Disability Tax Credit Promoters Act Comes Into Force

Summary#

This order, SI/2021-10 — Order Fixing November 15, 2021 as the Day on Which that Act Comes into Force, sets November 15, 2021 as the day the Disability Tax Credit Promoters Restrictions Act comes into force. In practice, that lets the government put in place rules that limit what private promoters can charge people when helping them apply for the disability tax credit (DTC).

What it does#

• Fixes the start date for the Disability Tax Credit Promoters Restrictions Act as November 15, 2021.
• Allows the government to make the Disability Tax Credit Promoters Restrictions Regulations that will set a maximum fee a promoter can charge for helping with a DTC request.
• Gives promoters time to change their business arrangements before the rules and enforcement are in place. The explanatory note says regulators and forms have been updated in preparation.
• The source says the Regulations will be published and will take effect after final publication; the timing between publication and the Regulations’ actual effect is described there and is not fully clear in the order itself.

Who's affected#

• Promoters and service providers who help people apply for the disability tax credit (often working on contingency fees).
• Persons with disabilities and their supporting family members who use paid help to complete a DTC request.
• Canada Revenue Agency staff, who will administer the rules and any notifications or penalties.
• People with existing contracts with promoters. The government says promoters will have time to complete existing contracts before the fee cap applies.

Why it matters#

• The rule is meant to stop promoters from charging very large contingency fees. The government has observed common contingency rates around 30% of an individual’s disability-related refund.
• The Act will allow a legal cap (the exact cap is to be set in the Regulations). Promoters who charge over the cap must notify the Canada Revenue Agency and may face penalties.
  • Penalties in the explanatory note include a base amount of $1,000 plus the net excess fee. Failure to disclose an overcharge can lead to a fine between $1,000 and $25,000 on conviction. Further fines could be 100% to 200% of the excess amounts.
• The government expects some administrative costs to set up monitoring and IT changes. It says forms such as the T2201 and a new T930 have been updated.
• The order itself does not set the fee limit. It simply starts the Act so the detailed rules can be made. The exact fee cap and the final timing for enforcement depend on the forthcoming Regulations.