The Top 5 Reasons the CRA denies Disability Tax Credit Applications #5
December 9, 2017
Reason #5: Everything was done “right”- but still resulted in a denial
In the news recently we heard briefly from Madison Ferguson, a frustrated Canadian who has Type 1 Diabetes, who has been denied the Disability Tax Credit. Diabetics (Type 1 and 2) have always applied for the Disability Tax Credit in the category of Life Sustaining Therapy, if they rely on multiple injections of insulin to manage their diabetes. The major problem with this category is that it was originally written with criteria that “fits” people undergoing kidney dialysis. Dialysis was typically taken 3 times a week and took 14 hours to administer at the time. The required 14 hours per week criterion can be difficult for doctors to attest to for diabetics- which ultimately leads to many denied claims. John Power, a spokesperson for the CRA has stated that the legislation has not changed (which is true) however, what they did not state is that the CRA routinely changes how they carry out administration of the credit.
Applicants are now being denied on the basis that “the type of therapy indicated does not meet the ‘14 hour’ per week criteria.” It is possible that the Disability Units in CRA have changed what they will accept in calculating the 14 hours required. Children with Type 1 diabetes usually receive the credit easily as it is assumed that they require assistance in managing their therapy. Once these individuals reach adulthood (age 18) there is an assumption that the person has the ability to administer the insulin by themselves. As stated on the application form (T2201) the CRA will not consider the time spent on:
“activities related to dietary restrictions or regimes (such as carbohydrate calculation) or exercising (even when these activities are a factor in determining the daily dosage of medication), travel time to receive therapy, medical appointments (other than appointments where the therapy is received), shopping for medication, or recuperation after therapy.”
So how long does it take to administer insulin therapy daily? Any diabetic will confirm that giving themselves a needle of insulin is only one aspect of many in controlling their condition. According to Diabetes Advocacy a diabetic who requires multiple insulin injections daily must also devote time to:
“establishing the insulin ratio, calibrating glucometer, monitoring blood glucose, maintaining a log book and analyzing trends, preparing insulin and administering the insulin. For those who use a pump, time is spent on calibrating insulin pumps, changing tubing, rotating insertion sites, programming the insulin pump, treating and recuperating from hypoglycemia when caused by a life event rather than human error.”
The real issue is that the legislation needs to change in regards to how the tax credit classifies life sustaining therapy. There is absolutely no question that insulin is life sustaining for a diabetic and, simply put, there are dire consequences if a diabetic stops taking insulin. It should not matter how many hours in a week it takes to administer it. Diabetes Canada has indicated that according to their research 80% of diabetics’ applications are now being denied (while a year ago 80% were approved). If 20% are being approved, I have to wonder how? If indeed the CRA has changed their interpretation of the legislation so that insulin dependent diabetics no longer qualify then why are some approved?
When an application is denied the CRA sends the applicant a “Letter of Determination”. It appears that the CRA agent has a limited list of reasons for each of the ten categories of the credit that they can “cut and paste” into the body of the form letter. For example, persons denied in the category of mental functions will probably receive an explanation that they are denied because their “restriction is only present when performing complex tasks or in stressful situations”. Persons who apply under one of the physical categories, walking, for example, might get “Your restriction in walking is not present all or substantially all of the time (at least 90% of the time)”. This letter format leaves many applicants confused as it provides almost no information as to how they came to their conclusion to deny the application.
As a Disability Tax Credit Advisor, all of my clients’ applications are thoroughly checked for errors and omissions and to ensure that the doctor has indicated the patient meets the criteria. Sometimes the application and the clarification response questionnaire are completed “correctly” but still get denied. In these cases, an appeal is not only warranted but vigorously pursued. Services are provided on a contingency basis, which means there are no upfront consulting or application fees. A fee is only applicable when an application for the DTC is approved and a tax refund is generated.