Madam Speaker, there has been a fair amount of discussion over the disability tax credit and it is indeed an important program, helping Canadians with disabilities to obtain the tax credits to which they are entitled under the Income Tax Act.
I would like to address some concerns that have been expressed by members in the House and Canadians in general with regard to the review process undertaken by the CCRA by better explaining the review and its importance. It is important that we all deal with the same information.
I would also like to tell the House about the efforts that have been made by the Canada Customs and Revenue Agency, the CCRA, in consulting with those most deeply concerned with disabilities in ensuring fair and equitable administration of the program.
It is critical that the Canada Customs and Revenue Agency, CCRA, take measures to protect the integrity of this program and other programs so that persons with disabilities can continue to benefit from them.
As members know, very few claims for the disability tax credit accepted between 1985 and 1996 were subject to the current level of review. Since 1996, when the CCRA became responsible for validating eligibility, it has been reviewing all applications in advance of assessment to ensure that the benefit is available to those for whom it is intended.
This is especially important since under the disability tax credit a one time review can lead to a lifetime benefit. Given a significant rejection rate for claims to the disability tax credit since 1996, it is possible that applications were accepted between 1985 and 1996 that were never eligible for the disability tax credit, and some recipients are no longer eligible to receive it. To ensure the integrity of this benefit program, claims filed during this period are being reviewed.
A number of concerns have been raised by the CCRA's recent review of disability claims.
An important aspect of tax fairness is ensuring that those who benefit from tax measures are entitled to receive them in accordance with the policy intent.
Prior to 1996, all applications for the disability tax credit were accepted upon assessment. Subsequently some of these returns were selected for review. This review resulted in some adjustments in which the disability tax credit was disallowed for more than the current year.
This approach was not favourably received and caused hardship for some individuals.
Further, following recommendations by the 1996 parliamentary task force chaired by the hon. member for Fredericton, the CCRA changed this administrative approach for the disability tax credit.
Since 1996 the CCRA has been verifying all new disability tax credit claims before granting the credits. The adoption of this new administrative policy reveals that a substantial number of individuals who applied for the DTC are not eligible to receive it. This is not to suggest that these individuals do not have impairments but rather that the effects of their impairments are not in accordance with the policy intent of the DTC.
This led the CCRA to conduct a pilot project in 2000 to review the eligibility of a sample of individuals who had applied for the credit between 1985 and 1996. The pilot project found that a significant number of individuals should not have qualified for the credit, should have been approved only on a temporary basis or did not have sufficient information on their files to determine if they were eligible. This information indicated that a full review of claims between 1985 and 1996 was needed.
Of the approximately 200,000 active files for disability tax credit claims made between 1985 and 1996, 135,000 claims were reviewed in the fall of 2001. Tax filers whose claims were supported by sufficient information, as well as those over age 75, were excluded from the review.
This left 106,000 claimants, just more than half of the entire number of claimants, who were asked to submit a new form T2201 in order to continue to claim the credit. No claims were immediately disallowed; all individuals contacted in the review were given the opportunity to substantiate their eligibility under the disability tax credit for the 2001 tax year.
No one will be denied access to the benefit without a full review of their claim, and the minister has ensured that clients who have documentation from the period from 1985 to 1996 will be able to submit this documentation as evidence that they are entitled to the benefit.
The purpose of the current review is to ensure that all claimants who apply for the credit are treated fairly and consistently and that the DTC is administered in accordance with its requirements. Of the 106,000 individuals who were asked to re-certify their DTC eligibility for 2001 and subsequent years, about 90,000 have responded to date. Of those, about 60,000 have been determined to continue to qualify for the credit.
It is important to note that this review ensures all claims for the DTC prior to and after 1996 receive the same level of eligibility scrutiny and that the governing criteria are applied to all claims in a consistent manner.
Nonetheless, after hearing from members of Parliament, senators and Canadians, and in response to a March 2002 report by the Sub-Committee on the Status of Persons with Disabilities that expressed concern about the T2201 form used to determine eligibility for this benefit, extensive consultations on administrative matters were initiated by the CCRA with organizations representing persons with disabilities and medical practitioners.
Furthermore, the minister has asked her officials to conduct further consultations before initiating the second phase of the review, a review of the pre-1996 spousal and dependent claims originally scheduled for this year. As part of these consultations, a new T2201 form for the DTC has been drafted and distributed to all participants and to the members of the subcommittee.
At the request of organizations representing persons with disabilities, the existing version of the T2201 form will be used for the coming tax filing season while consultations are completed. The Minister of National Revenue has instructed CCRA officials that no new administrative reviews are to take place until these consultations and changes are completed.
The government is committed to consulting with organizations representing persons with disabilities and medical practitioners on an ongoing basis. It is important that the government hear their views to help ensure that federal tax assistance for persons with disabilities is fair and effective.
As indicated above, the CCRA will establish a new permanent administrative advisory committee on disability to ensure ongoing consultations on administrative issues.
Finally, I would like to conclude by saying that I do not believe that Canadians would want the CCRA to extend the disability tax credits in cases where it is not warranted. Nor would they object to a review being conducted to ensure the integrity of this important program. The CCRA has a responsibility to administer the disability tax credit in a fair and equitable manner in accordance with legislation approved by Parliament and to ensure that those who are entitled to receive the disability tax credit can continue to benefit from it.
As my colleague from Oak Ridges indicated earlier, the government is continuing its consultation and will be reporting to Parliament at a later date.
