For 2017, Canada Revenue allowed 765,072 claims totaling $ 1,310,660,890.
The DTC is worth around $8,113 with a supplement of $4733 available for dependent children under 18. Sounds promising.
But the average allowed claim was just $1713.12. That's because you need the tax liability to offset the DTC, meaning that the more you earn, the more you benefit.
If you are in a minimum wage job - $10.70 x 2000 hrs = $21,400, your income tax will be about $2,424 and you can claim a DTC of $2,424. You will need twice the income, $42,000, to get the full benefit.
This is totally upside-down. Those that need the benefit most receive least. For those on social assistance - getting around $1,000 a month - it's entirely moot because social assistance is not taxable. So if your income is entirely social assistance, there's no reason to file for a DTC and you get no credit.
This is a concern not only because people are missing out on the credit itself but also because eligibility to the DTC – which is not automatic – is a gateway to other important and more valuable benefits such as the Child Disability Benefit and Registered Disability Savings Plans (RDSP).
I attended a meeting the other day where people enumerated the difficulties of being poor and disabled - access to employment transportation and medical care chief among them. Now I learn that this government program does exactly the opposite of what is desired. I'm beginning to think government programs are the main problem.
I'm not a tax expert, but the obvious solution is to make this a refundable tax credit. Sort of a guaranteed income, but only for people medically certified for a DTC. The minimum wage earner gets a refund of $5689 ($8,113 - $2,424), the social assistance recipient gets a refund of $8,113. The middle income earner gets a refund of up to $8,113 of withholding.
A more complicated but perhaps more complete approach (and palatable to the private sector) would be to allow syndication of the credits. A private investor would buy the unused credit from the taxpayer. The tax credits can only be applied in certain situations:
- low-income housing
- investment in rural communties
- making historic properties accessible
The taxpayer with a certified disability gets the money, and society gets socially beneficial programs.
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A University of Calgary paper in January 2018 estimates the uptake on the DTC is around 40% - low because the program is not well known, the rules are complex and it requires a medical opinion. 765,072 is 40% of 1,912,680 - a vastly different number than 3,775,910 Canadians with disabilities reported by Statscan in 2012. That's around 5% of the population. In Nova Scotia it's 50,000 people.
To be eligible for the DTC, an individual must have a severe and prolonged impairment in physical or mental functions, as defined in the Income Tax Act and as certified by a medical practitioner. Eligibility is not based on a diagnosis, but rather on the effects of the impairment on the ability to perform the basic activities of daily living (as described in the Income Tax Folio S1-F1-C2, Disability Tax Credit).
Ontario is experimenting with a guaranteed income.
1 comment:
Lois Miler says
And also those disability-related expenses are a much higher per centage of the income of a poor person than of a person with higher income.
Making that DTC refundable was the key advocacy issue of IL Canada and Council of Canadians with Disabilities a year or so ago, but with no success to date.
Lois
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