Poverty and the limits of the Disability Tax Credit
The Disability Tax Credit (DTC) was initially set up to account for higher day-to-day costs faced by people with disabilities. In 2023, however, the federal government introduced the Canada Disability Benefit and required certification for the DTC as a prerequisite, turning the DTC into a “gateway” for programs and policies that can make or break a person’s ability to make ends meet.
New research from the Canadian Tax Observatory authored by Dr. Gillian Petit finds that 84 per cent of people with disabilities do not have DTC certification—and can’t access the other disability programs it is intended to unlock. This means the majority of people who could benefit for federal disability supports are excluded before they can access them.
The report examines and dissects the tangled web of process and bureaucracy connected to the DTC and finds that at every step along the way, there are deep flaws and barriers that perpetuate the very poverty trap it is meant to alleviate.
Related reading
Broken Links II: Pinpointing Barriers. Improving Access. Reducing Poverty.
Broken Links II brings together two new reports on the Disability Tax Credit. The first maps 10 barriers that stop people from completing their application; the second models how automatic eligibility could lift up to 53,000 people out of poverty.
A snapshot of new disability research
The good news is: the government has recognized that the process was not working properly and wants to do something about it. The bad news, however, is it’s just not enough to resolve the persistent poverty found among people with disabilities.
Extending the Eligibility for the Disability Tax Credit to Fight Poverty
The DTC was originally designed as a tax credit. It recognizes that persons with severe and prolonged impairments bear non-discretionary costs that reduce their taxable capacity, and its strict functional test was calibrated to identify that population, not the broader population of people who are disabled in some meaningful sense.
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