The government is cracking down on consultants who profit from disabled Canadians
The Canada Revenue Agency (CRA) announced in early June that it will be limiting what consultants can charge to help taxpayers get the Disability Tax Credit (DTC). Individual taxpayers can apply themselves, but the process can get complicated; some consultants cite the level of difficulty in the application process to justify fees that have been called excessive.
The DTC is available to Canadians with severe and prolonged disabilities or their caregivers to help them cope with “unavoidable additional expenses that other taxpayers don’t have to face.”
According to the CRA, consultants tend to charge between 15% and 40% in contingency fees to those who succeed in accessing the tax credit. For adults, those charges can run as high as $4,663, the CRA says, and up to $7,383 for minors. The government estimates that last year the industry made anywhere between $9.5 and $25.4 million in revenue as a result.
According to the proposed new rules, consultants will be allowed to charge only $100 when determining whether someone is eligible, $100 for helping the person navigate the application process, and no more than $100 a year if the applicant is granted the tax credit.
In a press release that followed the announcement, the Association of Canadian Disability Benefit Professionals said, “The direct result of these regulations will be the unavailability of services to disabled Canadians, near total job losses within the industry, and fewer benefits received by those who need them most. Members of the Association play a critical role in unlocking benefits for disabled Canadians and their families.”
You might wonder why people would hire a consultant when they can fill out the application forms themselves for free. But a review of the tax credit by the University of Calgary’s School of Public Policy shows that many Canadians don’t bother because the application process is too difficult to navigate. It found that though 1.8 million people live with a severe disability, only 40% per cent have access to the DTC.
In announcing the new regulations, the CRA promised to simplify the process.
The review also found that many who apply can’t access the tax credit because their application is declined by the CRA. That often includes those with mental illnesses, who are eligible only if they’re impaired 90% of the time as a result of their mental illness.
If you want to apply for the credit and are feeling overwhelmed, consultants aren’t your only option. There are groups that will assist you for free, such as Independent Living Canada (ilcanada.ca), which has 25 offices across the country.