Finance Committee on May 7th, 2013

[Mark Perlman]

I believe a lot of people aren't doing their own taxes, or they're using tax intermediaries or tax preparers to do those files that they were doing before. What had happened before, though, was that we were getting....

I don't want to get into...but we were getting tax preparers who would prepare the files electronically for the individuals and then they would submit them on paper. That's one of the reasons why the legislation changed. We found that by putting the rules in about the ten returns or more, we were actually able to get a lot more of those electronically.

[Raymond Côté, NDP, Beauport—Limoilou, QC]

Sorry. I do want to accept what you are saying, but that still generates costs for individuals. I assume that the agency currently does not evaluate that cost.

Do you evaluate the cost that could generate? We are talking about cost internalization in economy. What kind of financial impact could the inability to file their own tax returns have on people?

[The Chair, Conservative, James Rajotte]

Just a brief response, please.

[Mark Perlman]

I believe the point I was trying to make was that they were already using tax preparers. The only difference was that they were coming in on paper as opposed to electronically. These tax preparers did have electronic tools to file. Filing it electronically actually made it a lot more efficient for the agency.

[The Chair, Conservative, James Rajotte]

Thank you. Merci.

I want to thank our officials for being with us today and for responding to our questions. There have been a number of items addressed for follow-up. Please send those to me, as the chair, and I will ensure that all members get them with respect to estimates or any other items that have been requested.

Colleagues, I will move to main estimates votes. It should be understood that all of the following votes take into account the fact that they have been reduced with the adoption of interim supply by the House.

I will do the votes under Finance first.

[An hon. member]

[Inaudible—Editor]

[The Chair, Conservative, James Rajotte]

Do you want it on division or do you want a recorded vote?

[Peggy Nash, NDP, Parkdale—High Park, ON]

We'll vote.

[The Chair, Conservative, James Rajotte]

Okay, a recorded vote.

[Peggy Nash, NDP, Parkdale—High Park, ON]

We can go on division, Mr. Chair.

[The Chair, Conservative, James Rajotte]

On division? Okay.

FINANCE

Department

Vote 1—Operating expenditures..........$111,169,165

Vote 5—The grants listed in the Estimates and contributions..........$5,035,000

Vote 10—Pursuant to subsection 8(2) of the Bretton Woods and Related Agreements Act..........$1

Auditor General

Vote 20—Program expenditures..........$74,100,653

Canadian International Trade Tribunal

Vote 25—Program expenditures..........$8,660,195

Financial Transactions and Reports Analysis Centre of Canada

Vote 30—Program expenditures..........$45,744,322

Office of the Superintendent of Financial Institutions

Vote 35—Program expenditures..........$909,369

PPP Canada Inc.

Vote 40—Payments to PPP Canada Inc. for operations and program delivery..........$12,300,000

Vote 45—Payments to PPP Canada Inc. for P3 Canada Fund investments..........$252,900,000

(Votes 1, 5, 10, 20, 25, 30, 35, 40, and 45 agreed to on division)

Shall I report the votes under Finance, less the amounts voted in interim supply, to the House?

[Some hon. members]

Agreed.

[An hon. member]

On division.

[The Chair, Conservative, James Rajotte]

We will now deal with Canada Revenue Agency.

CANADA REVENUE AGENCY

Department

Vote 1—Operating expenditures, contributions and recoverable expenditures on behalf of the Canada Pension Plan and the Employment Insurance Act..........$3,046,330,734

Vote 5—Capital expenditures and recoverable expenditures on behalf of the Canada Pension Plan and the Employment Insurance Act..........$73,081,967

(Votes 1 and 5 agreed to on division)

Shall I report the votes under Canada Revenue Agency, less the amounts voted in interim supply, to the House?

[Some hon. members]

Agreed.

[An hon. member]

On division.

[The Chair, Conservative, James Rajotte]

Thank you, colleagues.

We have a very busy panel next. I will suspend for a couple of minutes while we bring them forward.

Thank you.

[The Chair, Conservative, 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.

[Cheryl Gallant, Conservative, Renfrew—Nipissing—Pembroke, ON]

Thank you, Mr. Chairman.

I'm just going to give a brief overview of the bill, in case anyone hasn't had a chance to read it and just to remind you of what it's about.

The intention in bringing it here was very straightforward. I want to see increased protection for disabled Canadians from the predatory practices of some disability tax credit promoters who see the tax credit as an opportunity to profit from the reduced circumstances of others.

Parliament voted in this tax credit with the recognition that Canadians living with disabilities face exceptional challenges. Canadians may be eligible for the disability tax credit if all of the time or substantially all of the time they're unable to perform one or more of the basic activities of daily living, or if it takes an inordinate amount of time, even with therapy and the use of appropriate devices and medication. Basic activities of daily living would include things like speaking, hearing, and eating. The wide array of disabilities eligible under the disability tax credit is important.

For the average Canadian, the maximum federal amount that could be claimed was $7,341. That was in 2011. That resulted in maximum federal tax savings of up to $1,101.

A number of years ago, the government allowed the disability tax credit to be retroactive. As a consequence of that, instead of $1,000 or a little bit more being refundable, it can amount to $10,000 or $15,000, and out of this sprang a cottage industry of disability tax promoters. They help people fill out their tax form to qualify for the disability tax credit, but at present there are no regulations or restrictions, and we're seeing some inordinate fees charged against the people who are qualifying for the disability.

So that's the purpose: to put some restrictions in place.

I really appreciate the questions we received pertaining to the bill during debate. There were questions about who is going to be exempted—we'll talk about that today—and what the limitations are. There was a concern that we should have fines that are greater than the cost of doing business.

There were also concerns about potential jail time. I think we addressed that concern, in that this bill is only meant to address fines and penalties for those who overcharge their customers. Any other offences would be covered under tax law. There are set rules and enforcement in place for that.

We can go forward from there. Thank you very much, Mr. Chairman.

[The Chair, Conservative, James Rajotte]

Thank you very much, Ms. Gallant.

We'll now hear from CRA, from Mr. McCauley, please.

[Brian McCauley, Assistant Commissioner, Legislative Policy and Regulatory Affairs Branch, Canada Revenue Agency]

With all due deference to the committee, we're available to answer questions. I think giving time back to committee members is best, so I'll pass on opening remarks.

Thank you.

[The Chair, Conservative, James Rajotte]

Okay. We appreciate that very much.

We'll hear now from Ms. Beck, please, from the Canadian Medical Association.

[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.

Thank you.

[The Chair, Conservative, James Rajotte]

Thank you very much, Ms. Beck.

We'll hear from Ms. Cohen, please, representing the Canadian Psychological Association.

[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.

Thank you.