Day 169: Parents get some clarity on the Childhood Budget tax issue and the Ford government continues to show a lack of leadership
Intrepid reporter Sneh Duggal gets results.
Ontario families have been worried for nearly six months that they would receive retroactive income tax bills because the CRA would treat Childhood Budgets as income, in the same manner that the old Universal child care benefit was considered taxable income. My view has always been as follows:
[T]he new program isn’t different enough from the DFO or the B.C. program, which are untaxed, for this program to be taxed. But when I bring this issue up with very smart tax economists and tax lawyers, their response has always been “ooooh, that’s a complicated one”.
The general consensus among parents has been that there is no reason why the province should want these funds subject to income tax, and they’d have to do a pretty incompetent job of designing the program for this to happen…. and then we get worried.
Families have been desperate for clarity on the issue. Yesterday, we received some, thanks to Ms. Duggal’s research and reporting. Her QP Briefing article, CRA says based on its understanding of autism program, ‘childhood budgets’ not taxable income is both a must-read and behind a paywall (if you’re interested in Ontario political issues, a subscription to QP Briefing is a must). Fortunately, I have access to it through work (one of the joys of being an academic!), so I can give a few details along with my thoughts.
The Canada Revenue Agency is quashing some fears within the autism community about whether “childhood budget” cheques would be considered taxable income, although the federal agency said its conclusion is based on its own interpretation of Ontario’s autism program.
“The Ontario Autism Program (OAP) has been solely developed, managed, and administered by the Province of Ontario; the federal government and the Canada Revenue Agency (CRA) were not consulted in the creation of the program,” said Etienne Biram, a spokesperson for the CRA, in an email to QP Briefing. “However, The CRA would be happy to review the details of the program in conjunction with the Province of Ontario to provide an interpretation.”
Biram went on to say that “based on the CRA’s understanding of the OAP, it is not social assistance that is included in income, and no provision of the Income Tax Act (Act) would apply,” Biram said.
Three key takeaways:
- Childhood Budgets are almost certainly not income for tax purposes, but without more information, the CRA cannot give a definitive answer.
- At no time did the Ontario government consult the federal government or the CRA about the tax implications of the Ontario Autism Program.
- The CRA is “happy” to work with the Province to provide clarity to families on the issue.
The second takeaway raised a number of eyebrows in the community, with some comments along the lines of “of course Doug Ford wouldn’t consult Justin Trudeau”. I get the sentiment, but I don’t think the somewhat frosty relationship between the federal government and the government of Ontario had anything to do with it. A more likely explanation is that it simply had never occurred to the designers of the OAP that their design decisions might have tax implications. This was a plan drawn up on the back of a napkin, by individuals with little-to-no experience in designing public policy. From day one, the re-designed OAP was riddled with unintended consequences, from the autism tax to paying parents to get divorced. These guys simply had no idea what they were doing, and families are suffering for it.
And the province continues to show a failure in leadership
After receiving the response from the CRA, Duggal asked Minister Smith about the tax issue and the provincial government’s failure to consult the federal government. She received this response from the Minister’s press secretary:
Christine Wood, press secretary for Smith, said in an email to QP Briefing, “we have no reason to believe that the federal government will consider funds received through the OAP as taxable income.” But Wood did not respond to a question about the CRA’s assertion that the province didn’t consult with the agency, along with other questions including whether this information had been provided to parents in any documents or whether the province would consult with the federal government or the CRA on this issue.
Are you kidding us?!? It’s been almost six full months and the province still does not fully know how Childhood Budgets will be treated for tax purposes, only that they have “no reason to believe” they will be.
If Minister Smith actually wanted to take leadership on this file, he could have said something like the following:
It has never been the intention of the Government of Ontario to have Childhood Budgets be treated as taxable income. I have instructed my Ministry to work with the Canada Revenue Agency to take whatever steps are necessary to ensure those Budgets will not be taxed.
Instead, we get a response from a press secretary that was essentially the shrug emoji and failed to address the issues of why the province has never reached out to the CRA and why they continue to leave families in the dark.
This is truly and utterly pathetic.
