CRA and me: Assessment Excitement

This past summer, the CRA sent me a letter of assessment for my son’s school fees. These kind of assessments happen often. While I am slightly freaked out by them, it is still not a big deal. The letter asked for all associated documentation supporting my medical claim for my son’s school fees.

I dutifully collected all the receipts for the School and for my son’s Occupational Therapist. I wrote a cover letter outlining what I was sending and I sent it via registered mail to the CRA.

In that previous paragraph I made two mistakes (one small and one critical error):

  1. I could have easily scanned all the receipts and submitted them to the CRA on line. Much faster, and less expensive. Hopefully I will remember that for the next time.
  2. The letter asked for all associated documentation, and I misinterpreted that to mean receipts, and that caused a big problem.

 For those unaware, if your child is disabled you can claim their schooling or training as a medical expense. You must have a DTC first, and then ask permission of the CRA to be able to make that claim on your taxes. This is where my blunder took place.

My son had changed schools a while back, and I had never done a new letter outlining how his new school would help him with his disability (Autism Spectrum). Without this letter, and supporting documentation from his Doctor and other medical professionals, the CRA had every right to deny this claim on my taxes. As I did not include any supporting documentation with my assessment, the CRA denied my claim, and sent me a bill for what I owed.

The CRA was in the right to do this, and I was in the wrong for not sending it. I want to be clear on this point, I am not casting any shade on the CRA, they have actually been very helpful in this case.

It took a while, but I finally received my Assessment response via email, and I was shocked and upset to see the results(an over $4000 tax bill). After reading the email a few times, my wife read it and pointed out my mistake. She realized that I had not sent a new package outlining how the new school helped my son. I believe I sputtered and swore, but then came to the epiphany that my wife was right.

The past few weeks I have spent collecting the needed data and letters to support my claim for my son’s school expenses, and submitted them (electronically) to the CRA.

As the date of when I was supposed to pay my new tax bill came closer, I realized my reassessment was not going to be completed in time. Again, this was due to my procrastination, not the CRA inaction. I decided to call the CRA, and they directed me to their collections group.

When I spoke to the collections person, he brought up my file, I explained that I had submitted the needed documentation, and they decided to give me a 90-day extension on my due payment. This means I won’t have to fork out $4000 at Christmas time.

There is no guarantee that the CRA will accept my claim and documentation. Given the amount of supporting documentation I am hopeful that this is sufficient, but at least I won’t have to pay out a large sum of money now (that might be refunded later).

Conclusion

As I have said previously, if you don’t ask the answer is always no. I asked the CRA for clarification on what they needed, they provided that to me. The CRA also granted me an extension on payment, because I asked, and had a good set of reasons.

Sometimes the CRA screws up, but in this case, they are actually the heroes in this story (so far).

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Apply for the DTC Please

I have spoken with a few folks who have convinced themselves they can’t get the Disability Tax Credit (DTC) so they won’t apply for the DTC. Given the stories lately about the CRA rejecting many applications, and how complicated the process is, many folks are not applying (when they should be applying).

Allow me to be clear, apply, fill in all the forms and let the CRA decide. If you don’t apply, you will never get the DTC.

Do the work, make sure you fill in the forms well, get all the help you can, but apply, please!

To paraphrase Wayne Gretzky you will receive 0% of the DTC applications you never send.

Without a DTC there is no RDSP, and while the Disability Tax Credit is not a large credit, it is still vital to have it to be able to get other services and help from the government. It is not easy to navigate the government red tape, but it is the most important thing you can do for your child or your loved one.

Apply for DTC

Should you Apply for the DTC ?

If you or your loved one has a disability recognized by the CRA or on their list, then yes is the answer.

Let me repeat my message, if you don’t apply you will not get the Disability Tax Credit, if you do apply you might (but if you don’t ask the answer is always NO).

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DTC RDSP Vicious Circle

While chatting with Kerry from Squawkfox, Mrs. C8j and I did some research and an interesting point was found, about the DTC RDSP vicious circle.

The non-refundable nature of the DTC has created a situation where some low-income disabled people don’t even bother to apply for the DTC, thinking it won’t benefit them. That can often be a mistake, as DTC certification has become a necessary requirement for a number of other government programs, such as RDSPs (registered disability savings plans) and the child disability credit.   “

That one left me quite upset. There is data about how few RDSPs are out there, but this explanation rings far too true for my liking.

This issue exists with RESPs too. Low-income families, think they need to save a lot to make the RESP system work. No! Open the account, put a small amount in there, but you might be eligible for the Canada Learning Bond, which is free money.

The Canada Disability Savings Bond

Getting back to RDSPs, there is a similar benefit for low income families. The Canada Disability Savings Bond is $1000 a year that can be deposited in your RDSP, even if you don’t make a deposit. This is why it is important to help folks with the RDSP.

No one should be leaving this kind of free money on the table.

The DTC RDSP vicious circle is what caused my wife to say, “The whole system is like navigating the fire swamp in the Princess Bride”.  That is a very apt analogy.

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DTC Change For The Better

The 2017 budget announced a very big DTC change (disability tax credit), for the better.  The specific statement is:

For many Canadians, nurse practitioners are the first and most frequent point of contact with the health care system, but today, these professionals are not allowed to certify application forms for individuals with impairments who are applying for the Disability Tax Credit.

Budget 2017 proposes to add nurse practitioners to the list of medical practitioners that can certify the impacts of impairments for Disability Tax Credit applicants. The measure will apply to Disability Tax Credit certifications made on or after Budget Day. This is an important step to improve access to the credit in areas where, due to a shortage of medical doctors, nurse practitioners may be the primary care provider.

I applaud this step by the government. As I have said the DTC is something you can do yourself, and this makes that easier for many folks. Many Doctors don’t have the time to fill in the needed forms. Adding Nurse Practitioners to the list of professionals who can fill in the T2201 is good.

dtc change

Simple Steps for DTC

My Opinions on Fee-based Firms

The number of firms willing to help the disabled (or their family) fill in these forms for fees continues to grow and this worries me. This can not be a growth industry, and it  shows the system is too complicated for disabled Canadians. All steps to simplify the system are a good thing.

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Bill C-462 : Protecting Disabled Canadians or a Paper Tiger ?

For those of  you unaware Bill C-462 the Disability Tax Credit Promoters Restrictions Act ,was passed into law and received Royal Assent (2014-05-29) . 

Disability Tax Credit Promoters Restriction Act

Penalties must be set for overcharging DTC Consultation Firms (link to CBC article on the act)

This Disability Tax Credit Promoters Restrictions Act  summary

This enactment restricts the amount of fees that can be charged or accepted by persons who, on behalf of a person with a disability, request a determination of disability tax credit eligibility under the Income Tax Act. It establishes a prohibition against charging or accepting more than an established maximum fee and establishes offences and penalties for failure to comply.

The Act was passed, given royal consent, however,  it seems to have never been made law. If you read the bill it looks like it would be easy to enforce, however in the summary you read:

“…an established maximum fee and establishes offences and penalties for failure to comply…”

The problem is the Act never defines maximum fees or the penalties for them.  The other issue is that the act has never “come into force”. I guess it is dead, which is unfortunate. A maximum charge and penalties are needed.

While I have always said you should Do It Yourself, I also realize some folks will need help. These firms must stop gouging their customers.

Who Should You Contact About This?

If you want to voice your concerns about the Disability Tax Credit Promoters Restrictions Act, contact the sponsor of the bill  , she would like to hear from you as well. I have been in conversation with Ms. Gallant.

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