Disability Tax Fairness —
Technical Advisory Committee’s Mandate Completed
By Garry Angus
Individuals with disabilities may experience more equity and greater tax
fairness, thanks to the work of a special technical committee that
submitted its final recommendations to the federal ministers of finance
and national revenue in December.
The report, Disability Tax Fairness, was the end product of 18 months of
deliberations by the government appointed technical committee composed
of members of organizations representing people with disabilities,
health practitioners, human rights groups and tax experts from across
The committee's mandate was to make recommendations on improving tax
fairness for people with disabilities within the existing tax system,
and advise the ministers on how to spend $85 million, first allocated in
the 2003 budget, to meet that objective.
The report's set of 24 recommendations focus on three key areas: the
disability tax credit (DTC); employment and education-related tax
measures; and special provisions for caregivers and children with
The estimated total annual cost of the tax changes, according to the
report, is $110 million plus $2 million in administrative costs. The
committee recognized that the package exceeded the $85 million ceiling,
but believes that all of the recommendations represent important steps
for people with disabilities.
In an interview for the Disability News, committee member Dr. Gary Birch
(executive director of the Neil Squire Foundation) stated that the DTC
was a major piece of the groups work. The DTC certificate – and
T2201 (the application form) – essentially define
all-around eligibility for these tax credit measures.
The group's DTC proposals responded to recommendations in the March 2002
report of the House of Commons Standing Committee on Human resource
Development and the Status of People with Disabilities, Getting it Right
for Canadians: The Disability Tax Credit, and called for legislative,
interpretive and administrative changes to achieve better tax fairness.
Significantly, they recommended that individuals with multiple
restrictions in activity that have a substantial overall impact on their
everyday lives be eligible for the credit, and made proposals seeking to
remove systemic barriers to financially and psychologically vulnerable
Key DTC proposals include: recommendation 2.3 -The Canada Revenue Agency
state in its explanatory materials and on the application form for the
disability tax credit that some impairments in function can result in a
marked restriction in a basic activity of daily living, even though
these impairments may have signs and symptoms that may be intermittent;
recommendation 2.4- the Income Tax Act be amended to provide that
persons with a severe and prolonged impairment who are restricted in two
or more basic activities of daily living qualify for the disability tax
credit if the cumulative effects of the restriction are equivalent to a
marked restriction in a single basic activity of daily living all or
substantially all of the time.
"The DTC is a real hard issue to deal with," said Birch, "because the
types of disability range and the impacts of those disabilities. It's
very hard to quantify and do it in a way that meets everyone's needs.
It's a very challenging task. I think that we saw a lot of improvement
there. I wouldn't by any means say it's perfect, but I would like to
think that we definitely made it more equitable than it was."
Within the second key provision, employment and education-related tax
measures, the technical committee had early federal approval and
adoption of one item. That item, recommendation 3.1, called for 100
per-cent deductibility of the cost of disability supports purchased for
the purposes of employment or education. The proposal, with an estimated
cost of $15 million annually, was implemented in the March 2004 budget
as the new disability supports deduction.
Committee member Laurie Beachell (National Coordinator, Council of
Canadians with Disabilities) affirmed it creates greater opportunity for
those who have expenses related to education or employment to write
those expenses off without a threshold, "such as what previously existed
in the medical expenses tax credit-expenses over three per-cent of
The committee's third key provision and proposals - those for caregivers
and children with disabilities - focus on tax measures that provide some
recognition of the costs that caregivers incur in providing support for
adults with disabilities and that families sustain in raising children
"Tax fairness", according to the technical committee, requires equitable
treatment among persons with disabilities and between persons with
disabilities with and without taxable income. According to Beachell, the
other major component of the report is an acknowledgement that the tax
system only has benefit for a certain segment of the disability
population — those with a taxable income or someone a tax credit can be
"The report probably does not address those who may have even greater
disadvantage," he said. "When you recognize that many people with
disabilities are unemployed, or poor, or live on social assistance, you
realize that tax remedies for people with disabilities are extremely
limited in their impact. Secondly, there are other sectors like
aboriginal Canadians, First Nations people, who are excluded from the
tax system; who, even when efforts are made to take up a benefit through
tax measures, are not substantive."
The committee's closing proposal was created with the intent of
recognizing the need for non-tax measures to create such equity for all
members of the disability community. The proposal states that priority
should be given to expenditure programs rather than tax measures to
target new funding where the need is greatest, and recognized that the
development of such programs would involve consultations with provincial
and territorial governments and the disability community.
As Birch points out, "there is a lot that just cannot be done through
the tax system, which can be better done through other mechanisms."
"At the end of the day, I think what the recommendations do," says
Beachell, "is recognize that people with a variety of cognitive
impairments, developmental disabilities, learning disabilities, mental
health concerns have not had equal benefits on the disability tax
credit. The report, I think, creates greater fairness, identifies the
limitations of the tax system in addressing broad social policy needs of
people with disabilities, and says ultimately what we need are greater
services and supports at a community level for people to engage in
employment, education and community life."
"I think what the community needs are two things. We need an investment
and an engagement process that helps us develop a long-term strategy,
the collaboration of federal and provincial governments and the
disability community to define a ten-year action plan.
"We need at the same time, as other communities have seen, an earmarking
of some initial resources.
Our community is saying, 'it's now time to commit some dollars to invest
in disability supports.' CCD calls for an investment in disability
supports that help people get education, get jobs, and participate in
community life. And frankly, we believe there has been an erosion of
those supports right across this country, as governments have done
deficit reduction. We understood the need for governments to get their
house in order. We have been patient. We say to governments, " now you
have surpluses. Now you have monies to invest. It is time to invest in
supports for people with disabilities to be equal and full citizens."
"For those persons with disabilities" says Birch, "the Disability Tax
Fairness recommendations will help. It is not a windfall by any means,
but it will help those who are working or who have taxable income. I do
not think that we need to return to the tax table per-say in the
foreseeable future, but focus on other mechanisms to create equity
outside the tax system. I believe, as a technical committee on tax
measures, our work is done."