Jan 19, 2022
As we advised in Tax Tip 20-04 , significant additional disclosure and filing requirements for trusts were announced in the 2018 Federal Budget and are scheduled to apply for trust’s 2021 and subsequent tax years.
Author: Peter Weissman, FCPA, FCA, TEP, CEA
Editor: Matthew Cho, CPA, CA, TEP
The Disability Tax Credit Promoters Restrictions Act (the “DTCPRA”) was adopted by Parliament allegedly to protect “vulnerable Canadians” from perceived abusive fees some “promoters” were believed to be charging to assist taxpayers in accessing the disability tax credit (“DTC”). Although the DTCPRA was introduced in 2012 and received Royal Assent on May 29, 2014 it has been inoperative because the amount of the fee cap was not determined when the bill was approved.
The fee limit was to be set by regulation and no regulation had been proposed until June 2019. The proposed regulation imposed a $100 fee limit on the amount a “promoter” can charge to help a taxpayer request a determination of eligibility and a limit of $100 for each request to actually claim the resulting tax benefits arising from the DTC.
The $100 fee limit will apply, not only to the completion of the DTC eligibility application, but also to any work required to pursue or challenge a determination with the CRA, including filing a notice of objection. The costs to appeal to tax court would not be restricted by the fee cap.
Many submissions were made regarding alternative fee limit models, including a proposal from our partner, Peter Weissman, but the final regulations were printed without modification on April 14, 2021, with an effective date of November 15, 2021.
Promoted to the public as a restriction imposed to protect vulnerable Canadians from predatory consultants, the fee cap also applies to regulated professionals such as accountants and lawyers but not medical practitioners.
It is our opinion that the $100 fee limit will effectively eliminate tax advocates for people with disabilities, because it is not an economically viable model. The loss of DTC consultants will leave taxpayers with disabilities vulnerable to the decisions of an unchallenged CRA.
True North Disability Services Ltd. and its founder, Shane Nercessian’s filed an application to the Supreme Court of British Columbia seeking an injunction against the fee cap pending a challenge as to its legality based on two issues. The first issue is whether the federal government has jurisdiction to regulate consultants as this usually falls under provincial jurisdiction. The second issue is whether the DTCPRA is constitutional because the law seemingly violates the rights of a class of Canadians, those with disabilities, to representation.
Our partner, Peter Weissman, agreed to file an affidavit of evidence with the court on this matter. On November 4, 2021, citing Mr. Weissman’s submission as well as those of the others who submitted evidence, the Supreme Court of British Columbia approved the injunction. The decision has rendered the fee cap inoperative until the court has a chance to rule on the two challenges mentioned above. Proceedings regarding these two issues have not commenced.
 $100 for a request made for a determination of DTC eligibility; and $100 per taxation year for a request in respect of a deduction for an individual or for a dependent, or in respect of any deduction or overpayment of tax under the ITA that is contingent upon DTC eligibility for that individual or for a dependent.
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The material provided in Tax Tip is believed to be accurate and reliable as of the date of posting. Tax laws are complex and are subject to frequent change. Professional advice should always be sought before implementing any tax planning arrangements. Cadesky Tax cannot accept any liability for the tax consequences that may result from acting based on the contents hereof.