CRA policy change prompted diabetes tax credit denials, health groups allege

Extended: Why did minister 'mislead the House?' Conservative MP Pierre Poilievre and Minister of National Revenue Diane Lebouthillier discuss the Disability Tax Credit.

OTTAWA – Diabetes advocates are voicing new concerns over the government's eligibility criteria for the federal disability tax credit, after getting their hands on an internal document that shows the Canada Revenue Agency appears to have changed its process when it comes to approving adults with Type 1 diabetes for the tax rebate.

At a press conference in Ottawa, Diabetes Canada and Juvenile Diabetes Research Foundation (JDRF) Canada said the documents they’ve obtained through the federal access to information system clearly show a change in policy, after the federal government insisted there hadn’t been.

The change has made it nearly impossible for most adults with Type 1 diabetes to be eligible for the tax break, despite previously being able to, the health groups said.

It contradicts National Revenue Minister Diane Lebouthillier’s prior assertion that there had been no rule change at the CRA, after Diabetes Canada and JDRF Canada first raised concern in October that hundreds of Canadians with Type 1 diabetes were being denied the disability tax credit.

"There’s either been a terrible breach in communication between the CRA and the minister, or the minister has been expressing false information," said Diabetes Canada Director of Federal Affairs Kimberly Hanson. The groups say the government has been using a nuance to say there has been no change in law, while the memo shows there has been a change in practice.

"If I sent a memo like this to my staff at an organization, I would expect them to follow it," President and CEO of JDRF Canada Dave Prowten said.

The health groups are demanding the minister immediately rescind the policy change, one they say, was made without the consultation of patient groups or physicians.

The document that indicates the policy change was described in a May 2 internal CRA email. The memo states that the criteria for what will be considered life-sustaining therapy was being updated for adults with diabetes.

The new criteria stipulates that Canadians will not qualify if they indicate the treatment of their diabetes requires less than 14 hours per week of treatment, or if they count ineligible activities such as carb counting or exercise towards their 14 hours of treatment.

"They instruct the agents to really deny any claim on that basis. It's a really significant change in practice that makes it basically impossible for an adult with Type 1, unless they also have complications, to qualify for the DTC. And that has not been the case in past," said Hanson.

Canadians with Type 1 will still be eligible if their case includes exceptional circumstances, such as other chronic conditions, or vision impairment, the document said.

On average, the tax credit is valued at $1,500 a year. The health groups say that Canadians with Type 1 Diabetes can pay up to $15,000 a year to manage their condition.

The health groups said they had asked for the information directly, but were told they had to go through the access to information system to receive it.

CTV News has reached out to Lebouthillier’s office for comment.

Conservative revenue critic Pat Kelly said in a written statement to CTVNews.ca that Diabetes Canada’s revelations on Monday confirmed that the CRA “has new instructions to deny the Disability Tax Credit to adults with Type One Diabetes.”

“The Revenue Minister is misleading Canadians when she denies that anything has changed,” Kelly said.

“This government is so desperate for new tax revenue for its out of control spending, that it is raising taxes on disabled Canadians and knowingly misleading them,” Kelly added.

'Advances in technology' 

A document previously obtained by CTV News said that "advances in technology" was the reason for the denials.

The July 31, 2017 letter explained that in order to receive a disability tax credit under the Income Tax Act, one must "require life-sustaining therapy (LST) at least three times each week for a total period averaging at least 14 hours a week to sustain a vital function."

"In the case of portable devices like insulin pumps, the time that the device takes to deliver the therapy does not count toward the 14-hour requirement," Lebouthillier added in the letter.

The letter suggested a major reason why people with diabetes are losing their special tax status is because of modern, portable insulin pumps.

"In general, and with consideration given to recent advances in technology, adults who independently manage their insulin therapy on a regular basis are unlikely to meet the 14-hours-per-week requirement," Lebouthillier wrote.

After diabetes groups and Canadians with the disease first spoke out, the minister announced the government would be re-launching the Disability Advisory Committee to inform the CRA of tax implications of its policies for people with disabilities. The committee was disbanded by the previous government in 2006.

These health groups say they welcome that move, but that it “does little to address the urgent concerns” of those being denied the tax credit.

CRA ATIP on Type 1 eligibility for disability tax credit by CTV News on Scribd