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The Canada Revenue Agency headquarters in Ottawa is shown on Nov. 4, 2011.

Sean Kilpatrick/THE CANADIAN PRESS

The Canada Revenue Agency took steps Friday to quell a furor over what critics were calling its heartless treatment of diabetics.

Disability advocates and opposition parties have been excoriating the agency for weeks over the fact that hundreds of Canadians with Type 1 diabetes have suddenly found themselves ineligible to claim the disability tax credit, even though they've previously qualified for it.

The CRA insisted there's been no change in the eligibility criteria, which requires an individual to spend at least 14 hours a week engaged in activities related to the administration of insulin.

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But diabetes support groups pointed to a May clarification letter sent by the CRA to doctors who provide the medical information needed to support a claim for the tax credit. That letter said only in "exceptional circumstances" would adult diabetics need 14 hours a week to manage their insulin therapy; most would not – which would mean they're not eligible for the credit.

The CRA said Friday that it will revert to the clarification letter that existed prior to May, and review all applications for the disability tax credit that have been denied based on the May letter.

Diabetes Canada welcomed the move.

Kimberley Hanson, director of federal affairs for the group, said she hopes the review "serves as an opportunity to make the application process clearer for those who need to access this much needed credit and ultimately provides financial relief and fairness for those living with Type 1 diabetes."

The advocacy group argues that the disability tax credit is essential to help diabetics pay for medication, medical supplies and devices and that the loss of the credit had caused enormous stress and financial hardship for those affected.

Revenue Minister Diane Lebouthillier has also reinstated a 14-member disability advisory committee to help the CRA and the minister improve the way they administer tax measures aimed at helping disabled Canadians.

On Friday, she released the names of the committee members.

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Their ranks include representatives of Diabetes Canada and the Council of Canadians with Disabilities. The committee is to be chaired by CRA assistant commissioner Frank Vermaeten and Karen Cohen, chief executive of the Canadian Psychological Association.

However, skepticism remained among opposition MPs over what precisely will change for diabetics, given that Lebouthillier has insisted throughout the controversy that there's been no change in the eligibility criteria for the disability tax credit, nor any change in interpreting the rules – a line her parliamentary secretary continued to parrot Friday.

"I want to reiterate that there actually has been no change to the eligibility criteria or the interpretation of the law," Kamal Khera said.

If that's the case, Conservative revenue critic Pat Kelly questioned the purpose of pulling the May clarification letter and reviewing the cases of those denied the tax break on the basis of that letter.

"The want to go back and review a change that they're denying that they've made. It's just the strangest thing," said Kelly.

Since May, the government has rejected almost every application by diabetics for the disability tax credit and yet it's "still trying to act like nothing has changed," he added.

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"I think they owe diabetics an apology and they owe us an apology in this House for misleading the House for the past two months."

The CRA has come under similar fire recently for its uneven handling of disability tax credit applications from Canadians coping with autism.

And in October, the agency was strafed for issuing a new directive instructing that employee discounts – including those enjoyed by retail store workers, who typically earn little more than minimum wage – should be considered taxable benefits. The directive was pulled after Lebouthillier ordered the CRA to review its interpretation of the tax code and consult stakeholders in the retail industry.

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