The Disability Tax Credit (DTC) is a critical non-refundable tax credit that reduces income tax that people living with disabilities or their supporting family members may have to pay. If someone is eligible for the DTC, they, or their supporting family member, can request that the credit be applied retroactively for previous tax years, up to 10 years.

However, our Office has received complaints about delays and communication gaps related to the CRA’s processing of DTC applications (Form T2201) and related T1 adjustments. As well, the CRA has shared publicly about the delays in processing T1 adjustments. These issues are causing financial strain and unnecessary frustration for vulnerable taxpayers who rely on these tax credits to offset some of the costs related to the disability.

We acknowledge the work the CRA has done and is currently doing to improve its services for people with disabilities through its 100-day service improvement plan. Specifically, we have been pleased to see the reduction of the backlog of T1 adjustments and the introduction of the callback scheduling pilot for specific DTC enquiries. However, more action is needed.

Key issues

This request for service improvement identifies several areas that could be affecting taxpayers with a disability. After first applying for the DTC, taxpayers can wait up to 15 weeks for the CRA to approve their application, which is 7 weeks longer than the 8-week service standard, only to potentially face 50 weeks for the CRA to process the associated T1 adjustment. This is 30 weeks longer than the CRA’s service standard of 20 weeks for complex adjustments.

The CRA takes longer to process some T1 adjustments because it considers them complex when they apply to multiple tax returns or tax years beyond the normal three-year reassessment period. However, many affected taxpayers who contact our office seem unaware of the additional processing time for T1 adjustments and only find out when they contact the CRA to ask about the status of the payment the CRA will send. Form T2201 does not inform taxpayers about these extended processing times, contributing to confusion, anxiety, and frustration.

As well, the CRA currently processes T1 adjustment requests on a “First In, First Out” basis. On the surface, this practice may seem fair, but it does not prioritize vulnerable taxpayers with a disability or their supporting family members waiting to receive these crucial funds, even after they have already waited over eight weeks for their DTC application to be approved.

Call for action

To address these issues and improve service for vulnerable taxpayers with disabilities, the Taxpayers’ Ombudsperson has requested that the CRA change its “First In, First Out” policy to allow it to prioritize T1 adjustments related to the DTC. Our Office looks forward to the CRA’s response to this request and to working towards improving services for Canada’s vulnerable taxpayers.

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Background information

The Office of the Taxpayers’ Ombudsperson works independently from the CRA. Canadians can submit complaints to the Office if they feel they are not receiving the appropriate service from the CRA. Our main objective is to improve the service the CRA provides to taxpayers and benefit recipients by reviewing individual service complaints and service issues that affect more than one person or a segment of the population.

The Taxpayers’ Ombudsperson assists, advises and informs the Minister of Finance and National Revenue about matters relating to services provided by the CRA. The Ombudsperson ensures, in particular, that the CRA respects the eight service rights outlined in the Taxpayer Bill of Rights.