Disability Tax Credit only for those who work

It seems that the UK is not the only country with disability benefit issues. On the opposite side of the Atlantic, Canada has a federal tax credit for people with disabilities. However, it seems that six out of ten people who qualify don’t actually benefit.

And why? Believe it or not, it is because they don’t have enough income for the credit to offer any benefit.

You see, the Disability Tax Credit reduces taxes by up to about $1,200 per year — but only for those who would otherwise pay taxes. That’s because it was designed to help people who have high expenses related to their disabilities, such as kidney dialysis, dementia, car accident injuries, mental disorders and physical disabilities.

But people who have restricted mobility and can’t work, don’t have access to the funds – and, unsurprisingly, many think that’s unfair.

canada flagCarmela Hutchinson from the Council of Canadians with Disabilities agrees with that sentiment. “Right now it’s tremendously challenging for people with disabilities at every level — financially, socially and physically,” she said.

Wayne Simpson and Harvey Stevens recently calculated that 301,458 of the 499,302 adult Canadians who qualify for the credit cannot receive any benefit from it because they don’t have enough income. If that isn’t ludicrous, I don’t know what is. How can any government have a form of benefit that people with disabilities don’t earn enough to obtain?

Simpson said the research is proof that the tax credit is not helping the “most vulnerable among persons with disabilities – the low-income families.”

Simply changing the credit from a non-refundable credit to a refundable credit would make a big difference, Simpson said. It would mean a majority disabled people from low-income families would receive the credit, getting on average about $511. That would cost the federal treasury $72 million, the researchers estimate.

Simpson and Stevens also calculated that if the federal government opted to make the tax credit refundable and tripled its value, “then virtually every family with a disabled person below the low income cut-off would benefit.” That would cost a lot more, however: about $516 million.

Canada’s finance minister Bill Morneau has said that review of tax credits is under way. How long that will take, whether that review will listen to disability organisations and whether the government will take action is another matter.


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