Please note that these Regulations that were to come into force November 15 to cap the fees that disability tax credit (DTC) promoters can charge for assisting people with applying for this valuable credit were suspended by a judge in British Columbia, pending a constitutional challenge to be heard at a later date. Thus, these are now pending rules (updated November 15th, 2021).
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When ever we have a review of a tax area (Disability Tax Credit (DTC) this time) it has been my experience that things will morph into a entire new zone, and become far more complicated than they have to be, and more time consuming. As things become more complicated it generally means more time and more cost.
In addition, the new rate regulation for Disability Tax Credits starts on November 15, 2021 for fees being charged to assist clients in filing a Disability Tax Credit application and adjustments. The fees become regulated rate on a per taxation year basis (see details below). These rates were based on a 6 page form under the 2020 and prior rules. The CRA rate regulation is about to begin November 15, 2021, but now with the new 16 page form this process has increased time and effort.
So while increasing the work load and increasing the processing time, the rate becomes regulated under a different set of circumstances! As I said, things morph into a new zone!
Here is the newer form that is now 16 pages. Don't you love longer forms? https://www.canada.ca/content/dam/cra-arc/formspubs/pbg/t2201/t2201-21e.pdf
While part of the increase is due to improved formatting and instruction, a significant amount relates to the requirement for more structured and detailed information (including box ticking). Thus, your MD or other health care professional will need to spend more time completing the DTC application form. More time normally means more cost to you from the Doctor preparing the form as well.
The MD or other health care professional was previously simply asked if the individual was markedly restricted in a particular activity. This question has been removed and more descriptive information will be requested.
While part of the increase is due to improved formatting and instruction, a significant amount relates to the requirement for more structured and detailed information (including box ticking). Thus, your MD or health care professional will need to spend more time completing the DTC application form. More time normally means more cost.
The CRA has provided an online app for the Doctor to use. Not sure if it will be faster for the Doctor or not? However, here is an app to use which is from CRA.
A couple more highlights on the changes are as follows;
a) The claimant (if different from the person with the disability) will also now need to sign the form.
b) Mental function analysis has been significantly expanded. More work required up front on this.
c) The new form states expanded eligibility as before it was based on the patient’s ability to work and now includes housekeeping activities, or engage in recreational activities.
Thanks to tax specialist Joseph Devaney CPA, CA and his team for a significant part of this analysis.
Rate Regulation Starting Soon!
Disability Regulations start on November 15, 2021. The Regulations establish the maximum fee that a CPA or others can accept or charge in respect of a DTC request as:
$100 for a request made for a determination of disability tax credit eligibility – helping to complete the T2201 – Disability Tax Credit Certificate; and
$100 per taxation year for assisting the individual or a family member request a reassessment, for up to nine prior taxation years, in addition to the current taxation year, should they wish to amend a prior year’s tax return, which may result in a refund of taxes paid in these previous years. This can be done by submitting either a T1 Adjustment Request – T1ADJ or a signed letter to the CRA.
These rates will be reviewed in 5 years. The inflationary adjusted year means 2025 and every fifth year after that year.
It is important to note that the cap does not impact how much tax preparers charge for preparing taxes and providing advice, beyond the adjustments that are required for claiming the DTC.
Therefore, I see less practitioners being inclined to assist in these applications go forward as the current rate regulation was based on a smaller form that was less involved.
However, I will continue to assist and do the tax adjustments for clients and have allocated the extra time need, at this juncture, as community service to ensure no one is left behind.
Please feel free to contact me for further information and advice.
Dated : October 7, 2021 (originally posted)
November 15, 2021 (updated for new court challenge)
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By Peter Wiesner CPA, CA
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