June 2022 Newsletter

Restrictions on fees for claiming disability tax credit put on hold for now

Disability Tax Credit (DTC) status is very valuable to taxpayers who qualify. Aside from the DTC itself (worth close to $2,000 per year in most provinces), taxpayers who are approved for DTC status are eligible for over a dozen other possible tax benefits, depending on their circumstances. DTC approval requires filing a Form T2201 (paper or online), with medical information that the CRA must approve. The CRA often denies DTC status, and many cases are disputed through the objection and appeal process. Filing a DTC claim is often not easy.

There are businesses that file DTC claims on behalf of taxpayers, in exchange for a percentage of the tax savings, sometimes 30% or more. This has raised concerns about predatory pricing.

The Disability Tax Credit Promoters Restrictions Act (DTCPRA) was introduced as a private member’s bill and enacted by Parliament in 2014, and was scheduled to come into force on November 15, 2021. It limits the fee that can be charged for a DTC claim to $100 per taxation year and prevents contingency fees.

However, in True North Disability Services v. Canada, the British Columbia Supreme Court issued an interim injunction on November 4, 2021, preventing the DTCPRA from coming into force, on two grounds. First, it may be an infringement by the federal government into “property and civil rights”, which is allowed only to the provinces under the Constitution Act, 1867. Second, it may breach the rights under the Charter of Rights of persons with disabilities to receive the tax advantages of DTC status.

True North then filed its petition for a permanent injunction on December 2, 2021. It remains to be seen whether the Courts strike down the DTCPRA as being unconstitutional.

Last modified on June 2, 2022 12:00 am
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