Flaherty pledges to open tax court to disabled
TheStar.com – Business/moneyville.ca
Tue Nov 23 2010. By James Daw
Finance Minister Jim Flaherty has come to the rescue of the poor and disabled.
He has vowed to open doors at the Tax Court of Canada after a judge, a Toronto lawyer and a Toronto Starcolumnist decried a bizarre barrier that blocked those most in need.
The court is prevented from hearing from those who owe no taxes, but want to appeal for the right to have a Registered Disability Savings Plan and qualify for government grants.
“I just wanted you to know we are going to fix this, and it is as a result of your article,” Flaherty said Tuesday in a telephone interview.
He was referring to a story about Chief Justice Gerald Rip writing recently he regretted not being eligible to hear a Montreal man’s appeal for the right to an RDSP. The man was too poor to owe tax and benefit from the disability tax credit. So he had no right to appeal to the court.
The Tax Court of Canada is a preferred venue for appealing Canada Revenue Agency rulings involving federal taxes of less than $12,000 a year. A taxpayer, a friend or accountant may appear before the court, saving the cost of a lawyer.
“We created the RDSP, and it’s really important to me,” said Flaherty, who has a mentally challenged son and, like other politicians, had long heard parents of the disabled pleading for options to help prepare for their old age.
“The fact that someone has taxable income or not should not stand in the way of establishing their right to the disability tax credit (and RDSP),” he said.
Flaherty had also pledged action when appearing earlier Tuesday before the Finance Committee of the House of Commons. Liberal MP and accountant Massimo Pacetti had asked about the inability of his constituent Giovanni Tozzi to appeal to the tax court.
Tozzi owed no tax in 2008 when RDSPs first became available. He applied for the disability tax credit in 2009 with the support of his doctor. But his application was denied, and Justice Rip ruled he could not hear his appeal.
Flaherty said he expected he would have to propose a change to the Income Tax Act in his next budget in the spring to ensure the right of Tozzi and others to appeal to the court.
Pacetti said Vincent Biello, the friend who appeared for Tozzi in tax court, was glad to hear of Flaherty’s pledge, but he hoped any change would be made retroactive to help Tozzi. He said Biello declined to speak with the Toronto Star before consulting Tozzi.
Toronto lawyer David Sherman, who contacted federal officials and the newspaper after reading Justice Rip’s ruling, said he would urge Flaherty to broaden access to the tax court for other appeals. For example, he mentioned the right to appeal a CRA refusal to waive interest and penalties on taxes owed.
An RDSP allows Canadians to set aside money for individuals who are under the age 60 and eligible for the disability tax credit. Tax on investment income is deferred; the government may match contributions and provide outright grants, called bonds, if the family has a modest income.
The 2010 federal budget proposed to carry forward entitlement to grants and bonds for up to 10 years, and allow the registered retirement savings of a parent or grandparent to be rolled into an RDSP.
Flaherty was in Japan and unavailable to comment before the column about Tozzi’s case appeared in theToronto Star.
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