Tax Forum
Patient Beware
Doctors must fill out the Disability Tax Credit Certificate properly or risk their patients being denied tax benefits.
FROM: JAN-FEB 2003 ISSUE | BY DON GOODISON
Governments are continually thinking up new forms for citizens to fill out. In fact, I would venture to guess that no government has ever found a form it didn't like. The Canadian government is no different, and the field of income tax offers many examples. Failure to file a form can be costly. And failing to properly complete some forms can also be costly, even when the form is less than clear about what is required. A good example of this is the case of Blair Dirk (appellant) v. Her Majesty The Queen (respondent) [Tax Court of Canada; 2001-3428(IT)I]. In this case, the failure of Dirk's doctor to properly complete the Disability Tax Credit Certificate led Dirk to the Tax Court of Canada.
In 1985, Dirk lost his right arm and now he wears a prosthesis. He claimed the disability tax credit when filing his 1999 income tax return. The CCRA disallowed the claim on the basis that Dirk was not markedly restricted in his ability to perform a basic activity of daily living. Dirk then appealed to the Tax Court of Canada.
Dirk had filed a Disability Tax Credit Certificate partly filled out by his doctor. Paragraph 6 of the certificate asks two questions: "Is your patient able to feed himself, using an aid if necessary?" and "Is your patient able to dress himself, using an aid if necessary?" The doctor answered "yes" to the questions, with a comment "see below." Question 9 asks: "Is the impairment severe enough to restrict the basic activity(ies) of daily living identified above all, or almost all of the time, even with therapy and the use of appropriate aids and medication?" The doctor did not check the appropriate box, but responded, "Does experience restriction, takes longer than average for grooming and dressing ? bad enough to qualify — need you to decide."
Basic Activities Restricted
The Court heard evidence from Dirk concerning the problems he encounters as a result of his disability. He pointed out the length of time it takes to prepare a meal and the problems he has opening jars and cans, and gripping utensils and pots. He testified that when opening a can, the grip of his prosthesis isn't strong enough and sometimes the opener slips. Dirk also testified that he has a lot of problems with buttons, zippers, hooks and shoelaces because of his inability to get the prosthesis close to his body.
Prior to his accident, Dirk had been right-handed, but he is now forced to use his left hand for many functions. He stated that, even after many years, he still finds it difficult because his left hand is not his dominant hand. In addition to the problems he experiences on a daily basis, Dirk has to remove his prosthesis when sores develop where the stump fits into the socket, and when experiencing the occasional bout of "phantom pain."
Section 118.3 of the Income Tax Act permits the deduction of a credit if an individual has a severe mental and physical impairment, and 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. Subsection 118.4(1) defines the nature of an impairment:
For the purposes of subsection 6(16), sections 118.2and 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.
A problem with this definition is that it does not state what constitutes an "inordinate amount of time." In Johnston v. the Queen [98 DTC 616], the Court said: "No definition has been given of what constitutes an inordinate amount of time in the performance of the basic activities of daily living. In my view, the expression 'inordinate amount of time' refers to an excessive amount of time, that is to say one much longer than what is usually required by normal people. It requires a marked departure from normality."
The Court found that Dirk met the tests set out in Johnston with respect to his ability to perform the activities of daily living. However, it also found that the failure of Dirk's doctor to properly complete the Disability Tax Credit Form, as required by paragraph 118.3(1)(a.2), was crucial. The Court was bound by a two-case decision of the Federal Court of Appeal, The Attorney General of Canada v. Joan MacIsaacand The Attorney General of Canada v. Kenneth G. Morrison [A-661-98]. The Tax Court of Canada had ruled that paragraph 118.3(1)(a.2) was not mandatory, but was merely directory. The CCRA then appealed to the Federal Court of Appeal, which concluded, " Section 118.3(1)(a.2) of the Income Tax Actis not merely directory. It is mandatory. Simply put, there must be a certificate by the doctor that the individual suffers impairments in the language of these subsections. This Court held to the same effect in Partanen v. Canada [1999 F.C.J. 751], and we feel bound by this decision."
Considering Dirk's doctor's failure to properly complete the Disability Tax Credit Form, the Court had no alternative but to dismiss the appeal. The judge had this to say: "I appreciate that [the doctor] may have found it difficult to complete the necessary form. However, his refusal to answer the question in the form required precluded the Appellant from having his claim decided on its merits. No one will dispute that there are problems inherent in the language used by the legislators in these questions but in my view, that is no excuse for the doctor's conduct. It was his responsibility to ask sufficient questions of the patient to determine whether or not the questions were to be answered yes or no. If at the conclusion of his examination he was unwilling to do so, he should have advised the patient to that effect and permitted him to seek another opinion."
How Long Is Too Long?
It may seem odd, but I do have some sympathy for Dirk's doctor. Many doctors are very reluctant to complete the form because they feel that the CCRA will challenge them. Without a definition of what constitutes an "inordinate amount of time," it becomes a very subjective matter. Has anyone ever timed how long it takes the average person to dress, for example? And, if you did, what criteria would you use? The length of time it takes to put on a full suit and tie? The time it takes to put on shorts and a T-shirt? And how about brushing teeth? Some people are careful brushers and take several minutes, while others take very little time. How would you distinguish between the person who is fussy and the person whose disability requires more time? Different doctors may have different opinions, and certainly the CCRA has demonstrated that it interprets this very narrowly. I recall a case a few years ago when a doctor, testifying on behalf of the CCRA, stated that two hours to dress oneself was not an inordinate amount of time considering that people slow down as they get older. Clearly this was a very subjective opinion based on whose behalf the doctor was testifying.
However, the courts have made it plain that in order to claim the disability tax credit, the form must be completed properly. Forms may be a pain in the neck, but filling them out correctly is a necessary evil.
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Don Goodison, CFP, FCGA, is a partner of Kemp Harvey Goodison, Certified General Accountants, in Burnaby, B.C. E-mail goodison@axionet.com.