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Bill targets "predatory practices" in pursuit of disability tax credits

A private member's bill that takes aim at the "predatory practices" of companies that purport to help people apply for federal disability tax credits (DTC) but then claim up to 40% of any refund that results has attracted all-party support in the House of Commons.

Bill C-462, which would restrict the fees the companies could charge for helping people apply for the DTC, has already undergone second reading in the Commons and been referred to the Standing Committee on Finance.

"I want increased protection for disabled Canadians from the predatory practices of certain disability tax credit promoters, some of who see the tax credit as an opportunity to profit from the reduced circumstances of others," Conservative MP Cheryl Gallant, the bill's mover, told the Commons.

The issue had already come to the CMA's attention because physicians complete most of the 200,000 new disability tax credit (DTC) applications the Canada Revenue Agency receives annually. It is estimated that 25 to 30 companies are now "helping" taxpayers apply for the credit. A recent full-page ad from one of these companies that appeared in the Ottawa Citizen informed readers that they may qualify if "they take an unusually long time to walk a city block" and "you have a doctor who will certify your impairment."

The company's website adds: "We do not charge you until you have a cheque in your hands."

"It was shocking to learn that some of these individuals were being asked for and charged 20%, 30% or as much as 40% of the tax credit owing to them," Conservative MP Phil McColeman commented during second reading. "That amounts to $20 million a year earmarked for people with disabilities that instead goes to the private sector promoters that help prepare their claims."

McColeman estimated that 9,000 of the 200,000 DTC forms submitted annually are completed by for-profit promoters. "That is a lot of money, money intended to help the person with a disability, not a promoter."

Gallant said that one constituent in her Eastern Ontario riding was asked to travel seven hours to Toronto so that the promoter's "house doctor" could complete her DTC application, which had already been rejected by the CRA based on her family doctor's assessment.

"The potential for abuse is too great, considering the amount of money involved, particularly in cases in which the credit can be claimed retroactively for 10 years," Gallant said during the debate.

The CMA, which is to meet with Gallant to discuss the issue, has also appeared before the Committee on Finance that is studying Gallant's bill.

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