Disability Tax Credit Promoters Restrictions Act
An Act restricting the fees charged by promoters of the disability tax credit and making consequential amendments to the Tax Court of Canada Act
Cheryl Gallant Conservative
Introduced as a private member’s bill. (These don’t often become law.)
Second Reading and Referral to Committee
Subscribe to a feed of speeches and votes in the House related to Bill C-462.
- March 6, 2013 Passed That the Bill be now read a second time and referred to the Standing Committee on Finance.
May 7th, 2013 / 10:10 a.m.
Akiva Medjuck President, National Benefit Authority
My name is Akiva Medjuck, the founder and president of the National Benefit Authority. I welcome the opportunity of appearing before this committee to discuss fees charged by tax advisers who assist Canadians applying for the disability tax credit.
My involvement started when I assisted three siblings in filing disability tax claims. After helping their friends and others, I realized there was a business opportunity. Our company was launched in 2008 to help disabled Canadians and their families navigate the complex disability tax credit process. We employ over 120 people in more than 12,000 square feet of office space, using state-of-the-art systems to process claims. National Benefit Authority is the largest tax advisory service in this field.
The disability tax credit is an important program designed to help Canadians in need. Unfortunately, many potential beneficiaries are not aware of its existence. We spent over $1 million last year raising public awareness. We receive over 1,500 calls a day. About 40% of inquiries come by word of mouth. The National Benefit Authority does not engage in cold calling. It is selective with respect to its clients. We do not claim disabilities when the client has none. We do not hide our engagement terms from our clients. The process is fully explained to every prospective client and our contingency fee is clearly disclosed. Our one-page client agreement is in plain language, and we do not engage in high-pressure sales tactics.
Our 30% contingency fees apply only to current and past tax credits recovered for our clients. In typical cases, our clients receive credits for five to ten future years. We seek no payment for those future credits. As a result, our fee is a percentage of the total credit received by our clients and is substantially lower than 30%.
In a House of Commons debate, it was suggested that the DTC process is a simple, two-page form. But that's simply not accurate. We all know taxation issues are by nature complicated. The DTC is no exception. Because the DTC is a non-refundable tax credit, the disabled individual or a defined list of supporters must have paid income tax to receive the credit. The DTC allows the credit to be claimed against taxes in the current year going back ten years. Divorce, bankruptcy, relocation, and other life-changing events make the process even more complicated. On top of the tax analysis, there's a medical form that could be a challenge for doctors who are not familiar with the DTC process. What's more, many doctors are not paid for completing the form.
Finally, if there are any errors in application, or if CRA requests additional information, strict deadlines must be met or else entire applications are thrown out. Let's understand what our fees are paying for: our advertising budget; explaining the program to potential clients; and reviewing in detail the client's tax and medical information, often going back up to ten years. Where the client has not paid taxes, we identify relatives who might be eligible and then review those relatives' tax situation, going back up to ten years. We address complications in the client's life that have an impact on the DTC application and related tax issues. We deal with the client's doctors, who are often unfamiliar with the DTC-related paperwork of the criteria for approval. We submit materials and monitor the application process as well as any CRA follow-up inquiries on the medical or tax aspects of the DTC. Finally, we work with clients to collect additional information to meet the needs of CRA.
National Benefit Authority spends approximately three months compiling the claim and another three months monitoring and assisting with the application. Our fees fall within the accepted range for similar professional advisory services, such as lawyer contingency arrangements, SR and ED refunds, EI refunds, and property tax reassessments. We accept the risk, the months of work for which a client may go uncompensated. In return, we ask for 30% of the retroactive credit for those who engage us.
Canadians are under no obligation to use our services. People who learn about the credit either through referrals or online advertising are free to apply on their own or with the assistance of any other adviser. I should note that a quarter of our business consists of individuals who first attempted this process on their own and were unsuccessful, failing to receive the maximum tax amounts to which they were entitled. We provide a valuable service to disabled Canadians, and the vast majority of our clients are happy with our work. We would be pleased to provide you with letters and emails from such clients. If you would like to learn how we operate, we invite you to our offices in Toronto to learn how we've been successful in helping over 10,000 disabled Canadians.
While Bill C-462 was signed to protect disabled Canadians, the likely result will be to reduce public awareness and force Canadian families to contend with this complex process on their own. Advisors will focus on clients with high incomes, who pay enough taxes to claim the credit. Canadians with lower incomes, to whom the funds are even more important, will be left to fend for themselves.
There are better ways to address the concerns raised by parliamentarians, and we have offered our suggestion in a more detailed submission.
When the issue of contingency fees was raised in relation to the SR and ED program, the government launched the study in the 2012 budget, and the 2013 budget introduced a number of reforms. The government rejected limits on contingency fees. This provides a common sense precedent. We think the DTC is at least as important a program, and it deserves a period of study before legislation is rushed through Parliament. If Parliament chooses to act before studying the issue, we recommend in our submission that the fees and the related issue should be addressed in the legislation, rather than leaving it for regulations crafted by officials.
In closing, should Bill C-462 restrict the ability of organizations such as the National Benefit Authority to represent clients, many qualified and deserving Canadians will not receive this benefit. Canadians with disabilities need to have someone in their corner with the expertise and resources necessary for representing their interests.
Thank you. I would be pleased to answer any questions.
May 7th, 2013 / 10 a.m.
Dr. Karen Cohen Chief Executive Officer, Canadian Psychological Association
Thank you for the invitation to join you today to talk about Bill C-462. The Canadian Psychological Association is the national association for psychology in Canada. There are about 18,000 regulated practitioners, making us the country's largest group of regulated specialized mental health care providers.
Psychologists are designated qualified practitioners who can complete the disability tax credit certificate on behalf of patients with disabilities related to mental functions. The intentions of this bill—to help ensure that consultants don't make promises of eligibility that they cannot guarantee, that they don't charge people to apply for it when they're clearly not eligible, and that they don't charge people inordinately even if they are deemed eligible—are honourable.
Today I'd like to provide the committee with a bit of background on how the tax credit was most recently revised and highlight some of the issues that were raised about the complexity of the application process at that time, particularly as disability related to mental functions is concerned.
In 2003 I was appointed to the national advisory group on disability, the technical advisory committee, which advised the Ministers of Finance and National Revenue on disability-related tax measures that led to the system we have today. One of the original charges to the committee stemmed from the difficulties and inequities of assessing disability related to psychological as compared to physical impairments. I was tasked with leading the subcommittee on mental functions, which took on reviewing the eligibility criteria for the tax credit related to mental functions and making recommendations about how these criteria could be more fairly applied by the CRA.
Before the technical advisory committee did its work, there were tremendous challenges in fairly assessing disability related to mental functions. Some of these were addressed by the committee, and their 2004 report resulted in important legislative and administrative changes.
Despite the best efforts of consumers, health care providers, and the CRA, the assessment of persons with impairments in mental functions for the purposes of establishing eligibility for the tax credit continues to be complex compared to the assessment of more straightforward impairments to physical function.
It was for this reason that in 2007 I authored a short article that attempts to review and clarify some of the eligibility issues for health professionals who fill in the certificates on behalf of their patients with mental health conditions. I also drafted a new wording for the form, which I felt would result in fairer assessments, but unfortunately this wording was not entirely applied.
The difficulty revolves around the definitions of mental functions necessary for everyday life and the distinctions made between some kinds of cognitive functions and others. For example, whereas a person could be considered markedly restricted if he had only an impairment in memory, he would not be considered markedly restricted if he had only an impairment in judgment.
Further, whereas functions like memory and judgment are necessary to the completion of adaptive activities like self-care, these are all treated equivalently as functions on the certificate. Treating functions and activities in this way is inconsistent with the way in which psychologists think about and assess function. What results are definitions and criteria that may not be readily understood or appreciated by busy practitioners who fill out the certificates for their patients. The lack of clarity among patients and practitioners may inadvertently create a market for promoters.
The Canadian Psychological Association supports this bill because excessive fees charged by promoters should be restricted, especially when they too may involve any misunderstanding of eligibility. However, it is important to address what might be the underlying cause driving the use of promoters. If it is indeed the lack of clarity for taxpayers and health practitioners, then the criterion certificates themselves should be revised to enhance the fairness of assessments.
I have been committed to disability and its accommodation for some time now as CEO of the CPA, but also as a health practitioner who has worked in the area of disability. I would be very glad to contribute further by working with government on this file.
May 7th, 2013 / 9:55 a.m.
Dr. Gail Beck Member, Board of Directors, Canadian Medical Association
Thank you very much. Good morning.
I would like to thank the committee for providing the Canadian Medical Association with the opportunity to comment on Bill C-462. My remarks today will also be brief, as we are undertaking legal analysis.
All of you are aware that the bill was to be studied by your committee at the end of the month, which was the timeline we were working with. Tight timelines notwithstanding, the Canadian Medical Association is pleased that this bill is being prioritized by the House of Commons. This is an important step toward addressing the unintended consequences that have emerged with the disability tax credit, and we will seek additional opportunities to participate in the legislative process as this bill advances.
For several years, the CMA has urged the Canada Revenue Agency to address the unintended consequences of changes that were made to the disability tax credit in 2005. These consequences include fraudulent claims and tampering of forms by third parties, and they have resulted in an increase in the quantity of forms, which, to quote one of my colleagues, contributes to an avalanche of forms in physicians' offices like their own. In some cases, these third parties have even placed physicians in an adversarial position with their patients.
We are pleased that this bill attempts to address the concerns we have raised.
At the same time, we do have four concerns with the bill as proposed. First, we urge, prior to moving this legislation forward, that any possible privacy implications be assessed. We're concerned about the potential for breach of privacy of patient information that could arise during the transfer of patient forms from physicians to promoters and back, and within Revenue Canada and potentially other departments. Essentially it appears that the proposed bill as written would authorize the interdepartmental sharing of personal information. The Canadian Medical Association raises this issue for consideration, as protecting the privacy of patient information is one of the key duties of a physician, as spelled out in the CMA code of ethics.
Secondly, the definition of “promoter” should be assessed to ensure that it captures the appropriate individuals. As currently written in the proposed bill, the definition may apply the same requirements to physicians as to third-party companies if physicians apply a fee for form completion, which is an uninsured service in all provinces in Canada.
Our third concern is that the bill will continue to allow promoters to profit with respect to these forms. A fee is a fee, and physicians are concerned that even if a limit is enforced, there would still be a financial incentive to third parties.
Lastly, this question arises: why do vulnerable people need to go to these promoters in the first place? We suggest the disability tax credit form be revised to be more informative and user-friendly for patients. Form 2201 should explain more clearly to patients the reason behind the tax credit and explicitly indicate that there is no need to use third-party companies to submit the claim to CRA.
In conclusion, the CMA will continue its analysis and may have further comments on the bill as it proceeds through the legislative process. Any effort to curb the actions of avaricious enterprises that take advantage of people who are unaware of a tax deduction that is clearly available to them is welcome. Furthermore, any reduction in unnecessary red tape contributes to patient-centred health care. Nonetheless, we urge the committee to accord this legislation careful study to ensure that, as it addresses one issue, it does not create others.
I would be happy to answer any questions you might have.
May 7th, 2013 / 9:50 a.m.
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.
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.
April 30th, 2013 / noon
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.
The House resumed from March 4 consideration of the motion that 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, be read the second time and referred to a committee.
Disability Tax Credit Promoters Restrictions Act
Private Members' Business
March 4th, 2013 / 11:45 a.m.
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.
Disability Tax Credit Promoters Restrictions Act
Private Members' Business
March 4th, 2013 / 11:35 a.m.
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.
Disability Tax Credit Promoters Restrictions Act
Private Members' Business
March 4th, 2013 / 11:30 a.m.
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.
Disability Tax Credit Promoters Restrictions Act
Private Members' Business
March 4th, 2013 / 11:20 a.m.
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.