an abuse of persons with disabilities, because it deprives them of part of the money that is rightfully theirs, which they need. Living with a disability can be difficult financially. That money should go primarily to them.

So, this bill limits the amount of fees that can be charged by promoters of the disability tax credit, in order to prevent these kinds of excesses. I am sure that the member, like me, has nothing against promoters in general, but rather she simply wants to ensure that people with disabilities have equal access to the tax credit and that they can find the support they need to obtain their refund, while safeguarding against potential abuse.

We know that promoters play a key role in helping people with disabilities get the government services and financial assistance they cannot get elsewhere. The Income Tax Act is fairly complicated, so it is easy to understand why someone might want help from a third party.

I am not an expert on the disability tax credit, but I am concerned that the bill, as written, may not include all of the details and provisions needed to ensure effective implementation. Still, it should go to committee so that we can study and improve it. After we study it in committee, we will be able to amend and clarify it so that we end up with a good bill that will protect people from those who would take advantage of them.

As it stands, Bill C-462 prohibits promoters from charging fees that exceed the maximum fee set by the Governor in Council. I wonder if it might be best to specify how and when those fees will be set and how the public will be informed. Those are details we can hammer out in committee. I imagine that my colleague has already started thinking about those details and will share her thoughts with the committee.

Any promoter who is convicted of charging more than the maximum fee or who makes false entries in a notification to the minister could end up with a criminal record. Here again, thorough study will ensure that we do not end up with the unintended consequence of saddling too many people with a criminal record.

I would like to make it clear that New Democrats support this bill, but we want to know exactly how the government plans to stop promoters from abusing the system and people with disabilities. We need more information about how this bill and its measures will be implemented and how the public will be informed about it all.

Though this is a useful bill, I believe that one of the problems with the disability tax credit lies not with promoters, but with access to the tax credit. The tax credit application process is not that easy to understand. Sometimes, people with disabilities have a hard time getting the credit.

In my region, the Canada Revenue Agency closed its Rouyn-Noranda office. Those people would have understood. People with disabilities may have trouble accessing services. When those services are no longer available in our regions, the situation is even worse.

I would also like to take a few minutes to congratulate and thank the hon. member for Burnaby—New Westminster. For several years now, he has been organizing information sessions to help people understand the process and get their refund more easily. He is supposed to come to my riding in the very near future. Many people with disabilities are waiting for him and are very eager to get this information. I really wanted to take the time to thank him today.

It is important to take some time to explain to people across Quebec and Canada how to get this tax credit, or in other words, to let them know who is eligible and what steps they have to take. Some people in my riding were able to get large retroactive refunds, which shows how important it is to facilitate access to this information and how essential and useful it has been for my constituents.

We must also ensure that the application is much easier for people to complete. We have to simplify the process and then, of course, properly inform the public. I would like to remind hon. members that the information sessions on the disability tax credit are vital and, unfortunately, this service may be reduced, particularly in remote areas, as a result of the cuts that are being made to the Canada Revenue Agency's regional offices.

If we want to stop promoters from abusing the system, we really have to look at the big picture. We can limit fees, but we must ensure that the information is available to people. That is essential. Giving people access to the information so that they can respond will help stop promoters from abusing the system. This is an essential step that must not be left out.

In order to build on the bill and improve access to the disability tax credit, it would be a good idea for the government to reverse the cuts it is making to the Canada Revenue Agency and give the department the resources it needs to make people aware of the tax credit and explain to them how to apply for it.

Of course, MPs' offices will also still be available to provide people with information and help them to navigate through this type of process. What is more, I encourage all members of this House, from all parties, who have not yet done so to set up information sessions to help those who could benefit from this tax credit.

I would like to remind the House that the hon. member for Renfrew—Nipissing—Pembroke's bill is worthwhile; however, I think that there are some details that could be ironed out in committee. I therefore urge my colleague to begin thinking about those details—how to determine the cost, for example—so that she can respond in committee to the questions I asked in my speech.