Mr. Speaker, before I start my comments, I should clarify something. I think the member for Cape Breton—Canso was a little confused. I know that the member for Bruce—Grey—Owen Sound said that the class of 2000 was rather impressive. However, he also said, and this is where the misunderstanding comes in, that the class of 2004 was far superior. I want to get on the record that the class of 2004 was, in fact, the better of the two.
I am thankful for the chance to outline both the need for and the benefits of this legislation. I really relish the opportunity to demonstrate how our government is working to make a real difference in the lives of Canadians with disabilities by providing them with increased opportunities to participate fully in society. There is no better example of this than the disability tax credit promoters restriction act before us today.
In a nutshell, this legislation is about ensuring the fair and equitable treatment of people with disabilities when it comes to applying for the disability tax credit program. Bill C-462, as it is entitled, does so by making sure that a tax credit intended solely for people facing serious health challenges goes to those individuals and family members who care for them. It would restrict the fees charged by private sector promoters who would profit from their circumstances.
The act's objective is comparable to that of the Tax Rebate Discounting Act, which protects all Canadians filing tax returns from unscrupulous business operators. It places limits on how much a discounter can charge for a discounted income tax refund. However, Bill C-462 focuses specifically on the needs and interests of people with disabilities and their supporting family members who rely on this tax credit. It recognizes the impact of disability-related costs on an individual's ability to pay tax and it would lessen the tax burden. Its intent is to curb the practice of charging outrageously high fees for services offered by promoters who help such individuals to fill out a small part of the application form, which is just a very small part of the process.
Let me explain just how grave this problem is and why we must act.
The Canada Revenue Agency, the CRA, receives an average of about 200,000 applications for tax credits each year. Of this total, it is estimated that as many as 9,000 of these requests received from taxpayers use the service of disability tax credit promoters. One needs to appreciate that the Income Tax Act allows someone with a disability who meets the criteria to request a reassessment dating back 10 years when applying for the disability tax credit program. This means, of course, that if the individual claim is successful, someone with a disability could get an income tax refund as high as $10,000 or $15,000, or even higher. I have seen them higher than that.
While this is good news for people who need the financial support to help defray the cost of therapies, medications, and other supports for the basic activities of daily living, not all of this money necessarily ends up in the pockets of the people who have the disabilities. That is because some promoters charge contingency fees as high as 30% and 40% of the tax refund. Even a 30% fee means that a refund going back a decade could yield a promoter a cheque between $3,000 and $4,500 just for filling out a few lines on an application form. That money is intended for Canadians with disabilities and the family members who care for them, not tax promoters who fill out a simple form that requires little or no effort.
As several speakers have already noted, CRA provides a wide array of information and assistance related to the application and adjustment process for the disability tax credit program. CRA telephone agents can help to demystify the process and explain how the form needs to be filled out. As mentioned, many members of Parliaments' offices are also helpful.
Instead, people are often told by promoters that they have insider knowledge. Ironically, these promoters also suggest that only they can ensure that people who may be eligible for tax credits will receive all the money to which they are entitled. That is quite a claim, given that the promoters expect to receive such a high percentage of the eventual refund.
At the moment, there are no provisions in federal legislation to prevent or restrict such practices. That is why we need Bill C-462: it would put an end to these ethically questionable business practices. At the same time, it would support a functioning marketplace for those with disabilities who choose to use the services of a disability tax credit promoter.
Certainly there are many legitimate businesses that provide a valuable service to the people who want help in applying for tax credits. We do not have a problem with that, but that is not what we are addressing here with this bill. We are not out to stop anyone from providing services as long as the fees are reasonable.
The provisions in this proposed legislation are designed to make sure that people with disabilities will not be charged excessive rates. We want to protect them from anyone who tries to capitalize on their tax credit by shortchanging them.
Equally important, the bill would assist caregivers by reducing the cost of applying for the tax credit so that they can redirect that money into helping the people in their care.
This proposed legislation is a clear demonstration of our government's pledge to ensure the sound use of public finances, as it would put an end to the days of paying out millions to tax promoters instead of providing funds to people with disabilities who really need the help.
The provisions in Bill C-462 would also serve as a deterrent, since any firm that tries to skirt the new rules would face harsh penalties in the future. These amendments would restrict the fees that could be charged or accepted by promoters for preparing a disability tax credit application on behalf of someone with a disability.
A maximum fee would be established under the disability tax credit promoters restriction act, and anyone who failed to respect the fee would face penalties. A minimum penalty of $1,000 would apply when the maximum fee is exceeded.
Exactly what the maximum rate should be would only be determined following public consultations. The discounter and tax preparation industry would definitely be a part of the consultations when the maximum fee is established through the regulatory process.
Another important feature of the bill is that it would require promoters to notify the CRA when more than the maximum fee has been charged. Failure to inform the agency when an excess fee is charged would be an offence and result in a $1,000 to $25,000 fine.
There is no shortage of sound reasons to back the disability tax credit promoters restrictions act, and there are countless good reasons to give it all-party support. None is more important than the fact that we will be looking out for the hundreds of thousands of people with disabilities who apply for the disability tax credit each year, ensuring that their needs and best interests are met.
Bill C-462 would ensure the fair and equitable treatment of Canadians with disabilities, providing them with the same protections other Canadians enjoy thanks to the Tax Rebate Discounting Act.
The legislation would provide assurance to qualifying Canadians with disabilities that they will receive the full amount of financial support to which they are entitled. How could any parliamentarian not agree with that?
In my riding, one of my staff, Sue Dingwall, has been devoted to helping people with the disability tax credit program. In the last four years, this staff member has helped people with disabilities receive over $8 million. Close to 2,000 people in my riding have received $8 million as a result of Sue Dingwall's efforts; if these fly-by-night operators were preparing those tax returns, disabled people would have lost maybe $2.4 million of that $8 million. This money belongs in the pockets of those poor people on disability and the people who care for them.