Private member’s bill expanding disability tax credit eligibility to cost $48 million

Thestar.com
January 30, 2019
Marco Vigliotti

A private member’s bill expanding eligibility for the federal disability tax credit will cost Canadians $48 million each year, according to a new study from parliament’s spending watchdog.

The Parliamentary Budget Officer said in a report Tuesday that Conservative MP Tom Kmiec’s Bill C-399 would cost Ottawa $25 million in lost tax revenue and $13.4 million in additional program expenses each year as the number of claimants grows by 22,000. The provinces would also stand to lose $9 million annually in reduced tax revenue.

Kmiec’s bill would make it easier for claimants to qualify for the disability tax credit on the grounds of “life-sustaining therapy,” which currently represents about four per cent of all approved claims.

To qualify now, applicants must show they need therapy to support a vital function at least three days each week for a minimum of 14 hours, including time spent determining necessary dosages. They also require certification from a doctor.

The bill would lower the necessary hours to 10 and allow claimants to include time spent determining dosages of medication related to a dietary or exercise regime. It also clarifies that time spent measuring dosages of medical food and formula would count toward the threshold.

Kmiec, who requested the PBO study, said he thought it was a reasonable cost, noting the lost tax revenue will flow back to Canadians with disabilities who must pay themselves for treatments and specialized medical needs.

“I think it makes the point that this a reasonable private member’s bill,” he told iPolitics.

“I’m not asking for the moon, I’m just doing a small tweak that will bring a lot of fairness for persons with disabilities.”

Kmiec said he requested the PBO study to help with his efforts to win support in the House for the bill, specifically among Liberal and NDP MPs. Most of the members from these parties, he said, did not oppose the idea of the legislation, but wanted more information on the “mechanics and costs associated” with implementation.

Green Party Leader Elizabeth May has already announced she will co-sponsor the bill, while Kmiec said he has the support of the Conservative caucus.

Émilie Gagnon, a spokesperson for Revenue Minister Diane Lebouthillier, said the federal cabinet had not yet made a decision on whether to support the bill.

Kmiec blamed his “not so great number” in the House lottery to determine private members’ business for slowing passage of the bill, but said he hopes to see the first hour of second reading debate take place in mid-March. From there, he wants to see it moved to committee in the spring and voted on before the summer recess.

Kmiec said he introduced the bill in response to criticism of how the Canada Revenue Agency was assessing applications for the tax credit from diabetics, noting the legislation largely mirrored a prebudget submission from JDRF, historically known as the Juvenile Diabetes Research Foundation.

In 2017, Diabetes Canada went public with claims that the CRA was rejecting virtually all applications from adults with Type 1 diabetes despite previously qualifying for the credit.

Minister Lebouthillier’s office insisted it had made no changes to the eligibility criteria, though the CRA suggested it was employing a new interpretation of the rules that would disqualify activities needed to manage the disease like meal planning as life sustaining therapies, as reported by the Globe and Mail.

The CRA later reversed course under public pressure and said it would revert to an earlier interpretation when assessing applications.

Including language clarifying dosage calculations in the bill will “partially prevent” the CRA again from interpreting the rules to disqualify diabetics, said Kmiec, who has three children that suffer from a chronic kidney condition.

The PBO report said the bill will cost the federal government $13 million more each year in tax and program spending under the Registered Disability Savings Plan (RDSP), which will become more popular under the expanded eligibility criteria. It will also cost Ottawa $400,000 more in working income tax benefit supplements.

The RDSP is a savings plan for disability tax credit claimants that allows them to withdraw funds without it counting as income.

If passed, the bill will increase the available amount per average benefit claim by $748, according to the PBO’s estimates.

Kmiec said his bill is about addressing tax fairness, arguing Canadians with disabilities should be able to claim tax deductions for the money they spend addressing medical needs that others do not require.

“This is about fairness and it’s about the reasonable burdens you place on taxpayers,” he said.