“There’s lies, there’s dammed lies and then there’s statistics.” Famous humorist and writer Mark Twain once said, “There’s lies, there’s dammed lies and then there’s statistics.” The Canada Revenue Agency seems to have seized upon this concept recently.
In their 2015-2016 Internal Statistics for the Disability Tax Credit program, CRA states that 706,968 Canadians held current Disability Tax Credit Certificates. They also state that they approved 365,274 new applications. Yet the number of Canadians noted as having current Disability Tax Credit Certificates only increased to 765,072 the following year instead of the expected outcome of 1,072,242.
How is this possible? It appears that when someone applies for a disability tax credit and is approved for multiple years, CRA considers each category and retroactive year as a separate approval for statistical purposes. However, denials are recorded only once per application. Regretfully this makes it appear that there are substantially more approvals than denials.
The other troubling trend is the sudden and unprecedented increase in denials across most categories in 2016-2017 as opposed to 2015-2016, the most recent years that we have CRA statistics for. Both Speaking and Elimination categories denial rates soared 72% each. Followed by the Feeding category whose denials rose 68% and Mental Functions category whose denials rose 53% year over year. Overall denial rates shot up a staggering 49% across all categories and Mental Functions denials made up almost half (48%) of all denials across all categories.
On Dec 8, 2017, The Globe & Mail reported that CRA took steps to quell a furor over what critics were calling its heartless treatment of diabetics. Conservative Revenue critic Pat Kelly stated, “Since May, the government has rejected almost every application by diabetics for the disability tax credit and yet, it’s still trying to act like nothing has changed.” Minister Lebouthillier insisted throughout the controversary that there were no changes in the eligibility criteria for the disability tax credit, nor any changes in interpreting the associated rules. If that’s the case, it begs the question, why did the Government pull its May 2017 clarification letter which in and of itself was a demonstrable change in interpretation and review the cases of all those denied the tax break on the basis of that letter?
It also appears anecdotally, that CRA has increased the burden of proof that applicants for a Mental Functions category Disability Tax Credit must meet. In the past, applicants needed to show impairment in 3 out of 8 mental axes such as memory impairments and developmental delays. That threshold appears to have been increased to 4. In my opinion, this is the likely explanation why the vast majority of denials across all categories are Mental Function based. It is simply many times more difficult to qualify given that you must prove the existence and severity of several mental impairments that are for the most part subjectively assessed. As opposed to a single physical impairment which is often objectively assessed. In other words, it’s easy to get a Disability Tax Credit if you are sitting in a wheel chair and it’s substantially more difficult to obtain one for a Mental Function application such as severe ADHD.
The take away is that you must take the statistics that CRA and the Government put forth regarding the Disability Tax Credit program with a healthy amount of skepticism. Obtaining a Disability Tax Credit has become much more difficult in the past 18-24 months, particularly if you are filing for a Mental Function category application.
Dan Bartie is the CEO of Paladin Disability