DTC Filters Subject to New Rules

Marco Iampieri B.A., JD, M.B.A.

Due to a court injunction, the Disability Tax Credit (DTC) Promoters Restrictions Regulations, which were to have taken effective November 15, 2021 have suspended until further notice.  The regulations were to have limited fees paid for DTC applications to $100.  We will keep you updated regarding the status of the injunction, but here’s what you need to know about the new regulations:

• The Canada Revenue Agency enacted regulations to prevent unscrupulous DTC credit promoters from charging unfair amounts regarding filing requests for a DTC.
• The maximum fee that a promoter may be renumerated is $100 per taxation year in relation to the preparation of the DTC request form.
• When an individual re-files their income tax return and requests a reassessment for up to nine prior taxation years because the individual did not claim the DTC, then the maximum fee that a promoter may be renumerated is $100 per taxation year.
• If the claim filed by the promoter is unsuccessful, the $100 cap remains unchanged. The promoter cannot further charge an individual in requesting a redetermination of eligibility for the DTC by the CRA. However, the $100 cap is not applicable to assistance provided by a promoter in filing an appeal to the Tax Court of Canada.
• Finally, the $100 cap is limited in scope to the DTC. The cap does not alter the amount that tax preparers or DTC promoters can charge for filing an individual’s income tax return, excluding reference to the DTC request.

Here’s a real world Example:

John Doe suffers from chronic obstructive pulmonary disease, and has been suffering from COPD for the past 10 years. John approaches Jane, who is a promoter. Jane notices that John likely qualifies for the DTC, but that John has not requested the DTC. John instructs Jane to request the DTC for the 2021 taxation year, and to re-file John’s income tax return for past nine taxation years in order to request the DTC for each of those taxation years. The maximum that Jane can charge for this service is $1,000 ($100 multiplied by 10 years), plus the applicable sales tax.

Key Takeway

The Income Tax Act allows an individual eligible for the DTC to re-file their income tax returns for up to nine prior taxation years when they failed to claim the DTC. Therefore, individuals who were eligible for the DTC during the 2011 taxation year, have a limited window, until December 31, 2021, to re-file their 2011 tax return in order to claim the DTC.

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