The Disability Tax Credit (DTC) is a non-refundable tax credit available to Canadians with permanent hearing loss where the hearing loss has been determined to markedly restrict an individual from performing functions of daily living, even with the use of their hearing aids or cochlear implants. The existing statutory deduction, as discussed more fully below, is itself unfair and overly restrictive. However, the interpretation given to the statute by the Ministry of Finance has compounded the problem significantly by providing information which is ambiguous, overly restrictive and ultimately discriminatory.
The commentary adopted by the Ministry of Finance on the DTC Certificate (Form T2201E) is also open for misinterpretation and results in inconsistency in its implementation by audiologists and physicians across Canada. This has created a situation where some consumers with hearing loss receive the DTC while others find themselves in situations where access to the DTC has been denied. Because of this unfortunate situation the, CHS wishes to bring public attention to this matter.
Form T2201E purports to interpret the provisions of the Income Tax Act which states that a person is markedly restricted in hearing if all or substantially all the time he or she:
"is unable to hear so as to understand another person familiar with the patient, in a quiet setting, even with the use of appropriate devices; or takes an inordinate amount of time to hear so as to understand another person familiar with the patient, in a quiet setting, even with the use of appropriate devices"
In its commentary entitled "notes" the Ministry of Finance interprets these provisions as follows:
"Devices for hearing include hearing aids, cochlear implants, and other such devices."
"An inordinate amount of time means that hearing so as to understand takes significantly longer than for an average person who does not have the impairment"
"Examples of markedly restricted in hearing (examples are not exhaustive)"
"Your patient must rely completely on lip reading or sign language, despite using a hearing aid, in order to understand a spoken conversation, all or substantially all the time."
"In your office, you must raise your voice and repeat words and sentences several times, and it takes a significant amount of time for your patient to understand you, despite the use of a hearing aid."
The terminology and examples used in Form T2201E are problematic for hard of hearing consumers as they do not reflect the communication realities and practicalities of living with hearing loss and is much more restrictive than the statute. The Courts have made it clear that a physician cannot taken into account ability to lip read in assessing whether an individual is markedly restricted but does not require that a patient rely completely on lip reading or sign language in order to be found to have a marked restriction. Rather the assessment is whether the disability is of such a nature as to prevent the person from performing one of the functions of daily living all or almost all of the time or require an inordinate amount of time for the person to perform that function.
Further the Federal Court has made it clear that in assessing the degree of disability the physician should have regard to a normal setting rather than the artificially quiet setting of a Doctor's office. In this regard the Federal Court stated in Barber:
"The Court is satisfied that a quiet setting does not mean a doctor's office. The Court is satisfied that a quiet setting does not mean a sound booth in an audiologist's office. The Court is satisfied that the quiet setting must be the normal setting that a person encounters during the day when they are performing the functions of daily living. That means in a room talking with people, that means in a house when their parents are there, when there may be other activities going on, when they are preparing dinner or perhaps where the phone is ringing or when other conversations are going on. It does not mean that a person has to be able to hear when there is a substantial amount of noise or an extraordinary amount of noise. It is in between, but surely it must refer to a normal situation in which a normal person would find themselves during the context of conducting their life during a normal day."
Due to incorrect and misleading wording of Form T2201E of the DTC, audiologists and physicians often find themselves in positions where they are only comfortable signing the form for anyone who relies solely on a signed language for communication or is deafened to the point where devices are of little or no benefit during communication. There are many shades of hearing loss in between that need to be considered in determining eligibility for the tax credit; however, due to the current guidance provided by the Ministry of Finance both consumers and clinicians are left in a state of confusion on the issue of eligibility for the DTC.
The Canadian Hearing Society (CHS) Position on the Issue
The Canadian Hearing Society's position on the issue is that the Ministry of Finance needs to change the definitions and terminology currently used on the Disability Tax Credit Certificate (Form T2201E) to wording that is more equitable and non-discriminatory and provides clearer guidance to medical practitioners.
Further the provisions of the Income Tax Act themselves should be amended to remove existing irrational and discriminatory restrictions.
- To that end, CHS supports private members bill C-577, an Act to amend the Income Tax Act (hearing impairment) that was introduced on October 5, 2010 in the Canadian Parliament. It seeks to amend the Income Tax Act in the following ways:
- Redefining quiet setting to normal setting
- Changing the requirements to reflect understanding another person vs. a person familiar to them.
- Assessing the degree of hearing loss while not wearing an assistive listening device.
While CHS does not agree with the current definitions and terminology for eligibility of the DTC, Form T2201E does indicate that the wording is not "exhaustive" in terms of providing examples of "markedly restrictive". Therefore, as an interim solution, CHS encourages physicians and audiologists completing T2201E to be as proactive as possible in interpreting the current legislation to the benefit of consumers by considering other factors in communication that could support a consumer being determined as markedly restrictive in quiet settings, with familiar speakers and with the use of his hearing aids. Other factors to be considered include:
- When visual cues are compromised. Examples could be in environments where the speaker is not facing the person with hearing loss, where visual noise is present or when lighting is not optimal.
- When distance to the speaker is a factor. Examples could include when the consumer is not positioned close to the sound source such as in a meeting or large group interactive discussion
- In any environment where the speaker, even if familiar, is not using effective communication strategies.
During the eligibility process, CHS also encourages physicians and audiologists to consider precedents in case law by the Federal Court of Appeals such as Barber vs the Queen (2001) discussed above, which held that a "quiet setting" should be interpreted to be subject to background noise, because that is the reality of the everyday world and to make the assessment in normal rather than artificial settings.
The Rationale for CHS's Position
The current Income Tax Act requires, in part, that a deaf, deafened, or hard of hearing person qualify for the Disability Tax Credit according to the following requirements:
- understanding, with the use of hearing aids,
- another person familiar with the individual,
- in a quiet setting.
The proposed Bill 5-C77 would change all three requirements for the better, for culturally Deaf, oral deaf, deafened and hard of hearing persons by substituting the following;
- understanding, without the use of assistive listening devices,
- another person, who may or may not be a stranger,
- in a normal setting.
CHS supports these changes. The removal of the requirements to use assistive devices, such as hearing aids, respects the culture of Deaf persons who may not be comfortable wearing hearing aids. This change also better reflects the actual lifestyles of culturally Deaf, oral deaf, deafened, and hard of hearing people who do wear hearing aids or cochlear implants, since their hearing aids or cochlear implants do not fully enable them to "hear" as a person without a hearing loss hears. For example, hearing aids and cochlear implants could break down, or may need to be taken off during certain times of the day or during certain activities. As well, hearing aids and cochlear implants cannot fully compensate for the myriad of communication challenges encountered by people with hearing loss. Additionally, the use of hearing aids, cochlear implants or other devices should not discount a person's eligibility for the DTC as these technologies in themselves are an imperfect solution to a complicated problem and do not mitigate the fact that hearing loss is usually permanent. Furthermore, people with hearing loss do not always utilize their hearing aids or cochlear implants for a variety of reasons including choice, malfunctions, dead batteries, etc. When they are not using their devices, their hearing loss and all the associated communication challenges still persist. Therefore, the use of devices should not be a requirement of the eligibility process.
Similarly, CHS believes that all culturally Deaf, oral deaf, deafened, and hard of hearing people lead full and productive lives whereby they may communicate with all people, including people who are not familiar to them, and they do so in environments that are usually noisy. A "quiet setting" is not the normal environment in which communication takes place, and the Society believes that the proposed wording change better reflects reality.
The Prevalence of Hearing Loss
Almost 25% of adult Canadians reports having some hearing loss (CHS Awareness Survey 2002), although closer to 10% of people actually identify themselves as culturally Deaf, oral deaf, deafened, or hard of hearing.
The average age in Canada is 39 years; by 2030 it will be 45 years. In 2030, Canadians 65 years and older will represent 25% of the total population, nearly double their current 13% (Statistics Canada).
Hearing loss is the third most prevalent chronic condition in older adults and the most widespread disability (Fook 2000; Yueh 2003). Its prevalence rises with age. Reports indicate that more than 80% of patients over 85 have a hearing loss (Yueh 2003). Further, 46% of people aged 45-87 have hearing loss (Dalton 2003).
Couple these statistics with the fact that aging is the number one cause of hearing loss, and the conclusion is clear that the incidence of hearing loss is poised to climb dramatically.
Frequently Asked Questions
Does CHS offer any services that help me find out if I qualify for the Disability Tax Credit?
Yes. Under the Income Tax Act, audiologists, as well as medical doctors, are listed as qualified medical professionals who may accredit an individual as eligible to qualify for the Disability Tax Credit. We have audiological services at many of our offices throughout Ontario. Please contact your local CHS office and arrange an appointment.
Does the Disability Tax Credit have anything to do with the Registered Disability Savings Plan (RDSP)?
Only to the extent that an individual who qualifies for the Disability Tax Credit automatically qualifies for the Registered Disability Savings Plan. You should speak with a licensed financial advisor at an investment firm or chartered bank to look into the Registered Disability Savings Plan.
For more information please contact The Canadian Hearing Society.