Citation: 2010 TCC 42
Date: 20100202
Docket: 2008-1545(IT)I
BETWEEN:
KATHLEEN GREENAWAY,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
Hogan J.
[1]
This is an appeal by
Kathleen Greenaway (the “Appellant”) from an assessment which disallowed her
claim for a disability tax credit under subsection 118.3(1) of the Income
Tax Act (the “ITA”).
I. Issues and Factual Background
[2]
The Appellant has
progressive multiple sclerosis. She is in an advanced stage of this disease and
is unable to walk, feed herself and perform most basic life functions.
[3]
In 2006, the Appellant
claimed a medical expense tax credit under paragraph 118.2(2)(e)
and a disability tax credit under subsection 118.3(1) of the ITA in
respect of expenses totalling $24,896.43. This amount was paid to the Huron
Lodge Home for the Aged (the “Home”) located in Windsor, Ontario, to cover
her expenses for prescriptions ($391.80), accommodation at the Home ($6,570.05)
and nursing care ($17,934.58).
[4]
In its reply to the
Appellant’s Notice of Appeal, the Minister of National Revenue (the “Minister”)
assumed, inter alia, that (i) the amount paid to the Home was not for
the use of special equipment, facilities or personnel for the specific
disability suffered by the Appellant and (ii) the Home is not a school,
institution or other place that provides care for individuals suffering from
the same handicap as that suffered from the Appellant. The Minister allowed a medical
expense credit under paragraph 118.2(2)(b) with respect to expenses
for an attendant or for nursing home care. The Minister disallowed the subsection
118.3(1) disability tax credit on the grounds that the disability credit is
denied where the expenses qualify as attendant or nursing home expenses under
subsection 118.3(1).
[5]
The Appellant argues
that the exclusion of nursing home care expenses in paragraph 118.3(1)(c)
does not apply because the medical expense tax credit was claimed under
paragraph 118.2(2)(e) and not as an attendant or nursing home
expense.
[6]
The crux of the issues
in this case is:
(i)
whether the conditions
set out in paragraph 118.2(2)(e) of the ITA have been met such
as to allow all or part of the Appellant’s medical expenses to be claimed under
that provision;
(ii)
in the affirmative, whether
the conditions prescribed with respect to claiming a disability tax credit under
subsection 118.3(1) have been satisfied; and
(iii)
in the affirmative,
does the scheme of the ITA allow the Appellant to claim both a credit
for medical expenses under paragraph 118.2(2)(e) and a disability
tax credit under subsection 118.3(1) of the ITA?
[7]
It is undisputed
between the parties that the Appellant suffers from a serious neurological
disorder and that the advanced state of her disease has limited her control of her
bodily functions to breathing, talking and moving her eyes. She is confined to
her bed most of the day except for the limited time she spends in a special
chair. She needs to be fed and bathed. Bathing requires her to be hoisted out
of and back into her bed. It is also undisputed between the parties that the
Appellant would die without constant attendant care.
[8]
The medical director of
the Home, Dr. John Robert Greenaway, who happens to be the
Appellant’s brother, testified regarding the level of care and treatment
provided by the Home to the Appellant. Counsel for the Appellant was
David G. Greenaway who is also the Appellant’s brother.
[9]
The evidence shows that
roughly 50% of the patients at the Home in the 2006 taxation year suffered from
neurological disorders. Of these patients, half required constant supervision
and care. Ninety-five percent of the residents of the Home were non‑ambulatory
and they suffered from a wide variety of illnesses. Only 5% of the Home’s
residents required minimal care.
[10]
Because 95% of the
residents of the Home were non-ambulatory, the Home had to have specialized
equipment and staff trained to treat patients suffering from handicaps that
rendered them non-ambulatory. This meant that qualified personnel and special equipment
were required to assist the patients in moving to and from their beds for eating,
sitting and bathing. Dr. Greenaway testified that there were always unregistered
and registered practical nurses and other personnel on duty to provide this
type of care to the Home’s patients.
[11]
Dr. Greenaway
explained that health care in the province of Ontario
has undergone major structural changes similar to changes made throughout Canada. Over the last decade, chronic care patients have
been transferred from hospitals to smaller medical institutions such as the
Home in order to control medical costs and provide improved care in smaller
community-based institutions. He explained that the Home was required to adapt
to these changes by acquiring equipment and trained personnel to deal with
non-ambulatory patients. Patients who could walk and who required less medical
care would not reside at the Home.
II. Analysis
[12]
The relevant parts of
subsection 118.2(2) read as follows:
(2) Medical expenses — For the purposes of subsection
118.2(1), a medical expense of an individual is an amount paid
(a) [medical and dental services] — to a medical
practitioner, dentist or nurse or a public or licensed private hospital in
respect of medical or dental services provided to a person . . .
(b) [attendant or nursing home care] — as remuneration
for one full-time attendant (other than a person who, at the time the
remuneration is paid, is the individual’s spouse or common-law partner or is
under 18 years of age) on, or for the full-time care in a nursing home of, the
patient in respect of whom an amount would, but for paragraph 118.3(1)(c),
be deductible under section 118.3 in computing a taxpayer’s tax payable
under this Part for the taxation year in which the expense was incurred;
(b.1) [attendant] — as remuneration for attendant care
provided in Canada to the patient if
(i) the patient is a person in respect of whom an amount may be
deducted under section 118.3 in computing a taxpayer’s tax payable under this
Part for the taxation year in which the expense was incurred,
(ii) no part of the remuneration is included in computing a
deduction claimed in respect of the patient under section 63 or 64 or paragraph
(b), (b.2), (c), (d) or (e) for any taxation
year,
(iii) at the time the remuneration is paid, the attendant is neither
the individual’s spouse or common- law partner nor under 18 years of age, and
(iv) each receipt filed with the Minister to prove payment of the
remuneration was issued by the payee and contains, where the payee is an
individual, that individual’s Social Insurance Number,
to the extent that the total of amounts so paid does not exceed
$10,000 (or $20,000 if the individual dies in the year);
. . .
(d) [nursing home care] — for the full-time care in a
nursing home of the patient, who has been certified by a medical practitioner
to be a person who, by reason of lack of normal mental capacity, is and in the
foreseeable future will continue to be dependent on others for the patient’s
personal needs and care;
(e) [school, institution, etc.] — for the care, or the
care and training, at a school, institution or other place of the patient, who
has been certified 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;
[13]
In Canada v. Scott, Madam Justice Trudel of the Federal Court of Appeal, quoting
from the case of Collins v. Canada,
states that the conditions that must be met in order for expenses to be
eligible under paragraph 118.2(2)(e) are as follows:
[4] The
requirements that the taxpayer has to meet in order to claim expenses under
paragraph 118.2(2)(e) are set out in Collins v. Canada [1998] T.C.J.
No. 396 at paragraph 20 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.
[14]
The first two points
are not at issue. The third and fourth points are at issue. I now turn to
these points. Is the Home an institution or other place that specifically
provides care for patients suffering from a similar handicap? The Appellant
suffers from numerous physical handicaps, including the inability to walk. Ninety-five
percent of the residents of the Home are non-ambulatory. The evidence shows that
Home’s staff must be trained to provide care to non-ambulatory patients. The
Home must have specialized equipment such as hoists to assist patients
suffering from the handicap. The evidence is uncontradicted on this fact.
[15]
I note that
paragraph 118.2(2)(e) requires that the care and equipment be
provided to patients suffering from the handicap from which the taxpayer
suffers. The provision does not require that the patients all have the same
handicaps in cases where they may suffer from more than one. That would likely
be an impossible standard to meet in communities of small population that could
not afford to build facilities to deal exclusively with multiple sclerosis. In
any event, the disease is progressive so that patients afflicted with it would
suffer from different physical handicaps depending on the stage to which it had
progressed. I also note that the French version of the provision does not
require that the handicap of the other patients be the handicap suffered from by
the taxpayer. Rather, the French version provides that the handicap be similar
(“semblable”) to that of the taxpayer. The rules relating to the interpretation
of bilingual statutes require me to determine whether both versions can be reconciled
through a shared meaning. Here, they can be so reconciled by interpreting the
English version to mean a similar handicap.
[16]
Counsel for the
Respondent argues that if I find that the conditions in paragraph 118.2(2)(e)
have been met, the part of the expense that relates to accommodation is not
eligible. This issue was considered by Madam Justice Sharlow of the Federal
Court of Appeal in the case of Lister v. Canada. She arrived at a different conclusion than
that suggested by the Crown regarding situations where accommodations expenses
are incidental to the care provided to the patient, as follows:
[18] . . . 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.
[17]
Out of a total of
$24,896 charged to the Appellant by the Home, $17,934 related to care. Only
$6,570 related just to the bed occupied by the Appellant. The allocation of the
total expenses incurred by the Appellant was not disputed by the Respondent,
and the evidence shows that the accommodation expenses are clearly incidental
to the medical expenses and care expenses in the case at bar.
[18]
In the present case, it
is possible, if the term “nursing home” is given a broad definition, that the medical
expense tax credit could also have been claimed under paragraph 118.2(2)(d),
which covers expenses for full-time care in a nursing home. In the present
case, the potential for overlap between that two provision and paragraph
118.2(2)(e) can be avoided by ascribing to the term “nursing home” a
meaning which excludes an institution or other place that provides care to a
group of patients suffering from a similar handicap. By virtue of such an interpretation,
a taxpayer could make a claim under paragraph 118.2(2)(e) for specialized
care intended generally for all patients suffering from the same handicap and under
paragraph 118.2(2)(d) more general care (i.e. care that may vary
from patient to patient where the patients may or may not have a similar handicap).
In the latter case, the disability tax credit could not be claimed. That being
said, Parliament could have provided an exclusion in paragraph 118.2(2)(e)
for expenses that could otherwise be claimed under paragraph 118.2(2)(d).
It did not do so. It is not for the courts to change the law. Therefore, to the
extent that an expense can qualify under different paragraphs of subsection 118.2(2),
taxpayers are free to choose the more favourable treatment, particularly if this
allows them to claim a disability tax credit under subsection 118.3(1) by
avoiding the restriction set out in paragraph 118.3(1)(c).
[19]
In an external
interpretation,
the CRA acknowledges that some claims made under paragraph 118.2(2)(e)
might also fall under paragraph 118.2(2)(b) as an expense in respect of
a nursing home. According to the CRA, this does not preclude the taxpayer from
claiming a disability tax credit if the conditions under paragraph 118.2(2)(e)
are otherwise met. The relevant portions of the CRA’s response to a taxpayer’s inquiry
read as follows:
. . . You have asked whether the disability tax
credit may be claimed for a person with dementia if the full cost of care in a
nursing home is also being claimed by someone as a medical expense.
. . .
The general rule is that the disability tax credit may not be
claimed if remuneration for general care in a nursing home was claimed by
anyone in computing their medical expense tax credit. This would be the case if
medical expenses were claimed under paragraph 118.2(2)(b) for
remuneration for the full-time care in a nursing home of a person with a severe
or prolonged mental or physical impairment or, under paragraph 118.2(2)(d),
of a person who, by reason of lack of normal mental capacity, is dependent on
others for their personal needs and care.
However, a disability tax credit may be available to a person in
circumstances where medical expenses have been claimed 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” under paragraph 118.2(2)(e). In
such circumstances, the fact that the “school, institution or other place” is a
nursing home will not preclude the person’s claim for the disability tax credit
provided the following conditions have been met:
-
The payment is made for care or care and
training of the individual in an institution, school or another place;
-
The payment is for special equipment, facilities
or personnel supplied for the specific disability of the individual;
-
The individual has been certified by an
appropriately qualified person to require the equipment, facilities or
personnel specifically provided by the institution; and
-
The payment is not for full time attendant care.
[Emphasis
added.]
[20]
There is still one
point that I must dispose of with respect to subsection 118.3(1). Counsel
for the Respondent argues that the Appellant was late in filing the medical
certification required under subsection 118.3(1) as she only filed it at
trial. He relies on Trudel J.A.’s decision in Canada v. Scott, above, as
authority for this proposition. I do not believe that decidendi stands for the
proposition that the medical certification must be filed with the taxpayer’s tax
return. In fact, I believe Trudel J.A. found that the doctor had merely given a
recommendation to the parents of the child who allegedly required specialized
learning classes. Trudel J.A. found that the doctor did not certify that the
training offered at the school was specifically required to treat the student’s
handicap, as follows at paragraph 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.
[21]
When the ITA
requires a form or other document to be filed by a certain date, it
specifically provides that the filing must be completed by that date. For example,
subsection 8(10) of the ITA provides that there shall be no deduction of
a particular amount unless a prescribed form is filed with the taxpayer’s
return of income for the year:
8(10) Certificate of employer – An amount otherwise
deductible for a taxation year under paragraph (1)(c), (f), (h)
or (h.1) or subparagraph (l)(i)(ii) or (iii) by a
taxpayer shall not be deducted unless a prescribed form, signed by the
taxpayer’s employer certifying that the conditions set out in the applicable
provision were met in the year in respect of the taxpayer, is filed with the
taxpayer’s return of income for the year.
[Emphasis added.]
No such language is found in section 118.3 and I therefore
believe that there has been proper certification for the purpose of claiming the
expenses, as required by that provision.
[22]
For all of these
reasons, I would allow the appeal.
Signed at Ottawa, Canada, this 2nd
day of February 2010.
"Robert J. Hogan"
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