disability services
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A new cap on the fees consultants charge to help people apply for the disability tax credit (DTC) could endanger the consultants’ ability to offer their services, disability advisors and advocates say.

The $100 fixed-fee schedule, which comes into force in November, may cause consultants to limit or even stop providing services, compromising Canadians’ ability to access disability benefits, they argue.

“We are terrified that come November, we are not going to be in business anymore,” said Barry Ho, president of DTC consultancy firm BMD Services in Winnipeg. Ho said he’s alerting new clients that “if there’s any significant difficulties with their [DTC applications], we won’t be able to move forward” under the new fee cap.

Peter Weissman, partner with Cadesky and Associates LLP in Toronto, said that by setting the cap too low, the government is “eliminating important advocates” for people with disabilities who are dealing with the Canada Revenue Agency (CRA). Weissman, a former chair of the government’s disability advisory committee (DAC), does not provide DTC application services to clients as part of his tax practice.

Parliament enacted the Disability Tax Credit Promoters Restrictions Act in 2014 to prevent consultants from charging what lawmakers regarded as excessive contingency fees of 30% or more of a client’s DTC claim. But the act didn’t take effect because consultations and other delays held up the regulations setting out maximum fees.

As of Nov. 15, 2021, consultants cannot charge more than $100 to help claimants complete Form T2201:Disability Tax Credit Certificate to determine their DTC eligibility. Consultants may also charge $100 per taxation year for assisting claimants in requesting reassessments for up to nine prior years and the current taxation year. The cap doesn’t affect how much can be charged for preparing tax returns.

A June 2019 document outlining the proposed $100 fee cap expressed the government’s concern about an increasing number of promoters aggressively marketing services, charging high fees and leaving claimants with too small a share of their tax credits. The DAC’s first annual report, issued in 2019, urged the government to cap fees at $100–$200, although it suggested consultants be able to charge more for complex applications.

An email from the CRA to Investment Executive stated the $100 fee cap “achieves an appropriate balance between the policy intent of supporting persons with disabilities and their caregivers and the concerns of small businesses” and was set after consultations in 2019.

The DTC is a non-refundable tax credit with a value of $1,299 for 2021. A valid DTC certificate also is a gateway to more than a dozen tax-related programs and benefits, including the Registered Disability Savings Plan and the Child Disability Benefit.

To be eligible for the DTC, a person must have a DTC certificate confirming they have a severe and prolonged impairment — which is present all or substantially all of the time — in physical or mental functions that restricts their ability to perform basic activities. The applicant fills out Part A of Form T2201, while their medical practitioner completes Part B.

The $100 cap represents a potentially significant drop in how much consultants can charge applicants. For example, the combined 2021 federal/provincial DTC in Ontario for a qualifying adult would be $1,743, meaning a consultant charging 30% would receive $522.90. (A qualifying minor’s credit would be more.)

Disability advocates said applying and being approved for the DTC can be straightforward for certain applicants; someone who is blind, for example, typically is approved.

However, for many other applicants — those with mental disabilities, for example, or those applying under the “cumulative effects” of health restrictions criteria — DTC eligibility rules can be difficult to understand and navigate, leading to denied applications.

“I’ve met many people over the years who fall into what I call the ‘grey zone’ [in terms of eligibility], and they really do need help,” said Ron Malis, a financial advisor with Reegan Financial in Toronto who serves clients with disabilities and their families. “They need somebody who understands the eligibility criteria, which is not readily evident on the form or on any sort of readily accessible guide on the government’s website.”

Malis refers clients to third-party firms he trusts that offer DTC application services and receives no pay in return.

The federal government has acknowledged that DTC eligibility rules can be unclear and complex. In recent years, the CRA has adjusted its guidance and administration with the goal of making the program easier to navigate. In the 2021 budget, the government proposed expanding eligibility for the DTC in the areas of mental functions and life-sustaining therapy and promised to develop a separate disability benefit program.

But Ho said medical practitioners who must fill out the DTC certificate form often don’t understand DTC eligibility rules and may not have the time or inclination to familiarize themselves with them. “People contact us daily to say their doctors won’t even look at the [DTC] certificate; won’t even sign it,” Ho said. “[Doctors tell them], ‘You walked into my office. You don’t qualify; you’re not disabled.’”

Ho counsels clients on how “to be their own best advocate, because doctors respond best to patients who are well informed.” But such counsel takes time, and Ho said he won’t be able to provide it under the new fee structure.

Ho said he believes “some [DTC application] services charge more than what they earn,” but he still doesn’t agree with the cap, arguing that clients should be allowed to choose their service provider. “The problem with setting a cap is what we’ve seen here: Who’s making the determination of what’s fair?”

Ho said his firm charges a contingency fee of 22%, adding that gaining government approval for clients can sometimes take years. “Service providers must exist and be able to charge a fee that enables them to continue to provide the services needed in order to turn their claims around and get them approved for all the years that they’re due.”

As Malis said, “There is merit for some intervention to regulate and deal with what I think are unsavoury and unethical practices from some providers.” But he suggested the fixed-fee cap offers inadequate compensation. “If there ever was an example of throwing the baby out with the bathwater, this is it,” Malis said.

Weissman submitted an affidavit in May supporting an application made earlier this year by Shane Nercessian and True North Disability Services Ltd., the consulting firm Nercessian owns. Nercessian sought a pretrial injunction from the Supreme Court of British Columbia to stop the $100 cap on constitutional grounds, arguing in part that it would violate Canadians’ charter rights to access professional advice. The court had not released its decision at press time.

In that affidavit, Weissman wrote the government’s fixed-fee cap would “hurt the very people the DTC is intended to help” by eliminating an industry that provides “a necessary ‘check’ on the CRA’s administration of the important credit.”

Weissman said he would prefer to see rules that allow consultants to charge a contingency fee of up to 25%. “It would create a level playing field of competition within that industry, while not allowing them to overcharge at the same time. To me, that’s a much more effective strategy than saying you can only charge a certain amount: one size fits all — it’s $100.”