Gabriel Parsons v. Her Majesty the Queen, [1996] 3 CTC 2672 (Informal Procedure)

Bowie J.T.C.C.: — Section 118.3 of the Income Tax Act provides a deduction from income tax payable for individuals who suffer from a severe and prolonged mental or physical impairment. The amount of the deduction is not great. When first introduced in 1988 it was $550; it has since been increased to about $700. The requirements to qualify for it, however, are rigorous.

To secure the deduction, the taxpayer, or in this case his dependent wife, must have a severe and prolonged mental or physical impairment which has the effect of markedly restricting her ability to perform a basic activity of daily living. He must also file with the Minister of National Revenue a medical certificate, in prescribed form, attesting to the impairment. Section 118.4 places further restrictions on the availability of this modest tax credit. Since its amendment in 1994, applicable to the 1991 and subsequent taxation years, subsection 118.4(1) has read as follows:

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.

It is clear from the 1994 amendment, which introduced all of that part of subsection 118.4(1) which follows paragraph (a), that Parliament intended the deduction to be available only to individuals who suffer from the most extreme disabling conditions.

This appeal is brought from the disallowance by the Minister of the Appellant’s claim for the tax credit under subsection 118.3(2) in respect of his wife’s disability. The Notice of Appeal purports to cover the years 1991, 1992 and 1993. However, I was informed by counsel at the trial, and it is not in dispute, that the Appellant did not claim the credit in filing his return for the year 1993, and the appeal in respect of that year was abandoned by him at the trial. Nor is it disputed that if Mrs. Parsons’ disability is of such a nature as to qualify under the Act, then the Appellant is entitled to have the benefit of the deduction as her spouse.

I heard evidence from the Appellant, and from Dr. James B. Hanley. Dr. Hanley is a physician, a specialist in psychiatry, who has been treating Winnie Parsons since 1986. During this period he has seen her approximately every two months when he visits their community of Fortune, Newfoundland, and he has had contact with her as well by telephone from St. John’s when the situation required it. He also has seen her on a daily basis during the periods of her hospitalization in St. John’s. He described Winnie Parsons as suffering from a unipolar major affective disorder, which is the result of a bio-chemical change in the central nervous system. He also referred to her condition as being a chronic anxiety disorder. He testified that she has a genetic predisposition to this condition, and has suffered from it, to some extent, since the age of twelve. It is a disease which is exacerbated by stress, and the death of her mother about ten years ago had the effect of dramatically worsening her condition. He described the symptoms of the disease as including loss of energy, lack of confidence in oneself, and of self-image, loss of appetite, insomnia, slowness of the reflexes, and loss of inflexion and facial expression. These are combined with feelings of frustration and hopelessness, general loss of enjoyment of the simplest pleasures in life, and social isolation. He described it as a disease in which patients tend to deteriorate over time. Unfortunately, Winnie Parsons has a severe case, exhibiting all of the symptoms, and is among that ten per cent of patients who do not respond to treatment. She has been hospitalized on a number of occasions, and would have been more often if a bed could have been found for her. She has received what is sometimes called electric shock treatment from time to time, but without any marked improvement in her condition.

According to both Dr. Hanley and the Appellant, Mrs. Parsons cannot and does not lead anything remotely approaching a normal life. She seldom, if ever, leaves the house, and often does not get dressed during the day. She does no housework, except for occasionally making her bed, and she passes her time watching television, or staring into space. If she watches television, she will not remember shortly thereafter what she watched. She has frequent visits from her grandson who lives nearby, but is not able to interact with him as a grandparent normally would. Since the death of her mother, she cries frequently. Her memory of recent events is very poor, and of more distant events it lacks detail. She does not read, she has no hobbies of any kind, and she is incapable of carrying on even a simple conversation about events in the community, or of doing such normal everyday things as shopping, cooking meals, or cleaning the house.

Dr. Hanley completed the Certificate filed by the Appellant with his income tax returns pursuant to section 118.3. It was his opinion that the form does not lend itself to describing the condition of a patient such as Mrs. Parsons. He described her condition as being in the nature of a disability, and the form as being addressed to describing incapacity. He expressed the opinion that Mrs. Parsons would not be able to function independently in the community. She would not survive if it were not for the constant presence and support of her husband and their adult son who lives with them. Addressing specifically the words “perceiving, thinking and remembering”, Dr. Hanley described this patient as having only perceptions which are self- directed and negative. She could experience pain, for example, but would not have any significant perception of events which did not affect her directly. Her lack of memory he attributes to a lack of interest on her part in the events around her. In summary, he said, her total cognitive function is compromised on a permanent basis. I have no doubt at all that Mrs. Parsons’ disease is debilitating in the extreme, and that neither her husband nor her doctor exaggerated in their description of its effects. I also have no doubt that her condition is permanent.

Counsel for the Appellant based his case entirely upon subparagraph 118.4(c)(i) which reads “perceiving, thinking and remembering”. Counsel for the Respondent, while acknowledging the severity of Mrs. Parsons’ condition and her symptoms, argues that she is not unable to perceive, think or remember, all or substantially all of the time, as the Act requires. The quality of her perceiving, thinking and remembering are impaired, counsel concedes, but the Act requires more. It requires a total inability to carry out the activity. Deficiency does not equate to inability. Nor, she argues, is it sufficient to find an inability to carry out the activity when her symptoms are at their most acute; it must be all, or substantially all, of the time.

Counsel for the Appellant relies upon two decisions of this Court, Strand v. R., [1992] T.C.J. No. 294, and Lawlor v. R., [1996] 2 C.T.C. 2005, the first for the proposition that the basic activities of daily living should be taken to include important ancillary activities, and the second for the proposition that the statutory provision in question should be given as broad an interpretation as it will bear, to alleviate against the rigour of the language of section 118.4.

As to the first point, in Strand, Judge Mogan was dealing with the 1988 taxation year. The 1994 amendment to the Act, referred to above, has had the effect of negating his conclusion as to ancillary activities. Paragraph 118.4(l)(d) now specifically excludes them from that which is defined in subparagraph (c) to be the basic activities of daily living.

I agree with the view expressed by Judge Bowman in Lawlor that the subparagraphs are to be read disjunctively. However, it would seem to make no practical difference whether the provision is read conjunctively, so that all three comprise one activity, or disjunctively, so that each of them is a separate activity. In either case the inability to do any one of the three will satisfy the requirement of the Act to qualify for the deduction. I also agree with Judge Bowman’s opinion that the legislation should be interpreted “... with a degree of compassion and understanding that achieves the objective of this section.”

There is no question that Mrs. Parsons has a very seriously impaired memory, but in my view it cannot be said that she is unable to remember, all or substantially all of the time. Similarly, her perceptions are very limited in their nature; they are largely self-directed and negative. However she does have some ability to perceive, and I cannot equate her condition to that which the words of the Act require.

The Oxford English Dictionary, 2nd. Ed. pages 945-8, contains a number of definitions of the verb to think. The most relevant are:

1. trans. To form in the mind, conceive (a thought, etc.); to have in the mind as a notion, an idea, etc.; to do in the way of mental action.

3. a. intr. To exercise the mind, esp. the understanding, in any active way; to form connected ideas of any kind; to have, or make a train of ideas pass through the mind; to meditate, cogitate. (The most general verb to express internal mental activity, excluding mere perception of external things or passive reception of ideas.)

4. To form or have an idea of (a thing, action, or circumstance, real or imaginary) in one’s mind; to imagine, conceive, fancy, picture.

9. a. trans. with obj. cl. (or pronoun substitute), or parenthetic; To be of opinion, hold the opinion, believe, deem, judge, apprehend, consider; usually, to believe without any great assurance, to regard it as likely, to have the idea, to suppose; in reference to a future event, to expect ...

The element which these definitions share, and which is therefore a necessary part of the process of thinking, is some degree of ratiocination. This is an active mental process which involves the formulation of original ideas, and the manipulation of ideas and concepts perceived. I am satisfied from the evidence of Mr. Parsons and Dr. Hanley that Mrs. Parsons is not capable in any real sense of forming original ideas, or of any reasoning process in respect of that which she perceives from the world about her. I find therefore that she is not capable of thinking, and thus that her condition satisfies the requirement of subparagraph 118.4(1 )(c)(i) of the Act.

The appeals for the taxation years 1991 and 1992 are allowed with costs. Counsel were agreed that the appeal for the taxation year 1993 is not properly before the Court, and it will be quashed. However, it is clear that Mrs. Parson condition in 1993 was such that her husband would have been entitled to the deduction had he claimed it, and I strongly recommend that the Minister reassess the Appellant for the 1993 year to allow the deduction.

Appeal allowed.