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CRA caps disability tax credit fees

The Canada Revenue Agency (CRA) plans to limit fees for preparing disability tax credit (DTC) claims, but CPA Canada believes its proposals go too far. Find out our suggested solution for meeting the CRA’s goal.

In June 2019, the CRA published draft regulations that would limit the amount of fees that so-called “promoters” can charge for preparing DTC claims to $100. The regulations are expected to take effect in early 2020.

Specifically, the $100 fee cap applies to any tax preparation services for:

  • helping Canadians complete and submit form T2201 DTC Certificate so the CRA can decide whether they are eligible for the DTC
  • any DTC-related claim made on a T1 personal income tax return for a current or previous year

The DTC provides vital financial support for vulnerable Canadians, and it’s important to the public interest that tax benefits reach their intended recipients. CPA Canada generally agrees with the government that it is unacceptable for some consultants acting for taxpayers with disabilities to profit from the value of disability claims made on their clients’ behalf due to how they bill for their services to the extent that this is occurring.

Most tax advisors bill for compliance services and tax advice related to the DTC in the same way as they bill for tax services and advice — based on time spent, charged at standard rates.

As a result, the proposals raise significant concerns and they were released with little forewarning. On announcing the proposals, the CRA said that it and the Disability Advisory Committee had received feedback from various stakeholders, but CPA Canada was not consulted. In CPA Canada’s submission in response to the CRA’s request for comments on the published proposals, we raised a number of issues highlighted below.

Overall, CPA Canada has called on the CRA to amend the proposals so that they do not apply to fees charged by tax advisors who provide a variety of tax services and bill for DTC-related work on the same basis as tax services generally. In particular, if the fee for work needed to claim the credit exceeds $100 under normal billing arrangements, we believe it is inappropriate to introduce regulations that may arbitrarily restrict the work needed.

The draft regulations are unclear as to who is a “promoter” and whether preliminary consulting is affected

The proposals seem to be aimed primarily at preventing the use of contingent pricing methods for DTC-related services. However, the definition of “promoter” appears to sweep in all paid service providers who perform these services (except medical practitioners), no matter what pricing method they use. 

Further, it is unclear whether the proposals apply to the work that a tax advisor does before making a DTC claim – which can easily exceed the threshold. This work helps ensure that only bona fide DTC requests are made, which benefits the CRA.

For these reasons, CPA Canada recommended that the CRA clarify the proposals to specify the nature of services that would be restricted.

According to new CRA guidance, the proposals would not apply to services for appeals related to DTC claims. 

The $100 maximum fee cap may limit access to tax services

We believe that a $100 limit would only cover basic data entry and processing, leaving little room left to cover issues involving eligibility or, in some cases, how to optimize the taxpayer’s position (for example, where a choice needs to be made on which credit to claim). Tax advisors therefore stand to put in significant work that they potentially could not charge for.

Our concern is that they could decide to either limit their work to tax preparation services only — leaving the DTC qualification/application work to the client — or question whether they should provide DTC services due to penalty risk and compliance costs.

Some taxpayers might have difficulty finding tax advisors who are prepared to perform DTC-related work as a result. Also, as tax advisors’ work helps to provide quality control for claims submitted to CRA, a move to set limits on this work may be counter-productive.

The proposed regulations may cause fewer eligible Canadians to claim the DTC

Along with the Disability Advisory Committee and others, CPA Canada is concerned about the proportion of eligible Canadians who are accessing the DTC and related benefits. On announcing the proposals, the CRA suggested that, as of December 31, 2017, nearly 1.3 million Canadians had an accepted DTC Certificate but only 800,000 Canadians had claimed the DTC.

If the regulations take effect as first proposed, we believe that even more Canadians who qualify for the DTC would have trouble getting professional help and that the DTC’s already low take-up could worsen. Although thousands of CPAs help by taking part in volunteer tax clinics nationwide, many people eligible for the DTC do not qualify for the clinics’ services. Others do not rely on these clinics because they are willing to pay for professional services at a reasonable fee. These individuals should be free to use the tax advisor of their choice.

The government should work to improve access to the DTC and avoid unintentionally reducing access

Complexity in a tax system creates costs for taxpayers. The DTC is aimed at vulnerable Canadians, but it’s among the most complicated tax credit for individuals in Canadian tax law. If the cost to obtain tax preparation services or tax advice at standard rates is too high for some DTC claimants, we do not believe advisors doing their best to help their clients are the problem. We believe this strongly indicates a problem with the DTC itself.

We encourage the government to continue its work to address this problem. This includes acting on the federal Disability Advisory Committee’s call to improve the DTC application process and the other recommendations made in its first annual report.

We look forward to working with the CRA to help finetune the proposals to ensure they achieve their objectives without discouraging CPAs and other tax preparers from providing DTC-related services or eligible Canadians from claiming DTC benefits.


What other issues do you think CRA should keep in mind as it decides how to proceed with its DTC proposals? Post a comment below.


CPA Canada’s Tax Blog is designed to create an exchange of ideas on tax policy and practice issues, and their impact on those who practice tax. Your comments can provide helpful input into the public interest advocacy positions developed by CPA Canada.