Date: 20010927
Docket: 2000-4176-IT-I
BETWEEN:
THOMAS VANKA,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent,
Reasons for Judgment
Lamarre Proulx, J.T.C.C.
[1]
This is an appeal by way of the informal procedure concerning the
1994 and 1995 taxation years.
[2]
The question at issue is whether a workspace in the
Appellant's residence is used exclusively for the purpose of
earning income from the Appellant's medical practice and used
on a regular and continuous basis for seeing patients in respect
of that practice.
[3]
The Appellant testified. He stated that he was a physician; that
he has been practicing in family medicine for the last 25 years;
that his patients are primarily elderly people and
psychologically unstable people; and that these patients require
their physician's availability on almost a continuous
basis.
[4]
The Appellant referred the Court to the Code de
Déontologie des Médecins du Québec and
to a report of a task force set up by the Collège des
médecins du Québec. In the report entitled
"New Professional Challenges for Physicians in the 21st
Century" the Appellant cited excerpts at pages 26 and 33
:
As for family physicians, they must increase the time they
spend with families, the elderly, and chronically ill patients;
they must devote the necessary time to coordinating their work
with that of the nurse and specialist colleagues. Their work with
respect to medical record- keeping, medical-administrative tasks
and teaching, if applicable, will become ever more demanding.
Family practitioners will often act as ombudsmen for their
patients vis-à-vis certain agencies and health
professionals, so that their patients have ready access to the
care their condition requires.
...
Family physicians are called upon to play a particular role in
first-line care. Indeed, they are responsible for the primary
care of their patients. ...The first-line care they provide
corresponds to primary medical care as defined by WHO. It
includes preventive, curative, rehabilitative and palliative
care. It is characterized by its accessibility 24 hours a day,
seven days a week. Thus, it is comprehensive and continuous and
includes long-term management of the person (Conseil
médical du Québec, 1995). ...
[5]
The Appellant explained that his downtown office is situated on
Drummond Street in Montreal where he sees patients Monday to
Friday, from 8:00 a.m. to 7:00 p.m. The Appellant
described his home office as a self-contained unit
measuring nine feet by nine feet in a two-bedroom cottage
situated in the Town of Mount-Royal.
[6]
The Appellant stated that unlike a walk-in clinic where
administrative and medical responsibilities end with the shift
and where the patients are shared with other doctors, his
practice requires him to remain available all times from
7:00 p.m. to 8:00 a.m. He stated that he receives an
average of seven calls in the evening and will see one patient
per week.
[7]
He explained that he considers his home office to be an extension
of his downtown office. It is directly connected to the downtown
office by telephone and to the computer. The patients' files
are on a computer system. When a patient phones, the Appellant
has access to the patient's file. The same applies when he
sees a patient. That office will be used to check the medication
effectiveness, calling in new prescriptions, monitoring the
progress of the patient's condition, reporting on the
laboratory results, discussing their case with families,
listening to their problems and advising the patients. The
correspondence with other specialists pertaining to problem cases
is done from the home office.
[8]
The home office is also used for administration purpose, as the
Appellant does not have time for that part of his work while he
is at the downtown office. The Appellant also stated
consultations by phone are medical acts and are paid by the
health care system.
Conclusion
[9]
Subsection 18(12) of the Income Tax Act (the
"Act")was added by 1988, c. 55, subsection
10(16), and is applicable to fiscal periods commencing after
1987. It read as follows, for the year 1994:
18(12) Work space in home — Notwithstanding any
other provision of this Act, in computing an individual's
income from a business for a taxation year,
(a) no amount shall be deducted in respect of an
otherwise deductible amount for any part (in this subsection
referred to as the "work space") of a self-contained
domestic establishment in which the individual resides, except to
the extent that the work space is either
(i) the individual's principal place of business, or
(ii) used exclusively for the purpose of earning income from
business and used on a regular and continuous basis for meeting
clients, customers or patients of the individual in respect of
the business;
(b) where the conditions set out in subparagraph
(a)(i) or (ii) are met, the amount for the work space that
is deductible in computing the individual's income from the
business for the year shall not exceed the individual's
income from the business for the year, computed without reference
to the amount; and
(c) any amount not deductible by reason only of
paragraph (b) in computing the individual's income
from the business for the immediately preceding taxation year
shall be deemed to be an amount otherwise deductible that,
subject to paragraphs (a) and (b), may be deducted
for the year for the work space in respect of the business.
Subparagraph 18(12)(b) was amended applicable to the
year 1995 and subsequent years :
(b) where the conditions set out in subparagraph
(a)(i) or (ii) are met, the amount for the work space that
is deductible in computing the individual's income for the
year from the business shall not exceed the individual's
income for the year from the business, computed without reference
to the amount and sections 34.1 and 34.2; and
[10] Since
there is no dispute that the Appellant's workspace at home is
not his principal place of business, the pertinent part of the
above provision in the present matter is
subparagraph 18(12)(a)(ii). This subparagraph allows
for a deduction of an amount in respect of a workspace in home,
insofar as it is used exclusively for the purpose of earning
income from business and is used on a regular and continuous
basis for seeing patients in respect of the business.
[11] I accept
the Appellant's testimony that the home office is well
equipped to carry out the Appellant's professional services
and that it is used exclusively for this purpose.There was no
evidence to the contrary and the evidence given by the Appellant
is plausible and thus credible.
[12] It
remains to be determined whether the home office was used on a
regular and continuous basis in respect of the business. It is of
interest to read the Interpretation Bulletin IT-514 entitled:
"Work space in home expenses" at paragraph 3,
entitled "Regular and Continuous Basis" that
states:
3. The first requirement of 1(b) above is that the work
space must be used exclusively to earn business income. This
requirement is met if a segregated area, such as a room or rooms,
is used in a business and for no other purpose. The second
requirement is that the work space must be used for meeting
clients, customers or patients on a regular and continuous basis.
The regularity and frequency of meetings in a work space to meet
the requirement of being on a regular and continuous basis will
depend on the nature of the business activity and is determined
on the facts of each situation. However, a work space in respect
of a business which normally requires infrequent meetings or
frequent meetings at irregular intervals would not meet the
requirement. A home office used by a doctor to meet one or two
patients a week is an example of a work space which would not be
considered used on a regular and continuous basis for meeting
patients. On the other hand, a work space used to meet an average
of 5 patients a day for 5 days each week would clearly be used
for that purpose on a regular and continuous basis. Unless
1(a) above applies, both requirements in 1(b) above
must be met in order to deduct expenses relating to a work
space.
[13] It is my
view that if the seeing of a patient on an average of once a week
at the home office could not suffice to make it a regular and
continuous use of the home workspace, the receiving of an average
of seven phone calls an evening by patients may be considered
such a regular and continuous use of a home workspace. The phone
calls could not be taken without the use of the home workspace
since the patients' files have to be reviewed and completed.
These files are in the computer system. Moreover, according to
the Appellant, the consultations made by phone are medical acts
and billable. The administrative work that follows the calls is
also made in the workspace. Although the words used in the
provision are "meeting patients", I am not convinced
that these words require the physical presence of the patients in
the home workspace. It is my view that the physician met his
patients by making himself available to answer his patients'
queries by phone and doing all that is described at
paragraph 7 of these Reasons.
[14] The
appeals are allowed.
Signed at Ottawa, Canada, this 27th day of september,
2001.
"Louise Lamarre Proulx"
J.T.C.C.
COURT FILE
NO.:
2000-4176(IT)I
STYLE OF
CAUSE:
Thomas Vanka and The Queen
PLACE OF
HEARING:
Montreal, Québec
DATE OF
HEARING:
August 21, 2001
REASONS FOR JUDGMENT
BY:
the Honourable Judge Louise Lamarre Proulx
DATE OF
JUDGMENT:
September 27, 2001
APPEARANCES:
For the
Appellant:
The Appellant himself
Agent for the
Respondent:
Philippe Dupuis (Student-at-Law)
COUNSEL OF RECORD:
Counsel for the Appellant:
Name:
Firm:
For the
Respondent:
Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Canada
2000-4176(IT)I
BETWEEN:
THOMAS VANKA,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Appeals heard on August 21, 2001 at Montreal,
Québec, by
the Honourable Judge Louise Lamarre Proulx
Appearances :
For the Appellant:
The
Appellant himself
Agent for the
Respondent:
Philippe Dupuis (Student-at-Law)
JUDGMENT
The
appeals from the assessments made under the Income Tax Act
for the 1994 and 1995 taxation years are allowed, and the
assessments are referred back to the Minister of National Revenue
for reconsideration and reassessment, in accordance with the
attached Reasons for Judgment.
Signed at Ottawa, Canada, this 27th day of september,
2000.
J.T.C.C.
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