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Report from the Taxation Committee
The Taxation Committee of the Canadian Celiac Association has been working with members of the Validation Policies and Procedures Section, Individual Returns and Payment Processing Directorate, Canada Revenue Agency (CRA), for close to three years. We have been treated with respect and listened to courteously, but it has also been made very clear to us that CRA is operating under very strict guidelines imposed by the Treasury Board and the Income Tax Act (the Act).
The Act states that Canadians must be able to prove all financial claims made in income tax returns. That is why, when the excess cost of gluten-free food was first allowed as a medical expense, CRA demanded that individuals make a detailed calculation, item by item, of the excess cost of gluten-free products, and back up that calculation with receipts for each item. That option is still in force for those who feel that a detailed return will provide them with greater benefit.
Following initial submissions regarding the workload involved in making these detailed calculations, CRA took the unusual step of allowing a more simplified method of submission in which a detailed calculation of excess cost still had to be made, but individuals had to retain only one receipt for each class of items (i.e., if the member bought fifty loaves of bread, the need would be for only one receipt to prove the cost of the items). We must caution here, however, that while this method is permitted at the moment, it has not received the approval of the Auditor General, and could be subject to change.
With the hope of finding an even simpler and more even-handed way of doing things, the Tax Committee generated a cross-Canada gluten-free food cost survey in 2005. Unfortunately, the returned survey results were uneven in quality, and seven Chapters did not respond at all. We had great difficulty, therefore, in developing an acceptable presentation. We did manage, however, and delivered that presentation in August, 2006. As usual, we were listened to carefully, but always with the warning that the legal provisions of the Act prohibited major change in CRA's approach. We were given to understand, however, that they would take our figures and consider some change to the current two options: detailed calculation with all receipts, or a semi-detailed calculation with one receipt covering all line items of the same nature.
We have now received CRA's position on that third approach. While there is not a great deal of change from either of the two current options, we have made some significant points that may be of use later:
First: CRA now accepts that the cost of gluten-free food is relatively constant across Canada, and that the cost calculations should be relatively constant across Canada.
Second: CRA accepts the cost factors that we have provided (but they do not like splitting costing methods by slice or by weight).
Third: CRA are willing to allow the use of CCA cost factors in making the excess cost calculations to determine allowable medical expenses.
What this means is:
First: CRA would allow the CCA to publish a uniform excess cost amount per line item that all celiacs across Canada could use in their calculations.
Second: CCA would be responsible for determining that cost factor (a survey every five years or if costs changed suddenly has been declared acceptable) and for advising members of that factor.
Third: CRA has suggested that CCA develop a section of our website that would help with the calculations. In other words, a member could type "49" into the "Loaves of bread" box, and have the website calculate the excess cost of that bread, based on the determined factor. CRA does not care whether it is raisin, cheese, flax, or just plain white bread.
Fourth: Celiacs would still have to retain one receipt per line item in case of audit.
At first sight, we have not gained a great deal for our work. What we have done, however, is gained the maximum amount of flexibility that CRA staffs are capable of providing under the current limitations of the Act. We have been given concessions that no other organization has, and even now, these concessions are still vulnerable to denial by the Auditor General.
Some have suggested that these concessions are not enough and that we should attempt a major political lobbying effort. Such an effort would require massive organization across Canada and would have a high potential for failure. Celiacs must remember that we are the only group of this nature to get any sort of tax break with food. People with environmental sensitivities do not get help with organic food; there are cancer patients who are getting no help with expensive drugs, and there are other organizations that would dearly love a break on medical expenses. If we raise a political fuss we are likely to be compared unfavourably with those who receive no compensation.
In short, the Tax Committee has reached the end of the road. We recommend locking-in our gains by ensuring that celiacs have the information necessary to make use of the deduction available to them. It is our considered opinion that efforts to gain additional concessions at this time through a massive lobbying effort would have little potential for success and could well be detrimental to the interests of all celiacs.
Respectfully submitted,
Quintin Wight and Denise Costello
Copyright © 2007, Canadian Celiac Association
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