Disability Tax Credit History

DTC legislative changeYou may or may not be receiving the Disability Tax Credit. You may or may not have recently heard that people living with insulin-dependent diabetes can qualify.  Here is the summary of how the changes first can to be and the legislative changes that we were able to create at that time.

 

February 23, 2005

Federal Budget brings in real change for people with Type 1 Diabetes…
Minister Goodale announced that his government would accept most of the Technical Advisory Committee on Tax Measures for Persons with Disabilities recommendations listed in the Fair Tax Report of December 2004. He further states that…

“the budget proposes amendments to the Income Tax Act to better define the activities that will be considered therapy and will be included as time spent receiving therapy. Specifically:
 Where the therapy has been determined to require a regular dosage of medication that needs to be adjusted on a daily basis, the activities directly involved in determining the appropriate dosage will be considered part of the therapy.
 Therapy does not include activities such as following a dietary restriction or regime, exercise, travel time, medical appointments, shopping for medication or recuperation after therapy.
 The time it takes to administer the therapy must be time dedicated to the therapy—that is, the individual has to take time away from normal, everyday activities in order to receive the therapy. Further, in the case of a child who is unable to perform the activities related to the therapy as a result of his or her age, the time spent by the child’s primary caregivers (i.e. parents) performing and supervising these activities for the child can be considered time dedicated to the therapy.

With these proposed changes, it is expected that children with very severe cases of Type 1 diabetes—who require many insulin injections (which requires knowledge of current blood sugar levels at the time of each injection), as well as several additional blood sugar tests to monitor their condition—will become eligible for the DTC.

The life-sustaining therapy provisions, in and of themselves, do not extend eligibility for the DTC to individuals who receive therapy in a manner that does not significantly affect their everyday activities (for example, by means of a portable or implanted device).

These measures will apply for the 2005 and subsequent taxation years.”

Where do we stand?

In the 2005 Budget, Minister Goodale stated that he would accept Recommendation 2.5 made by the Technical Advisory Committee. This recommendation stated that
“The federal government ensure that the legislative and administrative requirements concerning the present interpretation regarding life-sustaining therapy adequately reflect the time taken for essential preparation, administration of and necessary recovery from life-sustaining therapy as recently interpreted in decisions of the Tax Court of Canada.”

In his May 6th letter, the Minister himself used this definition of Life-sustaining Therapy as it applies to Type 1 Diabetes when he stated “”where therapy has
been determined to require a regular dosage of medication (insulin) that needs to be adjusted on a daily basis, the activities directly involved in determining the appropriate dosage (insulin) will be considered part of therapy.”

The exclusion of the determination of the number of carbohydrates in order to calculate the insulin dosage in the proposed legislation is a restriction that has no medical basis and defies common sense. Calculating carbohydrate intake and calculating the insulin dosages are inextricably tied together. They cannot be separated. One can’t be determined without the other. Any effort to do so can result in death and criminal charges.

July 1, 2005

The budget legislation passed through the House of Commons, and is now going through the Senate (and its passage should be perfunctory since it is part of a money bill). It then needs to be signed by the Governor General before it is finally law, however CRA has already started it’s implementation process internally.  They always said they would be ready for September implementation roll-out of the changes, and from our position, it appears they are more or less on track.

There are still a lot of outstanding issues regarding the fair treatment of people with Type 1 diabetes.  We will be keeping on top of the issues and the process. We will work to keep CRA accountable for their actions. Please keep us informed as to what is happening with your case.

May 19, 2005

The second reading of the February 23rd budget pass thanks to the Speaker of the House.  It would appear that we are one step closer to Recommendation 2.5
becoming law.  Recent applicants for the DTC have been told that their claims were “awaiting a Federal decision”.  While you can demand to have your claim assessed right away, CRA is awaiting this pending legislation so that it can properly assess the length of time one would qualify for the DTC. If you have your claim assessed before this legislation is passed, you will most likely have to
reapply in the 2005 tax year.  Patience now should mean that you will be given the credit for a longer period of time–for children this should be until they reach the age of majority.

In the budget released on Wednesday, February 23, 2005 the Honourable Minister Ralph Goodale noted that the federal government would accept most of the Recommendations put forward by the Technical Advisory Committee on Tax Measures for Persons with Disabilities.

The budget proposes amendments to the Income Tax Act to better define the activities that will be considered therapy and will be included as time spent receiving therapy.

Specifically:

  • Where the therapy has been determined to require a regular dosage of
    medication that needs to be adjusted on a daily basis, the activities
    directly involved in determining the appropriate dosage will be
    considered part of the therapy.
  •  Therapy does not include activities such as following a dietary restriction or
    regime, exercise, travel time, medical appointments, shopping for medication or recuperation after therapy.
  •  The time it takes to administer the therapy must be time dedicated to the therapy—that is, the individual has to take time away from normal, everyday activities in order to receive the therapy. Further, in the case of a child who is unable to perform the activities related to the therapy as a result of his or her age, the time spent by the child’s primary caregivers (i.e. parents) performing and supervising these activities for the child can be considered time dedicated to the
    therapy.

With these proposed changes, it is expected that children with very severe cases of Type 1 diabetes—who require many insulin injections (which requires knowledge of current blood sugar levels at the time of each injection), as well as several additional blood sugar tests to monitor their condition—will become eligible for the DTC.

The life-sustaining therapy provisions, in and of themselves, do not extend eligibility for the DTC to individuals who receive therapy in a manner that does not significantly affect their everyday activities (for example, by means of a portable or implanted device).
These measures will apply for the 2005 and subsequent taxation years.

Notice of Means and Ways Motion to Implement Certain Provisions of the Budget Tabled February 23, 2005 

(4) The Act is amended by adding the following after subsection
118.3(1):

(1.1) For the purpose of paragraph 118.3(1)(a.1), in the determining whether therapy is required to be administered at least three times each week for a total duration averaging not less than an average of 14 hours a week, the time spent on administering therapy
(a) includes only time spent on activities that require the individual to take time away from normal everyday activities in order to receive the therapy,
(b) in the case of therapy that requires a regular dosage of medication that is required to be adjusted on a daily basis,
includes (subject to paragraph (d)) time spent on activities that are directly related to the determination of the dosage of the medication,
(c)in the case of a child who is unable to perform the activities related to the administration of the therapy as a result of the child’s age, includes the time, if any, spent by the child’s primary caregivers performing or supervising those activities for the child, and
(d) does not include time spent on activities related to dietary or exercise restrictions or regimes (even if these restrictions or regimes are a
factor in determining the daily dosage of medication), travel time, medical appointments, shopping for medication or recuperation after therapy.

This subsection is applicable to tax years 2005 and beyond.

The Finance Minister has released its proposed amendments to the Income Tax Act. While we assumed that the draft would closely follow the guidelines established by the Technical Advisory Committee, this does not seem to be the case. As noted on www.disabilitytaxcredit.com
“In its report, TAC recommended that Life-Sustaining Therapy, in particular for children with juvenile (Type 1) diabetes, includes activities, such as monitoring of blood sugar levels and determining insulin dosages, as indicated in recent Tax Court decisions.”

In the proposed legislative amendment, “the time spent on administering therapy includes only time spent on activities that require the individual to take time away from normal everyday activities in order to receive therapy” including the time spent on “activities directly involved in determining the appropriate dosage (of insulin).”

However, the proposed amendment does not include the time required to calculate of the number of carbohydrates (which is essential in order to
determine the insulin dosage). The time spent on activities related to dietary restrictions is excluded “even if these restrictions or regimes are a factor in determining the daily dosage of medication.”

The exclusion of calculating carbohydrates as part of the therapy contradicts the position taken by Minister Ralph Goodale. He acknowledged in a letter dated May 6, 2005 that, “where therapy has been determined to require a regular dosage of medication (insulin) that needs to be adjusted on a daily basis, the activities directly involved in determining the appropriate dosage (insulin) will be considered part of therapy.”

Excluding the determination of the number of carbohydrates in order to calculate the insulin dosage is a restriction that has no medical basis.
It certainly defies common sense.

Such a restriction has no foundation in law. Indeed, such a restriction makes a mockery out of a number of recent Tax Court decisions as well as the deliberations by TAC.

Calculating carbohydrate intake and calculating the insulin dosages are
inextricably tied together. They cannot be separated. One can’t be determined without the other. Any effort to do so can result in death and criminal charges.

According to the Legislative Proposals:

The Act is amended by adding the following after subsection 118.3(1):d)
does not include time spent on activities related to dietary or exercise
restrictions or regimes (even if these restrictions or regimes are a factor in
determining the daily dosage of medication), travel time, medical appointments, shopping for medication or recuperation after therapy.”
To view the legislation in its entirety go to
Minister of Finance Releases of Draft Legislative Proposals
Implementing Remaining Budget 2005 Income Tax Measures and follow the applicable link. 

Please visit our “Tips” section for further information on applying for the DTC.

To read of one family’s struggle to obtain the DTC go to “Our Story”.