Finance Committee on May 7th, 2013

[The Chair, Conservative, James Rajotte]

Thank you very much for your presentation.

We'll hear from Ms. Hutchison, please.

[Carmela Hutchison, President, DisAbled Women's Network of Canada]

Thank you.

I'll begin with a list of recommendations up front. I always like to lead with those first, in case we run out of time.

People with disabilities should have rightful entitlement protection from unfair fees charged by financial promoters. The disability tax credit has become the gate for determining eligibility for a variety of benefits. Thus, we must ensure unencumbered and fair access. The disability credit becomes more commonly used as a determinant of eligibility for other federal benefits, and there's a need to review the forms and the process of establishing eligibility.

Removing barriers for people living with mental health disability in the section entitled, “mental functions necessary for everyday life” has changed markedly from previous years. There is a need to address issues posed by people with episodic disabilities, as the criteria do not help account for the waxing and waning of symptoms within an overall picture of disability.

The Council of Canadians with Disabilities and DisAbled Women's Network Canada believe disability organizations should be supported as part of Minister Finley's interest in social financing to assist people to complete applications for disability tax credit, CPPD, and other relevant government programs. The disability tax credit should be made refundable for those who do not have a taxable income but experience additional costs related to their disability. Now that the disability tax credit has multiple purposes, eligibility must be considered in relation to those who should be eligible for other benefits, such as the RDSP.

The Government of Canada needs to do a broader review of tax measures for people with disabilities to create greater access and fairness. Streamlined process and strategy should allow people to have greater access to programs, clear policies, and forms available online to create savings that can be directed to increased benefits and programs for disabled people. Make the CPPD, disability tax credit, and other federal government forms ones you can save as you work through them. Review the “other qualified professionals” list of who can sign a disability tax credit application. Prohibit billing above a set amount for forms for any provincial, federal, or municipal government program by either professionals or for-profit companies. Protect people from exploitation and outright financial abuse by ensuring some standards for industry promoters and financial advisors of people with disabilities.

I'll now begin the body of my text. I simply like to lead with the recommendations for fear of being cut off.

Good morning. We thank you very much for consulting with us today. We wish to acknowledge the Algonquin peoples as we meet on the traditional lands we share.

It's my privilege and responsibility to speak on behalf of both the Council of Canadians with Disabilities, on which I serve as a member-at-large of the executive committee, and as president of the DisAbled Women's Network Canada.

CCD and DAWN 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. In addition, we also recognize that determining eligibility for the disability tax credit can be complex. An inequity exists because it's much easier to provide evidence of a physical or sensory disability than it is to provide evidence of a cognitive learning, intellectual, or mental health disability. In some cases, the cost of diagnosis is considerable, and in other instances access to professionals able to make this determination is limited. The disability tax credit, in its current iteration, has created barriers for people living with mental health disability in the section entitled, “mental functions necessary for everyday life”, which has changed markedly from previous years.

The reality is that the definition and understanding of disability is always changing. Medical conditions are also changing and emerging as new discoveries are made. It is recognized that some disabilities are episodic in nature. As the disability tax credit becomes more commonly used as a determinant of eligibility for other federal benefits, there's a need to once again review the forms and the process of establishing eligibility.

The disability tax credit was initially designed as a tax fairness measure, recognizing that people with disabilities have additional disability-related expenses. Disability tax credit eligibility is now the determinant for accessing other benefits and programs, such as the registered disability savings plan, the child disability tax benefit, the working income tax benefit for persons with disabilities, and the disability accommodation benefit in the Tax Act.

[The Chair, Conservative, James Rajotte]

One minute, please.

[Carmela Hutchison]

For these reasons, an industry has emerged to assist people with disabilities to complete forms for the disability tax credit and other benefits. It's recognized that this support, while necessary for some, comes at a significant cost.

There are three organizations within our report that are identified. Two of them are member organizations of the Council of Canadians with Disabilities. The Saskatchewan Voice of People with Disabilities and the Alberta Committee of Citizens of Disabilities actually provide the service for free. The Alberta Network for Mental Health, which is located in Airdrie, is an organization for which I also serve as president. It assists people with any government forms they require, from income support to the DTC and beyond, including appeals. We have emerging best practices that we would be happy to share.

CCD and DAWN believe disability organizations should be supported as part of Minister Finley's interest in social financing to assist people to complete applications for the disability tax credit, the CPPD, and other relevant programs.

In closing, I wish to make only one other point. We do address the issue of costs that come from other professionals and our experience with that. Then I would like to read the last two very brief paragraphs.

CPP and DAWN are very concerned with the need to protect people from exploitation and outright financial abuse. None of the informants to this presentation can attest to the efficacy or credibility of their services: they appear unregulated. This means the safety of Canadians with disabilities and their families is at risk.

For proof of why this bill is so important, we need only to look at Vicky Shachtay's death, a disabled mother of a six-year-old in Innisfail, Alberta, who was murdered by her financial advisor. Though the crime was not related to the disability tax credit promoters referred to in this legislation, it is a clear demonstration that financial abuse did not only take a woman's money but also her life. Regulation of the fees and protection of citizens with disabilities is so important.

We look forward to working with the Government of Canada as active and engaged partners in improving the lives of people with disabilities.

We thank Ms. Gallant for her initiative. We hope you support her both in her work and in ours.

Thank you.

[The Chair, Conservative, James Rajotte]

Thank you for your presentation.

We'll now hear from Mr. Akiva Medjuck, please, for your presentation.

[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.

[The Chair, Conservative, James Rajotte]

Thank you very much for your presentation.

We will begin members' questions.

Unfortunately, we only have about 15 minutes or so for questions, but we'll start with Ms. Nash, please.

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

Thank you, Mr. Chair.

Welcome to the witnesses.

Thank you, Ms. Gallant, for introducing this bill.

I would like to share my time with Mr. Rankin, and I would like to begin by giving the committee notice of a motion.

May I proceed, Mr. Chair?

[The Chair, Conservative, James Rajotte]

Yes.

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

The motion is:

That the Standing Committee on Finance issue a report to the House asking that the House grant the Standing Committee on Finance the power to divide Bill C-60 into 6 pieces of legislation, which could then be properly referred to the appropriate committees, as follows:

Clauses 1 - 135, and all un-named clauses in the list below, remain as Bill C-60

(a) clauses 136 to 154, related to the Investment Canada Act; be allowed to be renamed as Bill C-62

(b) clauses 161 to 166, related to the Immigration and Refugee Protection Act and the temporary foreign worker program; be allowed to be renamed as Bill C-63

(c) clauses 174 to 199, related to the proposed department of foreign affairs, trade and development act; be allowed to be renamed as Bill C-64

(d) clauses 213 to 224, related to the National Capital Act and the Department of Canadian Heritage Act; be allowed to be renamed as Bill C-65

(e) clauses 228 to 232, related to the Financial Administration Act and collective bargaining between crown corporations and their employees; be allowed to be renamed as Bill C-66

And that the subsequent bills be allowed to be referred to the following committees as being passed after second reading.

That section (a) of this report do form Bill C-62; that Bill C-62 be deemed read a first time and be printed; and that the order for second reading of the said bill provide for the referral to the Standing Committee on Industry, Science and Technology;

that clauses mentioned in section (b) of this report do form Bill C-63; that Bill C-63 be deemed read a first time and be printed; and that the order for second reading of the said bill provide for the referral to the Standing Committee on Human Resources, Skills and Social Development and the Status of Persons with Disabilities;

that the clauses mentioned in section (c) of this report do form Bill C-64; that Bill C-64 be deemed read a first time and be printed; that the order for second reading of the said bill provide for the referral to the Standing Committee on Foreign Affairs and International Development;

that the clauses mentioned in section (d) of this report do comprise Bill C-65, that Bill C-65 be deemed read a first time and be printed, and that the order for second reading of the said bill provide for the referral to the Standing Committee on Canadian Heritage;

that the clauses mentioned in section (e) of the report do comprise Bill C-66, that Bill C-66 be deemed read a first time and be printed, and that the order for the second reading of the said bill provide for the referral to the Standing Committee on Government Operations and Estimates;

that Bill C-60 retain the status on the order paper that it had prior to the adoption of this order and that Bill C-60 be reprinted as amended; and that the law clerk and the parliamentary counsel be authorized to make any technical changes or corrections as may be necessary to give effect to this motion.

I so move.

[The Chair, Conservative, James Rajotte]

We'll take that as notice of motion. You can move that after 48 hours' notice.

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

Thank you.

[The Chair, Conservative, James Rajotte]

Mr. Rankin, you have one minute remaining.

[Murray Rankin, NDP, Victoria, BC]

Thank you, Chair, and thank you, witnesses, for attending.

Thank you, Ms. Gallant, for your work on this.

I want to ask my question of Mr. McCauley. As you know, the CRA's payment and inquiry counter services are closing. Face-to-face outreach sessions have discontinued, and every service counter in Canada is set to close by October 2013. These service cuts have had a profound impact on disabled people and seniors, certainly in my community of Victoria, but likely in all of Canada.

Now, as noted by Dr. Beck and Ms. Cohen, and Mr. Medjuck as well, form T2201 and the application process for the disability tax credit are extremely complicated. They've all testified to that. Hasn't this complex system created the need for these promoters, and haven't the government cuts, simply as a result of no longer doing outreach effectively, outsourced to promoters the assistance to vulnerable Canadians that CRA previously provided?

[The Chair, Conservative, James Rajotte]

Mr. McCauley, a brief response to that, please.

[Brian McCauley]

No, I don't believe so. I have the form with me. I've filled it out myself. With every form and everything we do, we always strive to make it as simple and as direct as possible. I think the witnesses here have acknowledged that it's a complex policy area, that the science and medicine is evolving. We undertook a review of the form with the CMA a number of years ago on a survey, and we're always willing to do that again to see what we can do, but the form can reflect policy only. Can there be more done in terms of working with organizations, with the CMA and others, to try to provide clearer and easier information? Yes, and we always strive to do that.

I don't believe the counter service, where the kind of information that would probably be helpful for somebody to fill out the form.... As you know from having looked at it, part A of the form is basic demographic information; part B, which is the complex part, is the one that is filled out by physicians.

If there are suggestions, we're certainly willing to consider them.

Thank you.

[The Chair, Conservative, James Rajotte]

Thank you.

Thank you, Mr. Rankin.

Ms. McLeod, please.

[Cathy McLeod, Conservative, Kamloops—Thompson—Cariboo, BC]

Thank you, Mr. Chair.

I do have to indicate that I'm very disappointed that the NDP, when we have the opportunity to question the witnesses, spend most of their time introducing a motion when there's a motion that's been introduced already that we'll be dealing with at the end of the committee meeting.

Having said that, I would like to focus in on Ms. Gallant's bill.

On behalf of the government, we have three amendments we are proposing. I'll just give a quick description.

First is to import the definition of “person” from the Income Tax Act; number two will be to improve the penalty structure; and third is to focus in on information sharing. Everyone has a copy.

I would like to ask Mr. McCauley two things. One is to first indicate why we felt these amendments were important to strengthen the bill. They're technical in nature. I too—if he could speak further about the form—look at the piece that has to be done by the individual. I certainly appreciate the physicians' much more complex piece, but the reality is, it is a very simple form that's done initially by the person or their support person who helps them fill the form.

First of all, could you speak to the amendments, and second, talk about the form?

[Brian McCauley]

Again, I'll try to be very brief.

On the amendments, as I understand, some of them actually address some of the suggestions that have been brought up by my colleague from the CMA. There's the issue of the definition of “person”, which ensures that it does capture all who may be active in the promotion field. It's a clarifying amendment that we think makes it more consistent and actually provides some assurance that all those who are playing in that field are properly captured.

The penalty is just a clarification again. As it's currently structured, it could be read that it's simply the cost of doing business, and there was really no penalty provision there. This allows for both the capturing of the profit and having a real penalty applied in those circumstances.

The last is on information sharing, which again speaks partially to the issue of privacy, inasmuch as it clarifies the information that can be shared. But that's exclusively within the Canada Revenue Agency, not with other parties, not externally. So the information, in terms of how it's currently managed, would not be managed differently.

I have the form with me, and as I said, I filled it out personally. The actual information that's provided and required of the applicant is fairly straightforward. I don't mean to suggest that you can't always look at doing things better. We've reviewed the form a number of times, and if it's time to do it again, we'd certainly look at that. One of the provisions is to look at modifying the form to ask people to identify the use of promoters, so there would be a chance for us to do that.

There's also a provision in the bill that requires that we engage in discussions across the country with promoters and people using the DTC, so that when we make a recommendation to the minister about what a reasonable fee might be, we also take advantage of that process to listen to people talk about the form and other suggestions. That's certainly something we'd be doing as well.

Thank you.

[The Chair, Conservative, James Rajotte]

Ms. Beck, you indicated to me you wanted to comment.

[Dr. Gail Beck]

I did, if that's possible, sir.

[The Chair, Conservative, James Rajotte]

Okay.

[Dr. Gail Beck]

I'm a physician, a child psychiatrist. It's fortunate, in a way, that this hearing is in early May because it's easy for my secretary to check that I filled out 36 DTC forms in April. Perhaps Dr. Cohen and I are not unbiased witnesses, because, like Dr. Cohen, I sat on the Technical Advisory Committee on Tax Measures for Persons with Disabilities and worked on the improvement of the form.

Physicians fill out a lot of these forms every year. I'm not saying they're not complex. I'm sure when you're starting a practice and you haven't filled out the form, it's complex to start. But I feel the changes that were made to the form made it much more straightforward to complete. That was what we worked for. The complexities are in understanding the conditions, and we can work with CRA. I wanted to make that point.

I am a physician who spends all my time working in mental health. There is a stigma associated with mental health that all physicians are aware of. For that reason, the privacy piece is particularly important.

[The Chair, Conservative, James Rajotte]

Thank you.

Please be very brief, Ms. McLeod.

[Cathy McLeod, Conservative, Kamloops—Thompson—Cariboo, BC]

To go back to part A of the form, which is filled out either by someone who supports the client or the client himself, would you believe it is almost as simple, as practical, as we can make it?