Bill C-462 (Historical)

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

This enactment restricts the amount of fees that can be charged or accepted by persons who, on behalf of a person with a disability, request a determination of disability tax credit eligibility under the Income Tax Act. It establishes a prohibition against charging or accepting more than an established maximum fee and establishes offences and penalties for failure to comply.

Disability Tax Credit Promoters Restrictions Act

[Gord Brown, Conservative, Leeds—Grenville, ON]

Mr. Speaker, I am pleased to rise this evening. I welcome the chance to add my voice in support of this commendable legislation. Bill C-462 builds on our government's strong record of supporting the full and equal involvement of those with disabilities in every aspect of Canadian society.

As the House knows, we work to ensure that our legislation, policies, programs and services are inclusive of people with disabilities and that they fully respect their rights and interests. The Government of Canada provides a variety of services and financial benefits to assist people with disabilities and their families to make this goal a reality.

For example, our government offers a range of generous tax credits and benefits for Canadians with disabilities. These important measures are among the many ways we are advancing our government's plan for jobs, growth and long-term prosperity that is working for Canadians, even as they face challenging times. We also strive to promote positive attitudes and raise awareness of the needs of Canadians with disabilities in order to prevent unintended negative outcomes. The House need look no further than Bill C-462 for the evidence of that.

When the hon. member for Renfrew—Nipissing—Pembroke discovered that some of her constituents with disabilities were being charged excessive fees by tax promoters to apply for the disability tax credit, she took action to put a stop to this abusive practice. It is thanks to her perseverance and diligence that we have this legislation before us today.

As parliamentarians know, the disability tax credit 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. It may help compensate for the cost of additional expenses, such as special equipment, medications and treatments. Eligibility is not based on the diagnosis of any specific medical condition, but is based on the effects of the conditions on an individual over a prolonged period of time.

To be eligible for the tax credit, the person must have a severe and prolonged impairment in physical or mental functions. It must restrict the person in one or more of the basic activities of daily life or cause the person to take an inordinate amount of time to perform the activity, even with the appropriate therapy, medication and devices. This needs to be verified by a qualified practitioner, medical doctor, optometrist, audiologist, occupational therapist, psychologist, physiotherapist or speech-language pathologist.

Hundreds of thousands of Canadians with disabilities and their family members who care for them count on the disability tax credit to help them improve their standard of living and quality of life. The CRA receives an average of 200,000 new disability tax credit applications each year. It is estimated that approximately 9,000 of these requests are received from taxpayers who use the service of a disability tax credit promoter.

In too many cases, the people who really need this tax credit do not get their fair share of the eventual tax refund. The problem is not with the tax credit, as others have explained. The issue is that there are some private sector companies that appear to have no compunction about cashing in on this tax benefit, which is intended for Canadians with disabilities, for their own benefit. There have been numerous cases brought to our attention in which promoters have charged 30% to 40% of the amount of the person's income tax refund. We are talking about thousands of dollars in fees for something that is very simple to do.

These businesses generally just complete part A of the disability tax credit application form, a straightforward process that usually takes little time. Aside from being reprehensible, this is first and foremost unnecessary. If someone with a disability or a family member providing care needs extra help completing the forms, the Canada Revenue Agency has agents who specialize in this disability tax credit. We have heard from others that this is not the case but, in fact, it is. They are just a phone call away and can assist both taxpayers and qualified practitioners by providing information on both the criteria and the application process.

There is simply no reason for people who really need and rely on the tax credit to give up a large percentage of it to a third party tax promoter who expects a large of the eventual tax return. With this bill, we are sending a clear signal that the price Canadians with disabilities pay for this service should reflect the real value of the services they receive.

Once it receives royal assent, Bill C-462 would restrict the amount of fees that can be charged or accepted by businesses that request a determination of disability tax credit eligibility on behalf of someone with a disability. This legislation would prohibit firms from charging or accepting more than an established maximum fee.

What that fee would be would only be determined following consultations. To discourage companies from overcharging their clients, the bill would also require businesses to notify the CRA of any fee charged in excess of the maximum amount permitted. If they persisted, they would face fines of $1,000 to $25,000 for not notifying the CRA or for any false or deceptive statements. A separate fine equal to 100% or 200% of the excess fees could also be applied in addition to the penalty. Such fines would be applied in serious cases, such as repeat offenders.

Members should not get me wrong: we are not trying to interfere with the free market and we have no intention of hurting legitimate businesses that charge reasonable amounts consistent with the value of the services that they provide. Our goal is simply to ensure that when Canadians with disabilities are eligible for the tax credit, especially if their claims go back many years, they receive the maximum amount that is due to them. This is consistent with our government's approach to ensuring that Canadians with disabilities are treated fairly, equitably, and with the dignity they deserve.

This legislation is a clear demonstration of our determination to support the full and equal involvement of those with disabilities in every aspect of Canadian life. I am sure no member of the House would argue with that aspiration.

Therefore, I urge all parties to lend their support to Bill C-462 so that we can take this legislation through its final stage and make it the law of the land. Members can be sure that people with disabilities in their ridings will thank them if they do.

[Scott Brison, Liberal, Kings—Hants, NS]

Mr. Speaker, I rise tonight to speak to Bill C-462. The purpose, obviously, is to restrict the level of fees that can be charged by promoters of the disability tax credit.

Since 2005, disabled Canadians have been able to claim this credit retroactively for up to 10 years, which can result in significant lump sum payments. Reports of consultants exploiting disabled Canadians and charging exorbitant and in some cases extortionate contingency fees in connection with these large, retroactive claims provide some of the reasoning behind the bill. Disabled Canadians ought to be protected from exploitation, clearly. Consultants who abuse the system and commit fraud ought to be punished under the law, so I support the intent of the bill.

I do have some reservations. My biggest concern is that the legislation may have identified the wrong problem, because while the bill establishes the need for introducing penalties against fraudulent consultants and protection for those exploited, a key question ought to be asked. Why do these consultants exist in the first place? It could be argued that the reason they exist is that there is a need created by an application process that is too complex, and that governments have failed to provide disabled Canadians with the resources they need to fill out the forms themselves. This is also in the context of times when we are cutting government and front-line services, which could actually help disabled Canadians complete these forms.

If the government is serious about helping disabled Canadians and stopping the alleged proliferation of these consultants, it ought to simplify the disability tax credit application process, and hire and train government workers in sufficient quantity and with sufficient expertise to help Canadians who have questions and need help with this process. This way more disabled Canadians who are entitled to these benefits would be able to fill out the forms themselves, and that would eradicate the need for these consultants in the first place.

The legislation in its current format does not address this central point, so I emphasize that I support the intent of Bill C-462 and recognize the importance of protecting innocent Canadian citizens from exploitation by consultants who abuse the system and charge usurious fees for their services.

I will outline a few of my reservations. First and foremost, there is a lack of information and detail within Bill C-462, and that is quite often the situation with private members' bills. Private members do not have the same kind of legislative or research capacity in working to develop legislation that, for instance, governments have.

However, the legislation in its current format does not specify what the maximum fees would be or how they would be set. That would be defined, perhaps, in the other place or perhaps in the regulatory process. Surely this ought to be a key element of the legislation as the aim is to restrict fees.

This vacuum of information leaves a number of questions unanswered and potential unintended consequences. For instance, how does the government propose to measure the fees? What services would be covered? What services would fall outside of the maximum fee structure? Would the maximum fee be set as a percentage of the tax credit or as a percentage of the tax refund, or would the maximum be set in absolute terms? Is the maximum to be set as a percentage of the tax benefit? How many years would be factored in or count towards that maximum? Would it be just the year of the application or would the government consider the value of the benefit over a number of years, for instance, the net present value of that future revenue stream? In setting the maximum fee, would the government differentiate between different applications, such as whether they are complicated, time-consuming or taken to appeals? If so, how would the government make that differentiation?

With some applicants claiming retroactively for up to 10 years, there could be complications within their application. The maximum fees set out in the regulations ought to reflect the complexity of the case in hand. The industry may be too complicated for a one-size-fits-all policy and the maximum fee structure ought to be set in an open and transparent process with a broad range of stakeholders.

Second, qualifying for the disability tax credit also qualifies people for other programs such as the registered disability savings program. Once they receive a disability tax credit certificate, they can remain eligible for the tax credit for several years. Therefore, the maximum fee structure that only considers the value of the refund for one year may not reflect the actual value that the applicant places on qualifying for the additional disability tax credit certificate.

For this point, let me illustrate with one potential example. Let us consider the amount of a disability tax credit in 2013 for an adult. That would be 15% of $7,546, which would be $1,131.90. Therefore, if the government is not willing to simplify the complex application process for disabled Canadians, some will continue to depend on the expertise of consultants. If the 5% fee cap is introduced, as has been suggested, the maximum amount a disabled Canadian could pay for expertise in applying for the tax credit could be as little as $56.60. However, the real reason the applicant may want to qualify for the disability tax credit is to be eligible for tens of thousands of dollars in RDSP bonds and matching grants from the government. Regardless of the amount people are likely to receive from just this one disability tax refund, some will take their claim to the appeals process in order to gain access to all these other programs and benefits.

Poor regulations that could flow potentially from Bill C-462, regulations that would have a narrow view of the tax credit, could have some unintended consequences, for instance, of preventing disabled Canadians the help they need to access government programs. We should acknowledge that there are businesses which provide very legitimate and valuable services to help disabled Canadians access these programs. I have heard from some of these types of operators who have certainly convinced me that what they are doing is legitimate and they are concerned that potential unintended consequences could render their businesses unprofitable if we did not consider some of their concerns in the design of this legislation. Again, I believe these are legitimate businesses.

The regulations under Bill C-462 must ensure that these legitimate businesses remain financially viable under this model. We must not punish these legitimate businesses because of the exploitative actions of some of the other operators who are taking advantage of this system.

One of the key reasons for the hiring of consultants, again, is the complex application process, which leads me to a point that right now the process is so complex that some Canadians feel like the only option available to them is to hire a consultant to guide them through. Therefore, we ought to make it easier for legitimate applicants to access the program themselves. After all, it is a program to which they ought to be entitled and, as such, why should they need an outside consultant simply to deal with their own government and access a program for which they qualify? The government should streamline the application process. It should hire and train more government workers who can answer the questions and help disabled Canadians apply for these credits themselves.

This is not just an issue of disabled Canadians and their interface with government. We have gone toward more automation, less personal interaction, less individually tailored services for Canadians dealing with their government and this is something we have to consider for seniors and for disabled Canadians.

In summary, we agree that disabled Canadians need to be protected from exploitation, but we also believe that there are other things the government could do through simplifying the process and ensuring that we have front line public servants who are providing these services and helping disabled Canadians interface with the government and access the programs not only to which they are entitled, but the programs they need.

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

moved that the bill be read the third time and passed.

Mr. Speaker, thank you for the opportunity to once again outline the necessity and the benefits of the disability tax credit promoters restrictions act, a crucial step toward ensuring the fair treatment of all Canadian taxpayers. It is vitally important that we see Bill C-462 through to completion as quickly as possible so that we can better protect disabled Canadians from the predatory practices of some disability tax credit promoters.

I also wanted to say how extremely proud I am that this act has achieved such widespread support from parliamentarians and from the many Canadians who appeared before the Standing Committee on Finance, which held public hearings regarding this legislation.

The fact that my bill has the support of all parties reinforces something that all members of Parliament recognize. We must take action to solve the problems caused by those individuals who seem willing to take advantage of Canadians with disabilities. Whatever our political affiliation, we realize that Canadians living with disabilities face exceptional challenges. We understand that the last thing they need is to see an important source of additional income reduced by tax promoters who would profit from these very challenges.

Of course, I am not suggesting that all of these businesses deserve such hard criticism. This legislation is not directed toward legitimate tax practitioners who provide a valuable service. Make no mistake; this bill is all about going after those whose intentions are not so honourable.

Before highlighting the important improvements we propose to make, let me remind the House of the purpose of the disability tax credit. It is meant to assist Canadians if they are unable to perform one or more of the basic activities of daily living, not occasionally, but all of the time or substantially all of the time, even with therapy and the use of devices and medication. The restriction must be expected to last continuously for at least 12 months and must be present at least 90% of the time. The kind of basic activities of daily living I am referring to include things like speaking, hearing, and feeding oneself.

The disability tax credit is meant to help offset some of the additional costs people incur to enable them to perform these everyday functions. Based on 2012 numbers, the federal tax savings for someone eligible for the disability tax credit was up to $1,132 for adults and as much $1,792 for children under the age of 18 or for a family member supporting the person.

It is important that Canadians living with a disability have access to all the support they need. When taxpayers apply and qualify retroactively, they can receive anywhere from $10,000 to $15,000. This represents a significant amount of money. It is important to ensure that these funds remain exactly where they belong, in the pockets of Canadians living with severe disabilities.

The significant sums of money involved created an incentive for a new class of third-party promoters to assist Canadians with disabilities with their claims. These higher numbers spawned a whole new industry of disability tax promoters. These businesses help people fill out just the first part of the tax form to qualify for the disability tax credit, often at a very steep price. We have seen some inordinately high fees charged to people who use tax promoters' help to qualify for the tax credit.

There have been cases of Canadians with disabilities being charged as much as 35% to 40% of the total amount they were due. That can add up to thousands of dollars for something that is really quite simple to do. Let us remember that these businesses generally just complete part A of the disability tax credit application form, a fairly straightforward process; the more important section of the application form, part B, must be completed by medical practitioners before a claim can be processed.

I first became suspicious about all of this a few years ago when I came across a tax credit promoter who told me he had spent $25,000 booking space, a hotel, and media coverage in my riding. Obviously, with an investment like that he was expecting to make a very healthy profit.

The high cost of completing just the initial step in an application is one that Canadians living with disabilities can ill afford. People who face extra costs for the supports and services they require for daily living sometimes end up with as little as 60% of the total amount of the disability tax credit that they are entitled to receive; the rest goes into the promoter's pockets.

Until now promoters have been able to get away with an unreasonable share of this money, as there are currently no regulations or restrictions to stop them, but I am proud to say that will stop with the passage of the disability tax credit promoters restriction act. As its name implies, its purpose is to put restrictions in place to make sure that the money stays in the pockets of Canadians who really need it, not tax promoters.

This legislation earned the praise and support of many who appeared before the House of Commons Standing Committee on Finance, most notably members from the medical community. We have been told by medical professionals that they at times have felt pressure from promoters to fill out forms fraudulently . We even heard that some promoters employ in-house medical practitioners to sign the medical portion of the disability tax credit application, perhaps having met only once with the applicant and having no prior knowledge of the person's medical history.

Dr. Gail Beck, a member of the board of directors of the Canadian Medical Association, told committee that:

...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....

Dr. Beck went on to say that the Canadian Medical Association has been concerned for some time about the unintended consequences of the changes that were made to the disability tax credit in 2005. She said:

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 that we have raised.

Dr. Beck was not alone. Dr. Karen Cohen, chief executive officer of the Canadian Psychological Association, told the committee that:

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.

Particularly important to me was the testimony of Carmela Hutchison, president of the DisAbled Women's Network of Canada and a member-at-large of the executive committee of the Council of Canadians with Disabilities. She is someone who knows far better than most of us just how much this legislation is needed.

Ms. Hutchison said:

[Both organizations] support the intent of Bill C-462 and agree that people with disabilities should have their rightful entitlement protected from unfair fees charged by financial promoters. Disability tax credit eligibility is a critical issue for people with disabilities, as it has become the gate for determining eligibility for a variety of benefits. Thus, we must ensure unencumbered and fair access.

That message applies to all parliamentarians, who need to lend their support to this legislation. When Bill C-462 becomes law, Canadians with disabilities who choose to use a promoter's services to apply for the disability tax credit will pay a reasonable fee for those services.

The proposed bill would restrict the fees that can be charged or accepted by businesses that request a determination of eligibility for Canadians with disabilities to receive the tax credit. Public consultations would be carried out to assess just what appropriate maximum fees should be, given the value of the services provided.

Once that fee is determined, the legislation would prohibit charging more than the established amount. The disability tax credit promoters restrictions bill would also require promoters to notify the Canada Revenue Agency if more than the maximum fee were charged. A penalty of $1,000 would apply if that limit were exceeded. A promoter failing to notify the CRA when an excess fee was charged would be guilty of an offence and liable to an additional $1,000 to $25,000 fine.

Another important element of this bill is its benefit for caregivers of people living with severe disabilities. The bill would decrease the cost of applying for the disability tax credit, freeing up more money for better care for their loved ones.

Clearly there are numerous compelling reasons to support the swift passage of this legislation. Bill C-462 would allow us to set new and necessary limits on the fees promoters can charge Canadians with disabilities, and it would provide better oversight of the industry. Let us get on with it.

I am calling on all parties to lend their stamp of approval to the disability tax credit promoters restrictions bill. Canadians with disabilities all across the country are counting on us to do exactly that.

The House proceeded to the consideration 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, as reported (with amendment) from the committee.

Finance

[James Rajotte, Conservative, Edmonton—Leduc, AB]

Mr. Speaker, I have the honour to present, in both official languages, the 20th report of the Standing Committee on Finance in relation to 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.

The committee has studied the bill and has decided to report the bill back to the House with amendments.

[Ted Hsu, Liberal, Kingston and the Islands, ON]

Thank you, Mr. Chair.

I'd like to move that the committee delay our clause-by-clause consideration of Bill C-462 until after the committee has spent at least half an hour questioning witnesses who are independent of the government on the subject of this bill. The reason for that—and I believe that all the committee members will have received the letter from Hon. Scott Brison, for whom I'm substituting today—is that we'd like to get this request on the record because I believe that only five minutes have been devoted to that so far. Only 45 minutes has been spent on Bill C-462 so far, and only five minutes of that was for asking questions of witnesses independent of the government.

I'm told that a lot of people who work with the disabled, who need the disability tax credit, have learned about this legislation only recently and want to make presentations to this committee. The issue is the maximum price set for a consultant to help with the application for the disability tax credit. That price level will affect the economics of the whole service of helping people access the disability tax credit, and it's left unsettled by this legislation. It probably should be considered, or at least some testimony put on the record, here at this committee.

So we'd like to just have 25 more minutes of testimony from witnesses independent of the government.

[The Chair, Conservative, James Rajotte]

I call to order meeting number 126 of the Standing Committee on Finance. The orders of the day, pursuant to the order of reference of Wednesday March 6, 2013, are for clause-by-clause consideration 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, I know that you're all well refreshed from your three hours of sleep last night.

I want to welcome our two officials here. I think they're both from the CRA, Mr. Brian McCauley and Mr. Michael Honcoop. Welcome to the committee. Thank you so much for being with us.

I understand there's a motion, and I think it's probably best to deal with it prior to delving into clause-by-clause consideration.

I'll ask Mr. Hsu to move his motion, please.

[The Chair, Conservative, James Rajotte]

We'll go to the vote on this motion.

(Motion negatived)

Colleagues, you do have two budget requests before you. First of all for this study, for Bill C-60, the amount requested is $26,500. That is approximately $10,000 less than what was initially sent to committee members. It's less than what we had thought, initially.

Are there any questions or concerns? Can I get someone to move this? So moved by Mr. Jean. All in favour?

(Motion agreed to)

Secondly, with respect to our study of Bill C-462, you did raise some concerns about the budget previously. It has been adjusted downward substantially.

Any questions or concerns about this budget? Can I get a mover for this? Mr. Jean again. All in favour?

(Motion agreed to)

Thank you, colleagues.

We will move to our second panel. I want to thank our witnesses for being very patient while we were dealing with the three motions and two budget items.

We have six people to present. First of all, as an individual, we have Mr. George Smith, a fellow and adjunct professor from Queen's University. We have, representing the Association of Municipalities of Ontario, Ms. Judy Dezell. From the Canadian National Institute for the Blind, we have the national director, Ms. Diane Bergeron. From the Canadian Union of Public Employees, we have Mr. Denis Bolduc, general secretary. From the Canadian Urban Transit Association, we have Mr. Patrick Leclerc, and by teleconference, we have Monsieur Florian Sauvageau.

Monsieur Sauvageau, can you hear me?

[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.

[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.

[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]

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, Conservative, 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

[Cheryl Gallant, Conservative, 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.