28 September 1989 Administrative Letter 73966 F - Disability Tax Credit

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.

SUBJECT:  Disability Tax Credit

This is in reply to your memorandum of May 26, 1989, concerning the interpretation of the phrase "can reasonably be expected to last for a continuous period of at least 12, months" as found in paragraph 118.4(1)(a) of the Income Tax Act (the "Act").

Paragraph 118.4(1)(a) of the Act states in part that for the purposes of the child care expenses deduction, the medical expenses tax credit and disability tax credit, "severe and prolonged impairment" means "the impairment has lasted or can reasonably be expected to last for a continuous period of at least 12 months".  Clearly then, this paragraph contemplates situations in which the disability tax credit may be available where the impairment has lasted less than 12 months.  You have suggested that the timing of the claim for the disability tax credit may make a difference as to whether or not the claim should be allowed.

Our interpretation of the "can reasonably be expected to last" test is that the taxpayer need not be alive at the end of the year for the disability tax credit to be available where the taxpayer cannot meet the "has lasted" test.  In other words, the "expectation" test is to be applied at the time the disability began.

We are surprised by your statement on page 1 of your memorandum that where an individual is already deceased when a claim is made, either at the time of filing a return or at the time of requesting an adjustment, and the duration of the disability is less than 12 months, the claim would be denied.  Page 8 of the 1988 Deceased Persons' Income Tax Guide states that the disability amount is available to a deceased when the impairment lasted or was expected to last for at least 12 months.  Thus the Department's current position is that the disability amount is available not only where the taxpayer dies after the year-end and before filing his return, but also if he dies before the year-end, regardless of how long the disability has lasted.  This is also set out on page 6 of the pamphlet "How You Claim the Disability Credit", where it states that if the disability begins in 1988 and meets the "expectation" test, a certified Disability Credit Certificate is in effect for 1988 and following years.

We believe that the above position is the technically correct one.  In determining what Parliament intended when paragraph 118.4(1)(a) of the Act was enacted, it is useful to look at the history of its predecessors, paragraph 110(1)(e) and subsection 110(1.3).  There has been over the years a gradual broadening of the availability of the disability deduction/tax credit.  At one time, the disability (except for blindness) `had to exist "throughout the whole of the year".  This was later amended to "throughout any 12 month period ending in the year" and then to "any 12 month period ending in the year or a period that commenced in the year and continued to the end of the year".  Finally, the present wording was adopted and our opinion is that the deletion of the reference to the disability continuing to the end of the year meant that the intention was that the disability need not be present at the end of the year, either because the taxpayer recovered or because he died, in order to be claimed.

It should also be noted that prior to the present wording being adopted, there was a separate test for blindness.  An amount could be claimed where the taxpayer "was totally blind at any time in the year".  Of course, there is now no separate test for blindness, and we do not believe Parliament intended to make the disability amount less available for blind people than previously.

This raises the question of what purpose the "has lasted" test serves, since it is a rule of legislative interpretation that words or phrases are not superfluous and must be given meaning.  Our opinion is that the "has lasted" test is there to make the disability amount available in cases where the disability is not reasonably expected to last for at least 12 months, but eventually does so.

Following are some examples of when we think the disability tax credit would be available.  We are assuming that when the disability begins, there is an honest and reasonable expectation it will last at least 12 months.

1.     The disability begins in March 1988 and ends unexpectedly in November 1988, either due to recovery or death.  The credit will be available for 1988.

2.     The disability begins in May 1988 and ends in January 1989.  The credit will be available for 1988 and 1989.

3.     The disability begins in December 1988 and ends in January 1990.  The credit will be available for 1988, 1989 and 1990.

It may appear that our interpretation is overly generous to the taxpayer.  However, it must be remembered that paragraph 118.4(1) (a) of the Act applies not only to the disability tax credit but also to medical expenses under section 118.2 and child care expenses under section 63.  Using the above examples, if we assume that the amounts in question are being claimed under paragraph 118.2(2)(b) or section 63, it would be difficult to justify the denial of the amounts claimed under these two sections for 1988 in example 1, or 1988 and 1989 in example 2, on the basis that the disability ended before the year-end or before the return was filed.

You sought our views on the following two examples on the last page of your memorandum:

1.     A child is born with spina bifida, the degree of which would normally qualify for the disability tax credit.  Because of this disease, the child dies within a couple of months of being born.  Does the application of the law depend upon the portions of what months the child was alive?  Would the child qualify because when the impairment was diagnosed, it was expected to last for a continuous period of at least 12 months?

2.     An individual is involved in a serious automobile accident in November 1988 which leaves him/her comatose, with no expectation of recovery, as he/she is being kept alive by machines.  The decision to disconnect the machines is an option.  If disconnected by choice, does the argument, it was reasonable to expect the condition would have lasted, apply?  If the machines are disconnected by choice and the individual dies in February 1989 would the individual be entitled to claim the credit for two years, 1988 and 1989?'  If not disconnected, and the individual dies before twelve months lapsed, is the decision to allow the claims dependant upon when the death occurs?

Our opinions are:

1.     The child would qualify if, when the impairment was diagnosed, it was reasonably expected to last for a continuous period of at least 12 months.

2.     The same result applies whether the person dies because the machine is disconnected or because he dies otherwise.  If he dies in February 1989, the disability tax credit is available for 1988 and 1989.

We trust the above is of assistance to you.

B.W. DathDirectorBusiness and General DivisionSpecialty Rulings Directoratelegislative and IntergovernmentalAffairs Branch