A FAIR AND EFFECTIVE
DISABILITY TAX CREDIT
SOCIETY OF CANADA
SUBMISSION TO THE TECHNICAL ADVISORY COMMITTEE
Multiple Sclerosis Society
250 Bloor St. E., Suite 1000
Toronto, Ontario M4W 3P9
Ph.: 416 922-6065/ Fax: 416 922-7538
A FAIR AND EFFECTIVE DISABILITY TAX CREDIT
The Disability Tax Credit
(DTC) is an Income Tax Act provision which recognizes, by providing
a tax credit, the extra costs of living that are incurred by persons
with disabilities. The DTC is a valuable component of the Government
of Canada’s measures to support persons with disabilities.
It is especially valuable in that it assists many people who work
to support themselves. Unlike the Canada Pension Plan, which provides
support when work is not possible, the DTC plays an important facilitating
role for disabled Canadians who continue to live independently,
support themselves through employment and contribute to the economy.
While the DTC is simple
in principle, it has proven complex and confusing in application.
The Multiple Sclerosis Society of Canada (MS Society) believes that
interpretations of the Act and criteria used to determine eligibility
are overly restrictive leading to ineligibility for many who merit
access to the DTC.
The MS Society is committed
to working with the Government of Canada to improve the clarity
and accessibility of the DTC to ensure it meets the objectives of
supporting Canadians with disabilities.
Advisory Committee on Tax Measures for Persons with Disabilities
The MS Society welcomes
the establishment of the Technical Advisory Committee on Tax Measures
for Persons with Disabilities. The Committee has an outstanding
opportunity to take a broad and comprehensive look at the DTC and
to make recommendations to ensure it more properly meets its stated
goals in future years.
We are encouraged that
the Committee has an 18-month timeframe to complete its work. This
provides time for a thorough review. We urge the Committee to look
to first principles and objectives of the DTC to inform its recommendations
rather than necessarily working within the parameters of the current
legislation and methodologies.
The DTC and the
Multiple Sclerosis Society of Canada
The MS Society is a member
of the Coalition for Disability Tax Credit Reform, a group of individuals
and organizations working on behalf of Canadians with disabilities
to improve the disability tax credit program. We will continue to
work with the coalition as a primary form of expressing the needs
of the MS community with respect to DTC. The MS Society is very
pleased to endorse the issues, concerns and solutions that are addressed
in the chart that has been presented already by the coalition to
the Technical Advisory Committee. We attach it to our submission
for your convenience.
The MS Society has been
pleased as well to participate in the consultation held this spring
to address specific aspects of the DTC application form (T2201).
This has been a useful process, and we feel that we have been able,
along with other health organizations and health care professionals,
to provide constructive and meaningful input. We hope our contribution
during the consultation will lead to a more accessible and user-friendly
form. We look forward to the next stages of this process.
Unique Characteristics of Multiple Sclerosis
There are disability
characteristics that are common to individuals with Multiple Sclerosis
and which are not well addressed in the structure and function of
We are pleased to have the opportunity to better explain the unique
characteristics of MS and the challenges they pose in the DTC context
to help inform the Committee as it begins its review. To assist
in this, we have included several profiles of individuals to illustrate
the types of difficulty that people with MS have encountered with
Multiple sclerosis is an often disabling disease of the central
nervous system that usually strikes young adults. Studies indicate
that Canada has one of the highest rates of MS in the world. An
estimated 50,000 Canadians have MS. While MS has been diagnosed
in children as young as four and in adults who are over 60 years
of age, the average age of diagnosis is 30 – just when people
are beginning careers and starting families. The effects of MS can
be devastating to them and to their families, partially because
MS is unpredictable in the way that it will progress over time and
how it will affect people on a day-to-day basis. Periods of spontaneous
recovery are interrupted by unpredictable attacks that over time
result in most people with MS becoming disabled – unfortunately,
Most people with MS are eventually unable to work full-time because
of increasing progressive disability. In 1991, 44% of adults with
disabilities (aged 15-44) were not part of the labour force. With
MS, however, this is significantly higher. Seventy per cent of people
with MS are not working 5-10 years after they are diagnosed.
DTC Issues Related
to Multiple Sclerosis
or ‘episodic’ disabilities
Once diagnosed with MS,
the individual will live with the disease for the rest of their
life. However, the affects of the disease are often ‘episodic’
in nature. While MS often causes severe disability – such
as tremor, problems with balance, spasticity, severe fatigue, cognitive
impairment and paralysis – MS is also unpredictable. This
means that those symptoms which make walking a city block so difficult
may unpredictably improve over a period of time and then just as
unpredictably worsen. Or a person with MS may be able to walk –
albeit with an aid such as a cane or walker – in the morning,
but in the afternoon be so unsteady that he or she cannot manage
the same distance without a great deal of time.
A Nova Scotia man had
received the disability tax credit for four years. He has difficulty
walking even with a cane and experiences severe fatigue because
of MS. His MS has not improved. In 2001 he received a letter from
CCRA requiring that his doctor fill out a new form so he could continue
to qualify for the DTC.
Unfortunately, his doctor
checked “yes” to the question of whether he could walk
50 metres on level ground. He can sometimes walk that far, but not
all the time, and with periods of rest. He also cannot climb stairs.
As he pointed out, “life doesn’t happen on level ground”—the
phrase that was on the DTC application form he was required to fill
Because of the checkmark
on the form, he received a letter from CCRA telling him he no longer
qualified for the DTC. He appealed the ruling and provided documentation
with the help of an MS neurologist detailing how his walking problems
are severe and prolonged even though they may fluctuate from time
to time. He also was able to document how MS fatigue severely impacts
all aspects of his life even though it is an “invisible”
The form that the first
doctor filled out did not provide an opportunity to explain that
his condition is severe and prolonged even though it may fluctuate
unpredictably within even short periods of time, as is typical of
Section 118.3 of the
Income Tax Act says that an individual may qualify for the disability
tax credit if their impairment is “severe and prolonged”.
Section 118.4 defines ‘prolonged’ as “has lasted
or can reasonably be expected to last, for a continuous period of
at least 12 months”.
An interpretive bulletin
prepared by the Canada Customs and Revenue Agency declares “intermittent
impairments are not considered prolonged.”
This wording in the legislation
and subsequent interpretation have the effect of barring legitimate
cases from receiving the disability tax credit and easing the extra
costs of having a severe disability.
This issue was also closely
reviewed by the House of Commons Committee reviewing the Canada
Pension Plan disability provisions. The Committee recommends that
the terms severe and prolonged “be amended to take into account
cyclical and degenerative mental and physical conditions.”
The Income Tax Act should
be amended to remove the “continuous period of at least 12
months” condition of eligibility. CCRA interpretive information
should also be amended.
DTC criteria must provide
enough flexibility to allow individuals with intermittent but severe
disability to have their degree of impairment assessed.
2. Severe Fatigue
While MS affects individuals
in a myriad of different ways, virtually all people with MS experience
severe and debilitating fatigue. In many cases, it is this chronic
exhaustion, and not the other physical disabilities associated with
the disease that poses the biggest challenge to daily life.
A Saskatchewan man applied,
and was turned down for the disability tax credit. He was judged
not to be sufficiently disabled to qualify for the DTC. He appealed
the ruling in a letter in which he described how multiple sclerosis
had impacted his life.
He wrote that MS has
affected his life drastically in all aspects. His life used to revolve
around work and sports of all kinds. After developing MS, he has
severe fatigue and has no energy to carry out simple activities
of daily living. Severe depression is also a major problem. He takes
antidepressants, sleeping pills and medication to help control tremours.
Even taking a shower is hard because of his lack of balance.
He faces additional expenses
because he can no longer take the bus and must take taxis whenever
he travels outside his home. He can no longer do simple yard work
and has to hire someone to mow the grass and do other gardening.
He receives CPP disability
benefits as he had to quit work in 1989 because of MS. He was shocked
when he was deemed ineligible to receive the DTC: “I feel
humiliated and depressed having to write down this process and trying
to answer your questions. My doctor is frustrated with filling out
more forms instead of treating patients.”
Fortunately, upon appeal
he has now learned that he will receive the DTC and it will be retroactive
for the time he was disallowed the credit. He still cannot understand
why he was disqualified in the first place, since his MS has not
changed in the past few years.
He was judged not to
be “severely” disabled despite the fact that MS has
negatively impacted all of his activities of daily living as well
as the many additional costs associated with his balance and fatigue
Fatigue is not directly
measured in the ‘daily life’ tests for DTC eligibility.
It is not uncommon for people living with MS to meet the discrete
‘daily living’ tests, which are highly specific and
adjudicated independently of one another, and yet face severe challenges
with daily living in the real world.
This points to the need
for flexibility in interpretation and more knowledge among those
adjudicating applications. As has been pointed out in repeated comments
before the Parliamentary committees, eligibility needs to be based
on the impact a disability has on an individual, not on a diagnosis
of a specific disability or a set of imperfect questions on the
application form. Fatigue is not a disease, but it is a common and
debilitating aspect of MS.
of daily living’ tests are too specific and discrete to properly
measure an individual’s capacity to manage daily living. They
should be evaluated together.
The MS Society is aware
of how important a well-informed CCRA staff is to the appropriate
assessment of people with disabilities and the administration of
the DTC. This is particularly vital in dealing with diseases such
as MS which have a multitude of symptoms and an unpredictable episodic
course which can vary greatly from person to person.
The CCRA has the responsibility
for administering the DTC. To carry out these duties effectively,
CCRA staff must have access to appropriate training and resources.
Staff should also be made aware of the various important court decisions
(such as Villani v. The Attorney General of Canada) which have emphasized
that benefits-conferring legislation ought to be interpreted in
a broad and generous manner and that any doubt arising from the
language of such legislation ought to be resolved in favour of the
This point has been highlighted
in the recent study of CPP disability done by the Commons Committee
on the Status of Person with Disabilities. Anna Mallin, a member
of the CPP Review Tribunals is quoted in the report as follows (page
41 of CPPD report):
names an illness; it doesn’t tell you what the effect of it
is. Indeed, one of our other recommendations is to encourage the
department to do much more in that way of providing information
on functional capacities evaluation, functional abilities tests,
etc. We need more information that focuses on a person’s capacity
to function, as opposed to a diagnosis of illness”.
These comments apply
equally to the Disability Tax Credit.
CCRA administration must
continue to train its staff and provide up-to-date training and
resource materials. The MS Society would be pleased to assist with
the training of CCRA staff about particular aspects of multiple
4. DTC as a Refundable
The disability tax credit
is currently non-refundable. It is applied against and thus reduces
taxable income. This means it does not assist people who do not
have taxable income or dependants of individuals without taxable
income. People with disabilities – including many people with
MS – generally are in the lowest income levels of all Canadians.
In addition, they have disability-related expenses that able-bodied
members of society can avoid. These include items such as canes,
walkers and wheelchairs which can be claimed in part as a medical
expense. Other more intangible expenses such as having to take expensive
taxis instead of low-cost public transit, which is unfortunately
not usually accessible, are unavoidable and cannot be claimed.
The DTC as it
is presently constituted is not a refundable credit.
The Income Tax Act should
be amended to make the disability tax credit a refundable credit
to benefit people who have severe and prolonged disabilities, requiring
them to cover additional costs but who have limited taxable income.
5. Extending the Medical Expenses Tax Credit
The MS Society is pleased
that by allowing the cost of an air conditioner as a medical expense
the Government of Canada recognizes that heat can have a significant
exacerbating effect on the symptoms of MS. It has been well known
for many decades that heat can make MS symptoms worse although fortunately
this worsening is temporary and responds to a cooled environment.
We are grateful that this unique characteristic of MS is accommodated
to at least some extent.
The MS Society proposes
that while people with MS can claim up to $1,000 of the cost of
a prescribed air conditioner, there is no relief for the cost of
operating an air conditioner for people with MS. This can be a significant
burden for people with MS and their families who are challenged
with many other disability-related expenses and lack of income.
This is especially true for people living on fixed incomes.
The MS Society urges
that the Technical Advisory Committee consider how this situation
might be addressed. The medical expenses tax credit might be the
process to capture these expenses, with a portion of electrical
bills used to establish the amount which individuals could claim
this medical expense, up to a certain level.
6. Building on
The MS Society is aware
of the excellent report on Canada Pension Plan Disability Benefits
issued recently by the House of Commons Committee on Human Resources
Development and the Status of Persons with Disabilities. We were
struck by the many areas of cross-over between this report and the
work on which the Technical Advisory Committee has embarked. A number
of the important issues outlined in the report on CCP(D) are relevant
here as well.
• Flexibility --
Several experts appearing before the Committee drew attention to
the need for more flexibility in the interpretation of the rules
to meet individual needs. This testimony was very much like that
of witnesses before the Committee when it was examining DTC issues.
Said Sherri Torjman:
“We really need to have a program that is far more flexible
and far more able to meet a whole range of needs” (report
page 27). The Committee agreed, saying “The ‘human lens’
will be ineffective without a flexible approach” (report page
26) and it recommended the establishment of a permanent advisory
committee to review and report on the program’s performance.
• Eligibility for
Cyclical Disabilities – As with its DTC review, the Committee
examined the issue of cyclical or intermittent disabilities. It
recommends amendments to the CPP to ensure fairness to those people
with severe but non-continuous disabilities.
• Clear Information
and Simplified Application –Much like the review of the CPP(D)
program, the DTC review demonstrates the need to make information
clearer and more accessible to individuals, support groups and medical
The process of renewal
of eligibility for DTC brought this issue into sharp focus, as many
people receiving DTC benefits were suddenly advised that they would
no longer be eligible despite the fact that their disability had
noted. It is also highlighted by the high degree of appeals of decisions
and high degree of success with appeals. Clearly, there is need
for more clarity in the objectives and criteria of the program.
and Appeals -- Both the DTC and CPP(D) programs are characterized
by a high rate of appeals. A significant number of appeals are supported
upon review. This can be partly explained by the greater amount
of information and closer scrutiny generated by the appeal process.
. However, in the interests of predictability for all and efficiency
of administration, the rate of appeals should be lowered. The Committee
reviewing the CPP(D) looked extensively at this issue and made this
objective a substantial part of its report and recommendations.
The MS Society is very
pleased to be able to outline some of the major issues facing people
with MS in terms of current tax issues. We feel that progress is
being made and we look forward to even more positive results because
of the work of the Technical Advisory Committee. We have used this
paper to focus on issues that are particularly unique to people
with MS. We would like to emphasize again that we also support the
issues and solutions brought forward by the Coalition for Disability
Tax Credit Reform.
Thank you very much for
your consideration of our views.
For more information
Multiple Sclerosis Society of Canada
250 Bloor St. E., Suite 1000
Toronto, Ont. M4W 3P9