Obligation to Register for Direct Deposit Discriminatory

In 2002, the Government of Quebec passed An Act to Combat Poverty and Social Exclusion. The law has been praised for its comprehensiveness and for defining poverty as more than just low income, including lack of “means, choices and power” as poverty indicators. The goals of the Act include reducing poverty in the province by half over 10 years, and achieving one of the lowest levels of poverty in the industrialized world by 2013.

In 2004, the Government of Quebec released its first five-year action plan on poverty, and in May 2010 released its 2010–15 action plan, Quebec’s Combat Against Poverty (PDF). From this initiative and action plan came the solidarity tax credit, which brings together the QST credit, the property tax refund and the credit for individuals living in a northern village. Low and middle-income households in Quebec are also admissible. The tax credit came into force on July 1, 2011, and aims to increase the purchasing power of underprivileged people, while limiting the effects of tax increases and rates on their income.

However, the obligation to register for direct deposit as a condition for obtaining the solidarity tax credit is counter-productive to the fulfillment of the Act’s goals. The condition discriminates against citizens who don’t have a bank account, which is required to receive direct deposit payments. No cheques are issued for solidarity tax credit payments.

Revenu Québec justifies this obligation to direct deposit as an assurance against theft, fraud or loss or postal strike. In addition, it helps the government cut around $20 million per year in administrative costs.

The Association coopérative d’économie familiale de l’Estrie (ACEF-Estrie) which works to defend the rights of consumers, particularly those with small revenues requested a legal opinion on the discriminatory aspect of such a requirement from the Commission des droits de la personne et des droits de la jeunesse (the Human Rights Commission).

On November 16, 2011, the commission tabled a legal opinion (in French) demanding that Revenu Québec amend section 1029.8.116.16 of the Taxation Act to eliminate the obligation to register for direct deposit as a condition to obtain the solidarity tax credit, as this measure is discriminatory and infringes the right to equality under the Charter of Human Rights and Freedoms.

The commission found that the obligation to register for direct deposit as a condition for obtaining the solidarity tax credit compromises the right to full exercise of economic and social rights, as well of the right to dignity of persons, who do not want, or cannot, open a bank account because of their social condition, disability, national or ethnic origin. “By imposing an obligation to register for direct deposit, thousands of persons are deprived of a benefit to which they are entitled and greatly need,” said the president of the commission, Gaétan Cousineau.

According to Quebec’s finance minister, about 10 percent of social welfare recipients, that is approximately 50,000 people, do not have an account in a bank or a credit union, either because they do not have access to this service or refuse to do so. Although financial institutions are required under Canadian law to make bank accounts available to all who request them, persons living on social assistance are often turned down. This is considered discrimination under human rights law. Discrimination in this case includes any action that creates burdens on a particular person or group compared to others. The action consequently limits access to benefits available to other members of society. Briefly, this act of discrimination has both objective and subjective components.

The objective component, a person’s standing in society, is often determined by his or her occupation, income or education level, or family background. The subjective component is associated with the perceptions that are drawn from these various objective points of reference. A person who claims discrimination based on the prohibited ground of social condition need not prove that all of these factors influenced the decision to exclude. It will, however, be necessary to show that as a result of one or more of these factors, the individual can be regarded as part of a socially identifiable group and that it is in this context that the discrimination occurred.

Differential treatment of individuals who are actually or presumed to belong to a particular group of people receiving a certain source of income is contrary to human rights standards. A measure that appears neutral can have a discriminatory effect upon a person or group of people, for example, where the measure imposes penalties or restrictive conditions not imposed on others because of their social status. This is exactly the case with respect to the registration requirement imposed for direct deposit to receive the solidarity tax credit. While on the surface, the measure looks the same for all persons affected, it actually imposes a special burden on those who, in particular because of their poverty or homelessness, do not have a bank account.

Although Revenue Quebec allows a person to contact them and make alternative arrangements on an individual basis, in my opinion, for the reasons stated above, this requirement should be removed entirely.


  1. My sympathies are divided on this one. I understand the need for the government to save money by not issuing cheques (and you know the outcry there would be during a postal strike if the payouts depended on cheques: ‘why didn’t they use direct deposits!’) Given that financial institutions are already under a human-rights-type obligation to open accounts for anyone who wants one, why not enforce that? ATMs are pretty accessible to everyone, and if they are not, maybe that is a solution.

    OTOH there are a lot of ‘unbanked’ people in the US, and some welfare agencies are using stored-value cards instead of direct deposits to make payments to them. So long as there is a system for using the value in the cards, that can be a solution. Such cards raise interesting novel legal issues but nothing insoluble, if the Quebec (or other) social security folks wanted to try them out as an alternative to direct deposit.

  2. Yosie, perhaps you could expound on why some members of this group do not have access to banking services or why they refuse to have a bank account, particularly when banks are required by law to provide bank accounts to all who request them. This is an interesting issue with regard to human rights and access to services.

  3. Hi Suzanne,

    This social phenomenon and human rights issue is explained in detail in the report.

  4. Thanks Yosie. I am reading the report now. It is unfortunate that it is not yet available in English.