DTC Why are the Neediest Disabled Canadians Receiving the Least Benefit?

Six in 10 adults with disabilities can't benefit from Disability Tax Credit: study.

July 1, 2016 10:08PM EDT

A new research paper finds that a federal government tax credit for people with disabilities isn’t reaching six out of 10 people who qualify, because they don’t have enough income for the credit to offer any benefit.
The Disability Tax Credit reduces taxes by up to about $1,200 per year -- but only for those who would otherwise pay taxes.
It was designed to help individuals who have burdensome expenses related to their disabilities, which can include things like requiring kidney dialysis, dementia, car accident injuries, mental disorders and physical disabilities.

But people like Ian Young, who suffered seven strokes that have restricted his mobility and made it difficult to work, can’t get any of the funds -- and he thinks that’s unfair.
“I would like to be able to afford equipment for myself to increase my independence,” said Young, who is a member of the Alberta Committee of Citizens with Disabilities.
“In a prominent thriving country like Canada, I expect to see more of taking care of each other,” he added.
Carmela Hutchinson from the Council of Canadians with Disabilities agrees. “Right now it's tremendously challenging for people with disabilities at every level --- financially, socially and physically,” she said.
Researchers Wayne Simpson and Harvey Stevens recently calculated that 301,458 of the 499,302 adult Canadians who qualify for the credit cannot receive any benefit from it because they don’t have enough income.
Simpson said the research is proof that the tax credit is not helping the “most vulnerable among persons with disabilities – the low-income families.”
Simply changing the credit from a non-refundable credit to a refundable credit would make a big difference, Simpson said. It would mean a majority disabled people from low-income families would receive the credit, getting on average about $511. That would cost the federal treasury $72 million, the researchers estimate.

Simpson and Stevens also calculated that if Ottawa opted to make the tax credit refundable and tripled its value, “then virtually every family with a disabled person below the low income cut-off would benefit.” That would cost a lot more, however: about $516 million, they say.
Finance Minister Bill Morneau has said that review of tax credits is underway.

http://www.ctvnews.ca/canada/six-in-10-adults-with-disabilities-can-t-benefit-from-disability-tax-credit-study-1.2970258

Canada's Disability Tax Credit- Why are the Neediest Disabled Canadians Receiving the Least Benefit?

CALGARY, June 9, 2016 /CNW/ - When the government establishes a social program whose primary purpose is to help provide support to low-income people with disabilities, its success should be measured on how well it achieves that purpose. Unfortunately, there are reasons to seriously question the usefulness of Canada's disability tax credit (DTC) since it is helping so very few of the people it is intended to support. In fact, the credit is helping only a small number of Canadians with disability who qualify for it, and least of all those in the poorest families who receive an average of only $29 annually.

Today, The School of Public Policy with authors Wayne Simpson and Harvey Stevens released a report that provides evidence of the limitations of the DTC and presents potential reforms, including an enhanced refundable disability tax credit that could provide benefits to every family with a disabled person below the low income cut-off, which would raise their incomes 27 per cent.

According to the report "Designing the support as a tax credit means that only those Canadians with disability who earn enough income to have them owing taxes can take advantage of it. The unfortunate reality is that people with disability are often at low incomes precisely because their disability leaves them unable to work in full-time, well-paid jobs. Thus, the very people who need this support most are the ones least able to take advantage of it. The neediest disabled Canadians are receiving the least benefit. Far from being a successful policy, the results of the disability tax credit can only be described as disappointing."

Can this be rectified? Yes. By making the disability tax credit refundable. Along the same lines as a guaranteed minimum income, or negative income tax, those low-income Canadians with disabilities who qualify for the credit but lack sufficient income to benefit from the credit could simply be made eligible for a refund of the amount they cannot claim. Simply doing that, turning this non-refundable credit into a refundable credit, would increase the average benefit for Canada's poorest families with a disabled person from $29 to $511 increasing their total income by 4.1 per cent. An even more effective option is the enhanced refundable DTC which can raise their incomes a far more consequential 27 per cent.

The paper can be downloaded at http://www.policyschool.ucalgary.ca/?q=research

Co-author Wayne Simpson will be available for interviews today from Ottawa.

SOURCE The School of Public Policy - University of Calgary

http://www.newswire.ca/news-releases/canadas-disability-tax-credit--why-are-the-neediest-disabled-canadians-receiving-the-least-benefit-582351511.html