Tax Court of Canada Judgments

Date: 20021017

Docket: 2002-2166-IT-I

BETWEEN:

SHARON WATKIN,

Appellant,

and

HER MAJESTY THE QUEEN,

Respondent.

Reasons for Judgment

Rip, J.

[1]            Sharon Watkin appeals from her 2000 income tax assessment that denied her the disability tax credit described in subsection 118.3(1) of the Income Tax Act ("Act").

[2]            During 2000 Ms. Watkin, a school teacher, suffered from chronic fatigue syndrome, a debilitating fatigue that is not attributable to known conditions and may last for an unlimited time. The activity of an otherwise healthy person is significantly reduced and may be accompanied by a myriad of symptoms. Ms. Watkin was impaired in the everyday sense of the word. For two months, April and May in 2000 she was bedridden; she would get out of bed only to go to the bathroom and, occasionally, toast bread. Her husband prepared all meals and help was engaged for other household chores. After May, Ms. Watkin was able to get up and "walk a bit" and she "dragged" herself to school the last three weeks of June for half days. At school, she had to be seated. She was not able to complete two of the half days of teaching. She "collapsed" back into bed with extreme exhaustion for the rest of the summer. During the summer months she spent 70 per cent to 80 per cent of the day lying down. She was told to walk and tried to do so, but after walking 50 metres she had to lie down and would not walk again that day.

[3]            Ms. Watkin also testified that while she could speak, she was unable to carry on an extended conversation for most of 2000 without triggering severe headaches and "becoming so breathless that I had to stop". While she could perceive, think and remember during the year, she explained she was so exhausted that she could not concentrate on any topic for more than 15 minutes.

[4]            Ms. Watkin said she was too weak to return to school in September and spent most of the time in bed although she did make some effort to prepare a meal. By autumn, she began to have some "good days" as well as "bad days" but most of her time was spent in bed. She also was easily depressed, she recalled.

[5]            Ms. Watkin still suffers from chronic fatigue syndrome, but not as severe as in 2000. During her testimony she experienced occasional spells of accelerated breathing.

[6]            Subsection 118.3(1) of the Act provides for a disability tax credit:

Where

(a) an individual has a severe and prolonged mental or physical impairment,

(a.1) the effects of the impairment are such that the individual's ability to perform a basic activity of daily living is markedly restricted or would be markedly restricted but for therapy that...

. . .

(a.2) in the case of

(i) a sight impairment, a medical doctor or an optometrist,

. . .

(b) the individual has filed for a taxation year with the Minister the certificate described in paragraph (a.2), and

(c) [...]

[7]            The requirements for the eligibility for a disability tax credit are set out in subsection 118.4:

(1) For the purposes of subsection 6(16), sections 118.2 and 118.3 and this subsection,

(a) an impairment is prolonged where it has lasted, or can reasonably be expected to last, for a continuous period of at least 12 months;

(b) an individual's ability to perform a basic activity of daily living is markedly restricted only where all or substantially all of the time, even with therapy and the use of appropriate devices and medication, the individual is blind or is unable (or requires an inordinate amount of time) to perform a basic activity of daily living;

(c) a basic activity of daily living in relation to an individual means

       (i) perceiving, thinking and remembering,

(ii) feeding and dressing oneself,

(iii) speaking so as to be understood, in a quiet setting, by another person familiar with the individual,

(iv) hearing so as to understand, in a quiet setting, another person familiar with the individual,

(v) eliminating (bowel or bladder functions), or

(vi) walking; and

(d) for greater certainty, no other activity, including working, housekeeping or a social or recreational activity, shall be considered as a basic activity of daily living.

[8]            Two disability tax credit certificates were completed by Ms. Watkin's physician, Dr. Geetha Rao. In both certificates Dr. Rao has answered "yes" to questions as to Ms. Watkin's ability to see, walk, speak, perceive, think and remember, hear, dress herself and manage bodily functions. In the first certificate, dated February 15, 2001, Dr. Rao diagnosed Ms. Watkin's illness as "chronic fatigue syndrome / fibromyalgia - Patient experiences severe fatigue / diffuse myalgias / constant pain / insomnia. She has had multiple investigations and has seen specialists who confirm the diagnosis".

[9]            Dr. Rao signed the second certificate on December 17, 2001. Notwithstanding his affirmative answers regarding Ms. Watkin's ability to perform the activities of daily living, Dr. Rao stated that:

Ms. Watkin has been diagnosed with chronic fatigue syndrome. Although she is able to continue with activities of daily living by the above criteria, she becomes easily fatigued and is unable to do any daily tasks without help from her husband or cannot maintain any activity for longer than 15 minutes.

[10]          In both certificates Dr. Rao agreed that Ms. Watkin's marked restriction in a basic activity of daily living is expected to last for a continuous period of 12 months. The dates the marked restriction began and may cease differ. In the earlier certificate Dr. Rao stated the marked restriction began in April, 2000 and would cease in 2002. In the second certificate the dates are January 2000 and 2003. I find that in the circumstances Ms. Watkin's impairment was severe and prolonged.

[11]          The respondent's agent, Mr. Mitschele, submitted that Ms. Watkin did not suffer an impairment that was prolonged and severe the effects of which markedly restricted her ability to perform a basic activity of daily living, within the meaning of paragraph 118.3(1)(a) of the Act. In addition, the certificates that she has produced deny she suffers from an impairment that markedly restricts her ability to perform a basic activity of daily living listed in paragraph 118.4(1)(c) of the Act. For Ms. Watkin to succeed, adds Mr. Mitschele, it is mandatory that she file a certificate attesting that she is markedly restricted from performing a basic activity described in paragraph 118.4(1)(c): MacIsaac v. Canada[1].

[12]          The Federal Court of Appeal and this Court have considered taxpayers to be entitled to a disability tax credit where the effects of a taxpayer's impairment markedly restrict the taxpayer's ability to perform one basic activity of daily living notwithstanding a medical practitioner's certificate would otherwise have denied the tax credit. For example, my colleague Campbell, J. decided that a medical doctor who filled out the necessary certificate misinterpreted the law because "[h]e did not understand that the six items defining a basic activity of daily living ... are not to be read together, but each activity is treated separately. The word "or" is used in that section".[2]

[13]          The courts have often approached appeals for disability tax credits with a degree of compassion. This compassion has led to the expansion of the provision to include situations that are not expressly listed in the Act. For example, in Johnston v. Canada,[3] the Federal Court of Appeal concluded that the basic activity of "feeding" includes the activity of preparing meals in addition to being able to bring the food to your mouth. That same case stated that the basic activity of "dressing" includes the activities of bathing and shaving. In Hamilton v. Canada,[4] the Federal Court of Appeal agreed with Campbell, J. that the basic activity of "feeding" includes the activity of shopping and procuring the items necessary to prepare a meal.

[14]          The compassionate approach in disability tax credit appeals was articulated by Bowman, J. (as he then was), in Radage v. Canada.[5] He set out two guiding principles when dealing with disability tax credit cases at page 1625:

The legislative intent appears to be to provide a modest amount of tax relief to persons who fall within a relatively restricted category of markedly physically or mentally impaired persons. The intent is neither to give the credit to everyone who suffers from a disability nor to erect a hurdle that is impossible for virtually every disabled person to surmount. It obviously recognizes that disabled persons need such tax relief and it is intended to be of benefit to such persons.

...

If the object of Parliament, which is to give to disabled persons a measure of relief that will to some degree alleviate the increased difficulties under which their impairment forces them to live, is to be achieved the provision must be given a humane and compassionate construction.

[15]          These principles have been quoted and followed by the Federal Court of Appeal in Johnston, supra and Hamilton, supra.

[16]          Ms. Watkin argues that "whereas a tax credit is granted to a person with one severe disability there is a class of persons who suffer from multiple less severe disabilities which, in their total effect, should be seen as equivalent". The disabilities Ms. Watkin refers to are the inability to perform more than one of the defined basic activities of daily living.

[17]          Ms. Watkin's position is that the cumulative effect of the restrictions imposed on her ability to perform more than one basic activity of daily living due to her severe and prolonged impairment was at least as markedly restricted as an individual with a severe and prolonged impairment who is entitled to a disability tax credit when the individual's impairment markedly restricts the individual's ability to perform any one of the basic activities of daily living described in paragraph 118.4(1)(c). In other words, even though she was not markedly restricted from performing any one basic activity of daily living, because of her severe, but not marked, restrictions in performing several of the basic activities of daily living she experiences the same marked restriction in her basic activities of daily living as a person who is otherwise entitled to the tax credit; the sum of her inabilities to perform several basic activities of daily living is equivalent to a situation where only one of her basic activities of daily living is markedly restricted. I refer to this as the "cumulative disability" submission.

[18]          There is much to be said in support of the cumulative disability argument. For example, if a taxpayer takes a very long time for the activity of eating and dressing and again for the activity of walking, and the time for each activity is not inordinate, the taxpayer would not be entitled to a tax credit. But the aggregate length of times in a day that it takes to dress and eat and then to walk may be inordinate, and in such circumstances, a taxpayer suffering such disabilities should be entitled to the disability tax credit. Did Parliament intend to grant a tax credit to a person who is markedly restricted from performing one basic activity of daily living but not to a person whose ability to perform a single basic activity of daily living may be a degree shy of being markedly restricted but whose ability from performing a combination of more than one basic activity of daily living is markedly restricted?[6]

[19]          In the appeal at bar Dr. Rao did certify that Ms. Watkin's daily activities are markedly restricted, notwithstanding the answers to the specific questions put in the certificate, which Dr. Rao interprets as "criteria".

[20]          In Stubart Investments Ltd. v. Canada,[7] Wilson, J. explained that:

It seems more appropriate to turn to an interpretation test which would provide a means of applying the Act so as to affect only the conduct of a taxpayer which has the designed effect of defeating the expressed intention of Parliament. In short, the tax statute, by this interpretative technique, is extended to reach conduct of the taxpayer which clearly falls within "the object and spirit" of the taxing provisions. Such an approach would promote rather than interfere with the administration of the Income Tax Act, supra, in both its aspects without interference with the granting and withdrawal, according to the economic climate, of tax incentives.

(Emphasis added)

[21]          The Federal Court of Appeal has accepted Bowman, A.C.J.'s conclusion that the object of the disability tax credit provisions is to alleviate the increased difficulties that disabled persons suffer. The spirit of the provision can be said to be a modest amount of tax relief to physically or mentally impaired persons. The cumulative disability argument, in my view, falls within both the object and the spirit of the provisions of subsections 118.3(1) and 118.4(1) of the Act.

[22]          Individuals like the appellant, who have a severe and prolonged impairment and cannot perform basic activities of daily living, are in no different situation than others with a severe and prolonged impairment who do not suffer chronic fatigue syndrome but who are markedly restricted from performing a single basic activity of daily living. The question is whether these individuals are entitled to the disability tax credit. The words of Lord Pearce in BP Australia Ltd. v. Commissioner of Taxation of the Commonwealth of Australia[8] are germane:

It is a commonsense appreciation of all the guiding features which must provide the ultimate answer.

[23]          The answer is that Ms. Watkins is entitled to the disability tax credit for the year 2000. The appeal is allowed, with costs, if any.

Signed at Ottawa, Canada, this 17th day of October, 2002.

"Gerald J. Rip"

J.T.C.C.COURT FILE NO.:                                   2002-2166(IT)I

STYLE OF CAUSE:                                               Sharon Watkin and Her Majesty the Queen

PLACE OF HEARING:                                         Toronto, Ontario

DATE OF HEARING:                                           October 3, 2002

REASONS FOR JUDGMENT BY:      the Honourable Judge Gerald J. Rip

DATE OF JUDGMENT:                                       October 17, 2002

APPEARANCES:

For the Appellant:                                                 The Appellant herself

Agent for the Respondent:                 Jason Mitschele (Student-at-Law)

COUNSEL OF RECORD:

For the Appellant:                

Name:                               

Firm:                 

For the Respondent:                             Morris Rosenberg

                                                                                Deputy Attorney General of Canada

                                                                                                Ottawa, Canada

2002-2166(IT)I

BETWEEN:

SHARON WATKIN,

Appellant,

and

HER MAJESTY THE QUEEN,

Respondent.

Appeal heard on October 3, 2002, at Toronto, Ontario, by

the Honourable Judge Gerald J. Rip

Appearances

For the Appellant:                                                                 The Appellant herself

Agent for the Respondent:                                 Jason Mitschele (Student-at-Law)

JUDGMENT

                The appeal from the assessment made under the Income Tax Act for the 2000 taxation year is allowed, with costs, if any, and the assessment is referred back to the Minister of National Revenue for reconsideration and reassessment on the basis that the appellant is entitled to the disability tax credit for the 2000 taxation year.

Signed at Ottawa, Canada, this 17th day of October 2002.

J.T.C.C.