Why the disabled community thinks that DTC agencies are a scam
Canada’s disabled community is becoming increasingly wary of Disability Tax Credit (DTC) promoters. The promoters proudly advertise their service of assisting people with disabilities with filing for special tax credits that can return up to thousands of dollars to eligible Canadians. Many worry, however, that these agencies are a scam.
What is the DTC?
For those of you who are unfamiliar, the DTC is a tax credit aimed at helping offset the high cost of living with a disability in Canada. In order to qualify, Canadians with disabilities must fill out and submit a lengthy form that requires medical practitioner endorsement and proves their “prolonged impairment” of physical or mental functions that will last throughout the year.
The form must be filed prior to regular tax returns so that it can be approved before being claimed. But once approved, Canadians with disabilities can claim up to 10 years of unclaimed disability tax credits — often thousands of dollars — if applicable.
Who are the scammers?
The scammers in question are third-party consultants called Disability Tax Credit promoters who often to help Canadians with disabilities fill out their taxes for a percentage-based fee. They typically promise up to $40,000 in tax credits so their services certainly grab the attention of unknowing patrons. But while these third-party consultants can be helpful with filling out forms that are otherwise lengthy and confusing, local government offices can often help to some extent for free, not to mention the accountants or tax preparers that many Canadian families already have.
Aggressive percentage-based fees
The worst part about these so-called scams are the aggressive percentage-based fees they charge for simply filling out forms for Canadians confused by the system. As mentioned previously, DTC promoters promise up to $40,000 in tax returns for Canadians with disabilities who hire them. But unlike flat rate agencies like Frontline Disability, these agencies charge heavy percentage-based fees of 20% to 30%.
If the promoters are actually able to secure $40,000 in tax returns for their clients, usually by using reassessment that allows them to claim unclaimed credits from the passed 10 years, then the client forfeits a whopping $8,000 to $12,000 of their tax return to these for-profit companies. Considering this, it goes without saying that this is an incredibly predatory practice.
Taking money from those who need it most
Regardless of how much money these third-party consultants make from each client, the principle of taking money meant to alleviate the financial stress of disabled Canadians has many people up in arms over the practice in general. The disabled community is one of the most marginalized communities in society today, with many disabled Canadians living close to the poverty line due to the financial burden of their disability. The tax credits were created by the government to put more resources in the hands of the disabled Canadians who need it the most, not to put more money in the pockets of for-profit companies.
Unfortunately, until recently the options for disabled Canadians seeking assistance with the application process was limited. Most of those eligible for the DTC were either spending lots of time navigating the process for the first time on their own and risking the chance of being denied for doing it incorrectly, or they were foregoing the process altogether. But those being denied or opting out altogether were (and still are) potentially missing out on thousands of dollars in tax credits.
Thankfully, a new company called Frontline Disability seems to have listened to the Canadian disabled community’s concerns by offering their DTC services for non-percentage-based fees. Instead, they charge a reasonable flat rate that puts more money in the hands of Canadians with disabilities to spend alleviating their conditions.