Date:
20021017
Docket:
2002-2166-IT-I
BETWEEN:
SHARON
WATKIN,
Appellant,
and
HER MAJESTY
THE QUEEN,
Respondent.
Reasons
for Judgment
Rip,
J.
[1]
Sharon Watkin appeals from her 2000 income tax assessment that
denied her the disability tax credit described in subsection
118.3(1) of the Income Tax Act ("Act").
[2]
During 2000 Ms. Watkin, a school teacher, suffered from chronic
fatigue syndrome, a debilitating fatigue that is not attributable
to known conditions and may last for an unlimited time. The
activity of an otherwise healthy person is significantly reduced
and may be accompanied by a myriad of symptoms. Ms. Watkin
was impaired in the everyday sense of the word. For two months,
April and May in 2000 she was bedridden; she would get out of bed
only to go to the bathroom and, occasionally, toast bread. Her
husband prepared all meals and help was engaged for other
household chores. After May, Ms. Watkin was able to get up and
"walk a bit" and she "dragged" herself to
school the last three weeks of June for half days. At school, she
had to be seated. She was not able to complete two of the half
days of teaching. She "collapsed" back into bed with
extreme exhaustion for the rest of the summer. During the summer
months she spent 70 per cent to 80 per cent
of the day lying down. She was told to walk and tried to do so,
but after walking 50 metres she had to lie down and would not
walk again that day.
[3]
Ms. Watkin also testified that while she could speak, she was
unable to carry on an extended conversation for most of 2000
without triggering severe headaches and "becoming so
breathless that I had to stop". While she could perceive,
think and remember during the year, she explained she was so
exhausted that she could not concentrate on any topic for more
than 15 minutes.
[4]
Ms. Watkin said she was too weak to return to school in September
and spent most of the time in bed although she did make some
effort to prepare a meal. By autumn, she began to have some
"good days" as well as "bad days" but most of
her time was spent in bed. She also was easily depressed, she
recalled.
[5]
Ms. Watkin still suffers from chronic fatigue syndrome, but not
as severe as in 2000. During her testimony she experienced
occasional spells of accelerated breathing.
[6]
Subsection 118.3(1) of the Act provides for a disability tax credit:
Where
(a) an
individual has a severe and prolonged mental or physical
impairment,
(a.1) the
effects of the impairment are such that the individual's
ability to perform a basic activity of daily living is markedly
restricted or would be markedly restricted but for therapy
that...
. . .
(a.2) in the
case of
(i) a sight
impairment, a medical doctor or an optometrist,
. .
.
(b) the
individual has filed for a taxation year with the Minister the
certificate described in paragraph (a.2), and
(c)
[...]
[7]
The requirements for the eligibility for a
disability tax credit are set out in subsection 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.
[8]
Two disability tax credit certificates were completed by
Ms. Watkin's physician, Dr. Geetha Rao. In
both certificates Dr. Rao has answered "yes" to
questions as to Ms. Watkin's ability to see, walk, speak,
perceive, think and remember, hear, dress herself and manage
bodily functions. In the first certificate, dated February 15,
2001, Dr. Rao diagnosed Ms. Watkin's illness as
"chronic fatigue syndrome / fibromyalgia - Patient
experiences severe fatigue / diffuse myalgias / constant pain /
insomnia. She has had multiple investigations and has seen
specialists who confirm the diagnosis".
[9]
Dr. Rao signed the second certificate on December 17, 2001.
Notwithstanding his affirmative answers regarding Ms.
Watkin's ability to perform the activities of daily living,
Dr. Rao stated that:
Ms. Watkin has been
diagnosed with chronic fatigue syndrome. Although she is able to
continue with activities of daily living by the above criteria,
she becomes easily fatigued and is unable to do any daily tasks
without help from her husband or cannot maintain any activity for
longer than 15 minutes.
[10] In both
certificates Dr. Rao agreed that Ms. Watkin's marked
restriction in a basic activity of daily living is expected to
last for a continuous period of 12 months. The dates the
marked restriction began and may cease differ. In the earlier
certificate Dr. Rao stated the marked restriction began in
April, 2000 and would cease in 2002. In the second certificate
the dates are January 2000 and 2003. I find that in the
circumstances Ms. Watkin's impairment was severe and
prolonged.
[11] The
respondent's agent, Mr. Mitschele, submitted that
Ms. Watkin did not suffer an
impairment that was prolonged and severe the effects of which
markedly restricted her ability to perform a basic activity of
daily living, within the meaning of paragraph 118.3(1)(a)
of the Act. In addition, the certificates that she has
produced deny she suffers from an impairment that markedly
restricts her ability to perform a basic activity of daily living
listed in paragraph 118.4(1)(c) of the Act. For Ms.
Watkin to succeed, adds Mr. Mitschele, it is mandatory that she
file a certificate attesting that she is markedly restricted from
performing a basic activity described in paragraph
118.4(1)(c): MacIsaac v. Canada.
[12] The
Federal Court of Appeal and this Court have considered taxpayers
to be entitled to a disability tax credit where the effects of a
taxpayer's impairment markedly restrict the taxpayer's
ability to perform one basic activity of daily living
notwithstanding a medical practitioner's certificate would
otherwise have denied the tax credit. For example, my colleague
Campbell, J. decided that a medical doctor who filled out the
necessary certificate misinterpreted the law because "[h]e
did not understand that the six items defining a basic activity
of daily living ... are not to be read together, but each
activity is treated separately. The word "or" is used
in that section".
[13]
The courts have often approached appeals for
disability tax credits with a degree of compassion. This
compassion has led to the expansion of the provision to include
situations that are not expressly listed in the Act. For
example, in Johnston v. Canada, the Federal Court
of Appeal concluded that the basic activity of
"feeding" includes the activity of preparing meals in
addition to being able to bring the food to your mouth. That same
case stated that the basic activity of "dressing"
includes the activities of bathing and shaving. In Hamilton v.
Canada, the Federal Court of
Appeal agreed with Campbell, J. that the basic activity of
"feeding" includes the activity of shopping and
procuring the items necessary to prepare a meal.
[14]
The compassionate approach in disability tax
credit appeals was articulated by Bowman, J. (as he then was), in
Radage v. Canada. He set out two guiding
principles when dealing with disability tax credit cases at page
1625:
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.
...
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.
[15]
These principles have been quoted and followed
by the Federal Court of Appeal in Johnston, supra and
Hamilton, supra.
[16] Ms. Watkin
argues that "whereas a tax credit is granted to a person
with one severe disability there is a class of persons who suffer
from multiple less severe disabilities which, in their total
effect, should be seen as equivalent". The disabilities Ms.
Watkin refers to are the inability to perform more than one of
the defined basic activities of daily living.
[17] Ms.
Watkin's position is that the cumulative effect of the
restrictions imposed on her ability to perform more than one
basic activity of daily living due to her severe and prolonged
impairment was at least as markedly restricted as an individual
with a severe and prolonged impairment who is entitled to a
disability tax credit when the individual's impairment
markedly restricts the individual's ability to perform any
one of the basic activities of daily living described in
paragraph 118.4(1)(c). In other words, even though she was
not markedly restricted from performing any one basic activity of
daily living, because of her severe, but not marked, restrictions
in performing several of the basic activities of daily living she
experiences the same marked restriction in her basic activities
of daily living as a person who is otherwise entitled to the tax
credit; the sum of her inabilities to perform several basic
activities of daily living is equivalent to a situation where
only one of her basic activities of daily living is markedly
restricted. I refer to this as the "cumulative
disability" submission.
[18] There is
much to be said in support of the cumulative disability argument.
For example, if a taxpayer takes a very long time for the
activity of eating and dressing and again for the activity of
walking, and the time for each activity is not inordinate, the
taxpayer would not be entitled to a tax credit. But the aggregate
length of times in a day that it takes to dress and eat and then
to walk may be inordinate, and in such circumstances, a taxpayer
suffering such disabilities should be entitled to the disability
tax credit. Did Parliament
intend to grant a tax credit to a person who is markedly
restricted from performing one basic activity of daily living but
not to a person whose ability to perform a single basic activity
of daily living may be a degree shy of being markedly restricted
but whose ability from performing a combination of more than one
basic activity of daily living is markedly restricted?
[19] In the
appeal at bar Dr. Rao did certify that Ms. Watkin's
daily activities are markedly restricted, notwithstanding the
answers to the specific questions put in the certificate, which
Dr. Rao interprets as "criteria".
[20]
In Stubart Investments Ltd. v.
Canada, Wilson, J. explained
that:
It seems more
appropriate to turn to an interpretation test which would provide
a means of applying the Act so as to affect only the conduct of a
taxpayer which has the designed effect of defeating the expressed
intention of Parliament. In short, the tax statute, by this
interpretative technique, is extended to reach conduct of the
taxpayer which clearly falls within "the object and
spirit" of the taxing provisions. Such an approach
would promote rather than interfere with the administration of
the Income Tax Act, supra, in both its aspects without
interference with the granting and withdrawal, according to the
economic climate, of tax incentives.
(Emphasis
added)
[21]
The Federal Court of Appeal has accepted
Bowman, A.C.J.'s conclusion that the object of the disability
tax credit provisions is to alleviate the increased difficulties
that disabled persons suffer. The spirit of the provision can be
said to be a modest amount of tax relief to physically or
mentally impaired persons. The cumulative disability argument, in
my view, falls within both the object and the spirit of the
provisions of subsections 118.3(1) and 118.4(1) of the
Act.
[22]
Individuals like the appellant, who
have a severe and prolonged impairment and cannot perform basic
activities of daily living, are in no different situation than
others with a severe and prolonged impairment who do not suffer
chronic fatigue syndrome but who are markedly restricted from
performing a single basic activity of daily living. The question
is whether these individuals are entitled to the disability tax
credit. The words of Lord Pearce in BP Australia Ltd. v.
Commissioner of Taxation of the Commonwealth of Australia are
germane:
It is a commonsense
appreciation of all the guiding features which must provide the
ultimate answer.
[23] The answer
is that Ms. Watkins is entitled to the disability tax credit
for the year 2000. The appeal is allowed, with costs, if
any.
Signed at
Ottawa, Canada, this 17th day of October, 2002.
J.T.C.C.COURT
FILE
NO.:
2002-2166(IT)I
STYLE OF
CAUSE:
Sharon Watkin and Her Majesty the Queen
PLACE OF
HEARING:
Toronto, Ontario
DATE OF
HEARING:
October 3, 2002
REASONS FOR
JUDGMENT BY: the Honourable Judge Gerald
J. Rip
DATE OF
JUDGMENT:
October 17, 2002
APPEARANCES:
For the
Appellant:
The Appellant herself
Agent for
the
Respondent:
Jason Mitschele (Student-at-Law)
COUNSEL OF
RECORD:
For the
Appellant:
Name:
Firm:
For the
Respondent:
Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Canada
2002-2166(IT)I
BETWEEN:
SHARON
WATKIN,
Appellant,
and
HER MAJESTY
THE QUEEN,
Respondent.
Appeal heard
on October 3, 2002, at Toronto, Ontario, by
the
Honourable Judge Gerald J. Rip
Appearances
For the
Appellant:
The Appellant herself
Agent for
the
Respondent:
Jason Mitschele (Student-at-Law)
JUDGMENT
The appeal from the assessment made under the Income Tax
Act for the 2000 taxation year is allowed, with costs, if
any, and the assessment is referred back to the Minister of
National Revenue for reconsideration and reassessment on the
basis that the appellant is entitled to the disability tax credit
for the 2000 taxation year.
Signed at
Ottawa, Canada, this 17th day of October 2002.
J.T.C.C.
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