Category Archives: 118.3

Disability Tax Credit – Ensuring that the Certificate is Correct

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Disability Tax Credit – Ensuring that the Certificate is Correct

McDermid v The Queen, 2014 TCC 264

The Taxpayer claimed the Disability Tax Credit pursuant to section 118.3 for two of the taxpayer’s children.  The certification requirement was met, but the court stated that it must still ensure that the certificates are correct.  In other words, the court must ensure that the statutory requirements are met:

[7]             The relevant statutory requirements are:

a)     the impairment is severe,

b)    the impairment is prolonged, in the sense of lasting for at least 12 months,

c)     the person is unable, all or substantially all of the time, to perform the mental functions necessary for everyday life, or can only do so by taking an inordinate amount of time, and

d)    a medical doctor or psychologist has certified in prescribed form that the above conditions are satisfied.

These provisions have to be interpreted liberally, humanely, and compassionately: Radage v The Queen, 96 DTC 1615.  The impairment, to qualify for the credit, must be of such severity that the person is rendered incapable of performing such mental tasks that will enable the person to function independently and with reasonable competency in everyday life (para 9): Radage v The Queen, 96 DTC 1615 .  The court stated at paragraph 15:

[15]        The legislation does not require a severe impairment with respect to all daily activities. It merely requires that mental functions be severely impaired all or substantially all of the time. For example, a child may qualify for the DTC with a severe impairment with respect to remembering, and yet be able to eat and dress herself. To qualify, it is not necessary that the child be unable to perform any activity on her own

The Court commented (as the court has on many other occasions) that the check-the-box form used by the CRA is capable of representing a misleading picture of the disability (para 14).  The court held that the Minister’s reliance on the form was misplaced (para 16).

The evidence convinced the Court only that one of the children met all the statutory conditions.  The son’s disability, mainly due to the auditory working memory problems, required significant support. The daughter, however, was held not to be so impaired in her daily activities to qualify for the credit.  Justice Woods was clear to say that this does not mean that the daughter will not qualify in the future when she is older and her daily activities become more complex (para 24).

Sas Ansari, BSc BEd PC JD LLM PhD (exp) CPA In-Depth Tax 1, 2 &3

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Disability Tax Credit – Certification Requirements

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Disability Tax Credit – Certification Requirements

Gibson v The Queen, 2014 TCC 236

The taxpayer applied for, but was denied, the disability tax credit under the Income Tax Act.  She appealed.

The TCC set out the legislative requirements for claiming the disability tax credit, found in Paragraphs 118.3(1)(a), (a.1) and (a.2):

  1. the taxpayer must have a severe or prolonged impairment in physical or mental functions,
  2. The impairment must result in a “marked” or “significant” restriction in one or more “basic activities of daily life” (as described in the ITA), and
  3. a medical practitioner must provide a positive certificate of the impairment in the form prescribed.

The Court observed that a certificate by a medical practitioner is not sufficient if the evidence does not support the doctor’s opinion, and that even if a positive certificate is not provided viva voce evidence of a medical practitioner can be taken into account (though the court cannot substitute its own judgment for that of the Doctor): The Queen v Buchanan, 2002 FCA 231.

The Court went on to state:

[13]        The certificate is a prescribed form requiring that the doctor state:

(a)              whether the patient is markedly restricted in one basic activity of daily living (as defined) and whether this impairment is present all or substantially all of the time, or

(b)             whether the patient is significantly restricted in at least two basic activities of daily living (as defined), and whether these impairments are present all or substantially all of the time and taken together are tantamount to a marked restriction in one basic activity of daily living.

The court highlighted the importance for providing details of the effects of the impairment in the certificate.

The Crown argued that impairments in judgment and planning daily activated are not sufficient, relying on paragraph 118.4(1)(c.1) that inclusively defined “mental functions necessary for daily life” as: memory, problem solving, goal-setting and judgment (taken together), and adaptive functioning. The Crown argued that having 2 of the 3, impairments in subparagraph 118.4(1)(c.1)(ii) not all 3, made the taxpayer ineligible.  The court disagreed, and noted that the phrase “taken together” only meant that one need to look at listed functions together and decide whether the combination results in severe impairment (parer 24).

The Court also made three additional observations: (A) the CRA forms are not ideal, and does not allow for the transmission of an accurate picture in some cases (para 25); (B) that physical may be reluctant to give an opinion as to the effect on a person’s daily activities (they cannot observe it and have to rely on information provided by the patient), and this should be taken into account appropriately (para 26); and (C) that the disability tax credit provisions should be interpreted in a compassionate manner (para 28).

– Sas Ansari, JD LLM PhD (exp)

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