Citation:
2016 TCC 6
Date: 20160106
Docket: 2014-1385(IT)I
BETWEEN:
ELLEN
LEIBOVICH,
Appellant,
and
HER
MAJESTY THE QUEEN,
Respondent.
REASONS
FOR JUDGMENT
Smith J.
[1]
For the 2011 taxation year, the Appellant
included tuition fees paid to the St. George’s School of Montreal (“St. George’s”) as “medical expenses” in
the computation of her medical expense tax credit pursuant to subsection
118.2(2) of the Income Tax Act (the “Act”)1.
[2]
The tuition fees were paid for the attendance of
the Appellant’s infant son, J. It is not disputed that the amount paid was
$18,560.12.
[3]
The Minister denied the credit on the basis that
the tuition fees were not “medical expenses”. Paragraph (e) of subsection 118.2(2) includes as “medical expenses”, an
amount paid:
(e) for the care, or the care and training, at a school, an
institution or another place of the patient, who has been certified in writing
by an appropriately qualified person to be a person who, by reason of a physical
or mental handicap, requires the equipment, facilities or personnel specially
provided by that school, institution or other place for the care, or the care
and training, of individuals suffering from the handicap suffered by the
patient;
[4]
At the outset of the hearing, the Respondent
conceded that J suffered from a “mental handicap” for the purposes of the paragraph noted above
(though this point had initially been disputed in the pleadings). The remaining
issues in this appeal can thus be summarized as follows:
a)
does the school (“St.
George’s”) specially provide equipment,
facilities or personnel for the care, or the care and training of individuals
suffering from the handicap suffered by J; and
b) for the relevant taxation year, has J been certified as someone who,
by reason of his mental handicap, requires the equipment, facilities or
personnel specially provided by St. George’s.
Preliminary issue
[5]
In the Reply to the Notice of Appeal, the
Respondent raised as a preliminary matter its view that the Notice of Appeal
had been filed 91 days after the Notice of Confirmation and as such that it was
out of time. There was also a statement that the Minister would not object to
an application for an extension of time but such an application was never
filed. At the hearing, counsel for the Respondent took the position that the
delay was de minimis and that she was prepared to treat the Notice of
Appeal as having been validly filed.
[6]
Having reserved on this issue at the hearing, I
now find that the Notice of Appeal was filed within the proper time limits. Section
26 of the Interpretation Act3 provides that when the time
limit for doing a thing expires or falls on a holiday (in this case on a
Sunday), the thing may be done on the next business day. Calculating the number
of days from the Notice of Confirmation, I find that the Notice of Appeal filed
on Monday, April 7, 2014, was validly filed.
Facts
[7]
The Appellant was not present at the hearing but
she was represented by Ron Evans, her husband and J’s father. He was the only
person to testify. He tendered as evidence, a number of clinical assessments
that I will refer to individually or collectively as the clinical reports (the “Clinical Report(s)”).2
[8]
J was born on March 13, 1999. There is no doubt
that his parents were concerned with his speech and language skills at an early
age and that they sought the assistance of qualified medical professionals. The
Clinical Report completed on March 5, 2003 – when J was almost 4 years old,
recommended “speech and language therapy” as well as psychological testing to clarify J “strengths and weaknesses”
and “help his parents make choices for his
schooling”.
[9]
J attended United Talmud School (“UTS”), an elementary
school in Montreal, from Kindergarten to grade 7 where he studied in French,
Hebrew and English. He was active in sports and was part of a chess group.
[10]
As a result of ongoing difficulties in school,
he was assessed several times. The Clinical Report of March 2006 noted that J “was seen by the school’s special needs teacher twice
a week” and that he “has
been tutored in private every second week”. It
made several recommendations including continued speech-language therapy and
the use of “visual aids to learning”.
[11]
Further clinical testing in 2007 and 2008
confirmed that J suffered from auditory processing difficulties and lead to a
diagnosis of “Central Auditory Processing Dysfunction” or CAPD (“CAPD”). In practise, this meant that J had difficulty
processing, discriminating, recognizing or comprehending auditory information
even though, according to the Clinical Report of 2008, a person suffering from
CAPD “has normal intelligence and hearing
sensitivity”.
[12]
The Clinical Report of 2007 made several
recommendations for the classroom including the use of a personal FM auditory system,
visual aids, flow-charting, graphically or schematically representing steps in
a set task or project including the use of various computer based programs. The
report concluded (at pages 11 and 12):
[. . .]
Irrespective of the future educational placement, [J] requires the opportunity
for constant one-to-one/small group direct therapeutic intervention, be it
through Special Education, a volunteer, resource person, special aide, etc.
This affords the chance for a concentrated academic remedial emphasis in an
optimized listening environment. [. . .]
[. . .] School
based tutoring with close coordination between tutor and teacher is recommended
for optimal therapeutic effect. [. . .]
[. . .] Teaching [J]
how to analyze body language (gestures and facial expressions) would be helpful
since these are important clues for a student who has difficulty processing
speech quickly.
[. . .] This
student needs an academic environment with a favourable teacher-pupil ratio,
where there is opportunity for ono-to-one work (and continuity between the
remedial and teaching colleagues) and possibly where academics could be
internalized in the first language. [. . .]
[13]
The report of 2007 (page 10) refers to the
availability of certain software that is “directed
to aspects of phonemic decoding and/or phonics” and
states that the program was available at, amongst other places, “Vanguard School (for students with severe learning
disabilities but good academic potential)”. This
is the only school that is specifically referred to in the Clinical Reports.
[14]
The Appellant testified that an application was
filed for J to attend Vanguard Elementary School (“Vanguard”) and that he was accepted as a student. A letter
dated March 26, 2007 from the Vanguard was tendered as evidence to corroborate
this though a careful reading of the letter suggests that J’s admission was
still tentative. He was viewed as “an eligible
candidate”.
[15]
J never attended Vanguard. In the end, according
to Mr. Evans’ testimony, (and confirmed in the Clinical Report of March 31,
2008 – page 4), J’s parents were pleased with the educational services offered
by UTS and that is where he remained to complete his elementary schooling.
[16]
Though not directly relevant to the issues in
this matter, it is worth noting that in cross-examination, Mr. Evans admitted
that UTS offered a regular school program and that J followed the same
curriculum as all other students.
[17]
Following his graduation from UTS, J was
enrolled in St. George’s for the grade 8 academic year. Mr. Evans produced a
copy of St. George’s 2015-2016 School Prospectus and provided a description of
the school. He testified that it was highly regarded in the academic community
and viewed favourably because of its low teacher-pupil ratio as compared to
public schools. It could also offer the opportunity for one-on-one work and
accommodate J’s needs.
[18]
Mr. Evans testified that approximately 40% of
the students in J’s class suffered from some form of learning disability and
that, although it was not advertised, it was generally well known in the
community that St. George’s catered to student suffering from learning
disabilities.
[19]
The Appellant testified that St. George’s was
informed of J’s learning disabilities, that copies of the Clinical Reports were
provided to them prior to his admission, that they expressed the view that they
would be able to accommodate his concerns and that J would be well served.
[20]
The Appellant tendered as evidence, a copy of
J’s academic record for the year ending June 2015 - a rather glowing report
with an average of 86.88% for that year. The report was also tendered to attest
to St. George’s success in accommodating and dealing with J’s learning
disabilities.
[21]
During cross-examination, Mr. Evans admitted
that apart from the adapted academic environment and special accommodations
offered to deal with J’s learning disabilities, he followed the same school
program and curriculum as all other students. Mr. Evans was also shown a letter
from St. George’s addressed to him and dated March 30, 2012 (the “Letter”)4
that references several of the Clinical Reports and states:
[. . .] Although
the school does not specifically cater to students with learning disorders,
we feel our approach to teaching, the enhanced, child-centered curriculum and various
resources are well suited to respond to (J’s) specific needs, [. . .]
[. . .]
St. George’s is an
environment which successfully nurtures all of its students, including many
with a broad variety of learning disabilities. I believe that our school
will allow Joshua to develop to his full potential.
[my emphasis]
[22]
Mr. Evans acknowledged receipt of the Letter but
did not provide any context as to its preparation in March 2012.
Position of the parties
[23]
The Appellant’s basic position is that J has
been diagnosed with a learning disability described as CAPD, that this
qualifies as a mental handicap, that he has been certified as someone who
requires special equipment, facilities or personnel and that St. George’s
provides such equipment, facilities or personnel for the care and training of
other students who suffer from similar disabilities.
[24]
The Appellant takes the position that J was
accepted by Vanguard, a school that specifically caters to students with severe
mental disabilities but strong learning potential, and that if St. George’s was
able to accommodate J as successfully as it has, then it follows logically that
it too is a school that caters to students with severe mental disabilities but
strong learning potential.
[25]
On the issue of certification, Mr. Evans
recognized that he was unable to obtain or provide any direct evidence since no
one, including the medical practitioners consulted, were prepared to recommend
any specific schools. He argued that a significant number of J’s classmates
also suffered from some form of learning disability though it would not be
readily apparent to someone who entered the classroom. He argued that St.
George’s does in fact cater to children with severe disabilities, that this is
well known in the educational community, and that St. George’s simply could not
survive financially if it did not cater to such students.
[26]
Mr. Evans argued that paragraph 118.2(2)(e) of
the Act should be interpreted broadly, that it would be wrong to give it a
narrow interpretation that required a school to be dedicated solely to serving
the needs of children with disabilities and that the modern trend was for
schools to be inclusive.
[27]
The Respondent’s basic position is that J
attended the same school program and curriculum as all the other students at
St. George’s and that, although appropriately qualified persons had attested to
J’s mental handicap and his need for an adapted academic environment, no one
had certified what special equipment, facilities or personnel was required for
his care and training.
[28]
The Respondent argued moreover that there was no
evidence and nothing in St. George’s prospectus to suggest that it catered to
students with disabilities and that the Letter clearly set out the school’s
position that it does not in fact specifically cater to students with learning
disabilities.
The applicable law
[29]
According to the definition set out in
118.2(2)(e) of the Act (reproduced again for ease of reference) tuition fees
may be claimed as medical expenses where the amount is paid:
(e) -- for
the care, or the care and training, at a school, an institution or
another place of the patient, who has been certified in writing by an
appropriately qualified person to be a person who, by reason of a physical
or mental handicap, requires the equipment, facilities or personnel
specially provided by that school, institution or other place for the care,
or the care and training, of individuals suffering from the handicap
suffered by the patient;
[my
emphasis]
[30]
The decision of Collins v. Canada, (1998)
3 C.T.C. 2981, of this Court is perhaps the leading case on tuition fees as
medical expenses and, not surprisingly, was raised by both parties. It sets out
a four-prong test (at paragraph 20):
20. A
reading of the above provision makes it clear there are several criteria to be
satisfied which are as follows:
1. The taxpayer must pay an amount for the
care or care and training at a school, institution or other place.
2. The patient must suffer from a mental handicap.
3. The school, institution or other place
must specially provide to the patient suffering from the handicap, equipment,
facilities or personnel for the care or the care and training of other persons
suffering from the same handicap.
4. An appropriately qualified person must
certify the mental or physical handicap is the reason the patient requires that
the school specially provide the equipment, facilities or personnel for the
care or the care and training of individuals suffering from the same handicap.
[31]
Having concluded that the Appellant’s infant son
suffered from a mental handicap, Rowe J. found:
36. [. . .] there is ample evidence [. . .] that Choice was
a school that had personnel who were specially trained and provided to deal
with gifted children who were also suffering from learning disorders
sufficiently serious to constitute a mental handicap. No special equipment is
needed but the key is small class size with a great deal of individualising
attention in accordance with the appropriate program designed for a particular
student [. . .].”
38. I conclude that Choice was a school which specially
provided [. . .] both facilities and personnel for the care or for the care
and training of persons suffering from the same mental handicap – ADHD –
although only one or the other is required to meet the language of the
provision.
[32]
Rowe J. then addressed the issue of
certification and, having noted that “there is
no longer any special form of certification”,
found that the medical practitioner consulted by the Appellant had concluded
that the child:
40. [. . .] should be educated at a school which could
provide proper care or care and training for someone suffering from ADHD [. .
.] Choice was an appropriate school to assist in treating that disorder and
otherwise dealing with the mental handicap [. . .] .
[33]
On that basis, Rowe, J. concluded that Choice
had been properly certified.
[34]
The issue of certification was also addressed by
the Federal Court of Appeal in Title Estate v. Canada, (2001) FCA 106,
where the court found that the certificates submitted were “simply too vague” to
meet the requirements of the Act. Sharlow J.A. noted:
5. In our view, a certificate under paragraph 118.2(2)(e)
must at least specify the mental or physical handicap from which the patient
suffers, and the equipment, facilities or personnel that the patient requires
in order to obtain the care or training needed to deal with that handicap.
[35]
The later decision of Scott v. Canada,
(2008) FCA 286, was an appeal from a decision of this Court where Campbell, J.
found that the Appellant had satisfied the four-pong test in Collins v.
Canada, supra. The Minister did not agree and appealed on the basis that
the third and fourth requirements had not been met. As to the third
requirement, Trudel, J. A. commented as follows:
10. The third of the Collins factors requires Rothesay to
be a school that specially provided to the student equipment, facilities or
personnel for the care or the care and training of other persons suffering from
the same handicap.
11. To satisfy this requirement, first of all, the respondent's
son must have a specific need. Second, the expenses of Rothesay must
be inextricably tied to this specific need resulting from his disability: Lister
v. Canada, [2006] F.C.J. No. 1541, 2006 FCA 331 at paragraph 15. Third,
Rothesay must be an institution that is capable of addressing the need of a
group with disabilities similar to those of the respondent's son.
[. . .]
14. All students have access to the same services and the
tuition fees are the same for all. The school's focus is not on the provision
of medical services and it does not specially provide equipment, facilities or
personnel for the care of students with particular needs such as those of the
respondent's son.
[. . .]
18. The fact that some of the services offered to the
general student body were beneficial to the respondent's son and other students
with special needs is insufficient to bring Rothesay within the ambit of the
provision under study.
[my
emphasis]
[36]
Trudel J.A. then turned to the fourth
requirement. Having noted that it was not necessary that certification be in a
particular format, she noted that:
23. However there must be true certification: one which
specifies the mental or physical handicap from which the patient suffers, and
the equipment, facilities or personnel that the patient requires in order to
obtain the care or training needed to deal with that handicap: Title Estate
v. Canada [2001] F.C.J. No. 530 at paragraph 5.
24. While the judge was in a unique and privileged position to
weigh the evidence before her, based on a careful review of the transcript
against the standard set out in Title Estate above, I find no
evidentiary support for her conclusion on certification.
[37]
The Respondent also referred to the decision of Lister
v. Canada, (2006) FCA 331, an appeal from a decision of this Court
involving the deductibility of fees paid to a senior’s residence as medical
expenses pursuant to paragraph 118.2(2)(e) of the Act. Sharlow J. A. made the
following assessment:
11. The Tax Court Judge reasoned that, as Ms. Lister suffered
from handicaps that met the description in paragraph 118.2(2)(e), and those
handicaps were accommodated by the facilities of Hawthorn Park, it followed
that Hawthorn Park "specially provided" the facilities she needed for
her care.
12. The Crown argues that this reasoning is not correct. The
Crown argues that in order to determine whether a particular payment is
eligible for the medical expense credit under paragraph 118.2(2)(e), it is
necessary to consider two questions independently. The first question is
whether the individual in respect of whom the credit is claimed has the
requisite physical or mental handicap (in this case it is undisputed that Ms.
Lister meets that test). The second question is whether the place that
received the payment is a place that is within the scope of paragraph
118.2(2)(e). I agree with the Crown that this is the correct way to
approach the interpretation of paragraph 118.2(2)(e).
[my
emphasis]
[38]
Having noted that subsection 118.2(2) sets out a
lengthy and detailed list of expenses that form the basis for the calculation
of the medical expense tax credit, Sharlow J.A. noted that:
15. One theme that emerges from subsection 118.2(2) is that no
tax relief is provided for the ordinary expenses of living such as the
costs of accommodation and food, except where those expenses are
inextricably tied to a specific need resulting from a physical or mental
impairment.
[my
emphasis]
[39]
She then turned her attention to paragraph (e)
and stated:
18. Given that statutory context, what kind of place is
contemplated by paragraph 118.2(2)(e)? According to the words of the provision,
an institution comes within paragraph 118.2(2)(e) if it "specially
provides" the equipment, facilities or personnel needed for the care or
training of its residents who require that specially provided equipment,
facilities or personnel by reason of a physical or mental handicap. The
circularity of this provision makes its interpretation somewhat awkward but it
is reasonably clear, at least, that paragraph 118.2(2)(e) contemplates
institutional care. For that reason, paragraph 118.2(2)(e) indirectly but
necessarily provides tax relief for accommodation and other ordinary living
costs that are included in the cost of care. However, given the context of
subsection 118.2(2), an organization that functions mainly as a provider of
residential accommodation should not fall within the scope of paragraph
118.2(2)(e) merely because it incidentally provides some medical services to
its residents.
[my
emphasis]
[40]
The Appellant argued that the Lister v.
Canada should be distinguished on the basis that it made no sense to
compare the type of 24 hour institutional care offered in a senior’s residence
with the services offered to students in a school. While the facts are
different, the analysis of paragraph 118.2(2)(e) is certainly compelling.
[41]
Several more recent cases were brought to my
attention. At least two are worth mentioning. In Piper v. Canada, 2010
TCC 492, Bowie J. dealt with a similar fact situation. The Appellant’s daughter
D suffered from certain learning disabilities as documented in a psychological
assessment and attended a private school described as GNS. The head of that
school testified at the hearing and Bowie, J. observed that:
7. Mr. Bruce-Lockhart testified that the GNS schools do
not provide a special program for students with learning disabilities, but they
do admit students, like (D) who have learning disabilities, and they do
accommodate them within the normal program [. . .]
8. It is not necessary in this case to decide whether (D's)
learning disability amounted to a mental handicap, as that expression is used
in paragraph 118.2(2)(e). The Federal Court of Appeal has held in Lister v.
Canada, 2 and again in Canada v. Scott, 3 that paragraph 118.2(2)(e)
creates a purpose test, which is to say that for the taxpayer to be entitled to
the credit that it provides, the expense associated with a child attending the
institution must be inextricably tied to the specific needs of that child. In
Scott, Trudel JA, speaking for herself and Desjardins and Noël JJA, said this:
The fact that some of the services
offered to the general student body were beneficial to the respondent's son and
other students with special needs is insufficient to bring Rothesay within the
ambit of the provision under study.4
9. Precisely
the same is true of the GNS in the present case. GNS is not a school that
has the education of handicapped children, or children with learning
disabilities, as a dominant purpose.
[my
emphasis]
[42]
And finally, in the decision of Vita-Finzi v.
Canada, 2008 TCC 565, special assistance was provided to a student with a
learning disability but Hershfield J. found that while the child suffered from
a mental handicap, the nexus between the program offered and the tuition fees
paid to the private school, was insufficient to meet the requirements of
paragraph 118.2(2)(e) as set out in Scott v. Canada, supra.
Analysis
[43]
It is agreed that the Appellant has met the
first and second requirements as described in the Collins v. Canada
decision above but the issue that remains to be determined is whether she has
met the third and fourth requirements.
[44]
Does St. George’s specially provide equipment,
facilities or personnel for the care or the care and training of persons
suffering from the handicap suffered by J?
[45]
Mr. Evans’ has argued that it does but I find
that there is little in the way of corroborating evidence to support his
position and that the documentary evidence points in the opposite direction.
The school prospectus does not refer to any special program for children
suffering from learning disabilities and in fact the evidence before the court
is that it “does not specifically cater to students
with learning disorders”. The Letter goes on to
say that it is able to provide an enhanced curriculum, various resources and an
environment that nurtures all of its students including “many with a broad variety of learning disabilities”. In my view, that is insufficient to support a
finding that the school specially provides equipment, facilities or personnel
for the care and training of students suffering from disabilities for the
purpose of paragraph 118.2(2)(e).
[46]
Reviewing the requirements of the case law noted
above, I find that the school in question simply does not meet the threshold.
It offers the same school program and curriculum to all students and the
adapted academic environment offered to J and other students with learning disabilities,
as described by Mr. Evans, is incidental and ancillary to its primary or
dominant purpose of providing a high school education to all its students,
including J.
[47]
The next issue relates to certification and the
question is whether an appropriately qualified person has certified that J, by
reason of his mental handicap, requires the equipment, facilities or personnel
specially provided by St. George’s.
[48]
I accept that J was diagnosed by appropriately
qualified persons as someone who suffered from a medically recognized learning
disability, that he required special attention and an adapted academic environment
but find that the Clinical Reports fail to establish a need for special
equipment, facilities or personnel. Although there are practical suggestions
such as the use of a personal FM auditory system and visual learning aids, for
example, many of the recommendations would apply to the general student
population. In any event, I have already concluded that any accommodation
provided to J by St. George’s was at best incidental and ancillary.
[49]
I find that nothing turns on the fact that J was
deemed “an eligible candidate” by Vanguard since he never attended nor paid any
tuition fees to that school.
[50]
On balance I find that the Appellant has not met
the burden with respect to the third and fourth requirements mentioned in Collins
v. Canada.
[51]
For all of the foregoing, this appeal is
dismissed without costs.
Signed at Ottawa, Canada, this 6th
day of January 2016.
“Guy R. Smith”
___________________________
[1] Income Tax Act R.S.C. 1985, c.1 (5th Supp.)
[1] Interpretion Act (R.S., 1985, c. l-21)
[1] Clinical
reports listed in chronological order:
1. Speech Language Update Report dated
March 3, 2003 prepared by the Speech Language Pathology Services, Queen
Elizabeth Health Complex;
2. Learning Progress Clinic Summary Report
dated October 23, 2006 prepared by the Montreal Children’s Hospital, Child
Development Program;
3. Report of Psychological Consultation
dated October 23, 2006, prepared by Judith Le Gallais, Psychologist, Montreal
Children’s Hospital, Department of Psychology;
4. Peripheral and Central Auditory
Processing Assessment dated September 26, 2007, prepared by I. M. Hoshko,
Audiologist;
5. Central Auditory Processing Evaluation
dated March 31, 2008, prepared by the Montreal Children’s Hospital, Development
and Behavioral Pediatrics Services;
6. Assessment prepared by Judith Le
Gallais, Psychologist, referencing assessments of November 23, 2013 and January
4, 2013;
[1] Letter from St. George’s School of Montreal, signed by the Head of
School, James Officer and dated March 30, 2012.
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