Maisie Winnetta Bowles v. Her Majesty the Queen, [1997] 1 CTC 2045 (Informal Procedure)

Watson D.J.T.C.C.: — This is an appeal heard under the informal procedure in Corner Brook, Newfoundland, on August 28, 1996, from a reassessment with respect to the Appellant’s 1992 and 1993 taxation years. The Appellant is appealing a tax assessment and reassessment by the Minister of National Revenue (the “Minister”) denying her the disability tax credit.

The Appellant’s income tax returns for the 1992 and 1993 taxation years were originally assessed on March 9, 1993 and April 6, 1994 respectively. In computing her tax payable for the 1992 taxation year, the Appellant did not include an amount in respect of a mental or physical impairment in the calculation of her non-refundable tax credits for that year. In computing her tax payable for the 1993 taxation year, she included in the calculation an amount of $4,233 in respect of a mental or physical impairment and requested that the mental or physical amount be allowed in 1992.

The Minister denied the Appellant’s request in respect of her 1992 taxation year and by Notice of Reassessment dated October 27, 1994, he disallowed the mental or physical impairment amount for 1993 which had been allowed when the 1993 return was originally assessed.

The Appellant served a Notice of Objection in respect of the 1992 and 1993 taxation years; the Minister granted an extension of time for the 1992 taxation year, pursuant to section 166.1 of the Income Tax Act (the “Act”). On February 22, 1995, the Minister confirmed the assessment of the Appellant’s 1992 income tax return and the reassessment of her 1993 return.

In his decision, the Minister relied on the following assumptions of fact:

(a) the Appellant claimed the amount for a mental or physical disability in respect of an aneurysm of a cerebral artery, for which she was operated, and various related and unrelated conditions;

(b) the disability or impairment in respect of which the Appellant sought to claim (claimed) the mental or physical impairment amount for the 1992 and 1993 taxation years did not markedly restrict her ability to perform a basic activity of daily living; and

(c) the Appellant was not entitled to claim the mental or physical disability amount for the 1992 or 1993 taxation years in respect of her alleged impairment.

The Appellant who was not represented was the only witness to testify at the hearing and I have no hesitation in accepting her testimony as worthy of belief.

The issue to be decided is whether the Appellant is entitled to the disability tax credit for physical or mental impairment for the 1992 and 1993 taxation years pursuant to section 118.3 of the Act.

Subsection 118.3(1) of the Act read in 1992 and 1993 as follows:

Where

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

(a.l) the effects of the impairment are such that the individual’s ability to perform a basic activity of daily living is markedly restricted,

(a.2) a medical doctor, or where the impairment is an impairment of sight, a medical doctor or an optometrist, has certified in prescribed form that the individual has a severe and prolonged mental or physical impairment the effects of which are such that the individual’s ability to perform a basic activity of daily living is markedly restricted,

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

(c) no amount in respect of remuneration for an attendant or care in a nursing home, in respect of the individual, is included in calculating a deduction under section 118.2 (otherwise than by reason of paragraph (2)(b. 1) thereof) for the year by the individual or by any other person,

for the purpose of computing the tax payable under this Part by the individual for the year, there may be deducted an amount determined by the formula

A x $4,118

where

A is the appropriate percentage for the year.

In order to understand the meaning of a severe and prolonged impairment, we must refer to subsection 118.4(1):

(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 may 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.

The following definitions of “inordinate” and “amount” have been accepted by Hamlyn, J. in Brookshaw v. R., (sub nom. Brookshaw v. Canada) [1994] 2 C.T.C. 2360, at page 2362:

“inordinate” means

1. Not “ordered”; devoid of order or regularity; deviating from right or rule; irregular, disorderly ...

2. Not kept within orderly limits, immoderate, intemperate, excessive ...

“amount” means

1. The sum total to which anything mounts up or reaches

a. in quantity ...

b. in number ...

2. The full value, effect, significance, or import...

3. The quantity or sum viewed as a total ...

The medical report prepared on August 27, 1992 by Dr. W. Dulowski revealed that the Appellant was a 46 year old woman who was operated on in June 1991 in St. John’s, Newfoundland, due to an aneurysm with intracerebral haematoma of the left cerebral artery; she complained of some headaches, episodes of confusion and forgetfulness and was having difficulties with her words; she was seen by a neurosurgeon who advised her to see a psychiatrist; past medical history revealed many medical problems including hysterectomy, hearing difficulty, calluses of planter aspect of both feet, tonsillectomy, multiple gallstones, appendectomy, left renal cyst and stress incontinence with cystolene operated on May 29, 1992.

The disability tax credit certificate prepared on March 9, 1994 by Dr. W. Dulowski indicated that he was of the opinion that the Appellant met the eligibility criteria of a prolonged impairment that markedly restricts all or substantially all of the time her ability to perform basic activities of daily living.

The Appellant stated in her testimony that for several years she has been unable to operate or survive on her own and was dependant on her husband to look after her; when she walks it results not only in loss of breath but also a strange noise is emitted from her chest which is noticeable to other persons; she is unable to earn a living at any kind of work; the severe loss of hearing necessitates the wearing of hearing aids in both ears; she is unable to wash her own hair; she has blurred vision requiring the use of special eye glasses; she has a sharp pain; she suffers from constant fatigue, weakness and lack of stamina in doing the simple daily activities; she has great difficulty concentrating, remembering and perceiving the activities going on around her.

I was able to observe the Appellant both during her testimony and during the conduct of the appeal; she appeared to have great difficulty understanding what was being said and expressing herself in a way that could be heard and understood by others; she appeared to be disoriented and confused much of the time even though she was trying her best in relating the details of her disabilities both mental and physical.

In the case of Oliver v. R. (June 7, 1996), Doc. 96-66(IT)I (T.C.C.), Sobier, J. of this Court stated:

The administration and interpretation of the right to receive the disability tax credit do not appear to have been consistently administered and interpreted … An examination of the case law shows that while the facts are consistent, interpretation of those facts has not always been so.

In the case of Taylor v. R., (sub nom. Taylor v. Canada) [1995] 1 C.T.C. 284, 95 D.T.C. 5051, McDonald, J.A. of the Federal Court of Appeal states as follows at page 285 (D.T.C. 5052):

If the learned Trial Judge had applied the proper test on the basis of the evidence before him he would necessarily have concluded that the applicant was entitled to the tax credit which she sought.

In the case of Radage v. R. (July 12, 1996), Doc. 95-1014(IT) (T.C.C.), Bowman, J. of this Court, in a similar case to this one, outlined the following principles on which his judgment was based:

It must be based not only on the facts of the particular case but upon appropriate legal principles. I shall try to state briefly those principles upon which this decision is based:

(a) 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.

(b) The court must, while recognizing the narrowness of the tests enumerated in sections 118.3 and 118.4, construe the provisions liberally, humanely and compassionately and not narrowly and technically. In Craven v. R., 94-2619(IT)I, I stated:

The application of the inflexible tests in section 118.4 leaves the court no room to apply either common sense or compassion in the interpretation of the disability tax credit provisions of the Income Tax Act - provisions that require a compassionate and commonsense application.

In my view I stated the test unduly narrowly in that case. I have heard many disability tax credit cases since that time and my thinking has evolved. My present view of the approach that should be taken is more accurately set out in such cases as Noseworthy v. R., 95-1862(IT)I, Lawlor v. R., 95-1585(IT)I, Hillier v. R., 95-3097(IT)I and Lamothe v. The Queen, 95-2868(IT)I and 95-3949(IT)I. 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. Section 12 of the Interpretation Act reads as follows:

"Every enactment is deemed remedial, and shall be given such fair, large and liberal construction and interpretation as best ensures the attainment of its objects."

(c) If there is doubt on which side of the line a claimant falls, that doubt should be resolved in favour of the claimant.

(d) The provisional meanings assigned above to the words “perceiving, thinking and remembering’’ are more in the nature of guidelines than definitions. They are:

Perceiving: The reception and recognition of sensory data about the external world that conforms reasonably to common human experience.

Thinking: A rational comprehension, marshalling, analysis and organization of that which the person has perceived and the formulation of conclusions therefrom that are of practical utility or theoretical validity.

Remembering: The mental activity of storing perceived data and of retrieving it in a manner that enables the person reasonably to perform the function of thinking.

In these guidelines I have emphasized the need to recognize the way in which one function depends on the others, and to attempt to relate the use of those functions to some meaningful result in everyday life.

(e) Finally there must be considered — and this is the most difficult principle to formulate - the criteria to be employed in forming the judgement whether the mental impairment is of such severity that the person is entitled to the credit, i.e. that that person’s ability to perceive, think and remember is markedly restricted within the meaning of the Act. It does not necessarily involve a state of complete automatism or anoesis, but it should be of such a severity that it affects and permeates his or her life to a degree that it renders that person incapable of performing such mental tasks as will enable him or her to function independently and with reasonable competence in everyday life.

Taking into consideration all of the circumstances of this case, I am satisfied that the Appellant has established on a balance of probabilities that she had a severe and prolonged mental and physical impairment and that her ability to perform the basic activity of daily living was markedly restricted substantially all of the time during the two taxation years in issue.

Accordingly, the appeal is allowed and the matter is referred back to the Minister for reconsideration and reassessment on the basis that the Appellant is entitled to the tax credit under section 118.3 of the Act for the 1992 and 1993 taxation years.

Appeal allowed.