Date: 20000721
Dockets: 1999-3793-IT-I; 1999-3794-IT-I
BETWEEN:
DEBORAH ROSS ATTAS, VICTOR ATTAS,
Appellants,
and
HER MAJESTY THE QUEEN,
Respondent.
Reasons for Judgment
Beaubier, J.T.C.C.
[1] These appeals, pursuant to the Informal Procedure, were heard together on common evidence by the consent of the parties at Toronto, Ontario on July 14, 2000.
[2] The Appellants testified, and called Matthew Ross to testify. They also called the following witnesses who were qualified as experts:
1. Dr. George Finlayson, a psychologist whose field of practice is in educational and clinical psychology of persons aged three to four years to adulthood;
2. Lou D'Angelo, B.A., M.Soc.Work, whose expertise is in facilities for the disabled; and,
3. Zlatko Cvitak, owner of Direct Hardware of Rexdale, who has been in various construction activities for 24 years and who testified as to the reasonable costs of construction relating to dwellings.
[3] Paragraphs 9 to 17 of the Reply to the Notice of Appeal of Deborah Ross Attas read as follows:
9. In assessing the Appellant for the 1996 taxation year, Notice of Assessment thereof dated January 26, 1998, the Minister of National Revenue (the "Minister") allowed a non-refundable medical expense tax credit in respect of medical expenses in the amount of $2,092.89 (ie: the various receipted medical/dental expenses $2,092.89 referred to in Exhibit A attached hereto). The Minister disallowed all amounts claimed as medical expenses for tuition in the amount of $11,040.00 and renovation costs in the amount of $77,667.09 (the "disallowed medical expenses"). Arrears interest in the amount of $40.09 was assessed in accordance section 161 of the Income Tax Act (the "Act") and a late filing penalty in the amount of $44.13 was levied in accordance with section 162 of the Act.
10. In so reassessing the Appellant, the Minister made the following assumptions of fact:
(a) in the 1996 taxation year, the Appellant paid and provided receipts for medical expenses in the amount of $2,029.89;
(b) disallowed medical expenses in the amount of $11,040.00 were paid to Professor Lorna Rodgers Ph.D, Consultant, as tuition fees for Matthew Ross, the Appellant's son (the "Student");
(c) the Student has not been certified to be a person who, by reason of a physical or mental handicap, requires the equipment, facilities or personnel specifically provided by a school, institution or other place for the care, or care and training of the Student;
(d) the disallowed medical expenses in the amount of $11,040.00 are tuition fees of the Student and not medical expenses;
(e) the renovation costs in the amount of $77,667.09 claimed as medical expenses are costs of home renovations of 272 Homewood Avenue, Toronto, Ontario which at all material times was the Appellant's principal residence;
(f) the renovation costs in the amount of $77,667.09 claimed as medical expenses are not reasonable expenses relating to renovations or alterations to the Appellant's residence to enable a patient who lacks normal physical development or has a severe and prolonged mobility impairment, to gain access to, or to be mobile or functional within, the Appellant's residence;
(g) the Appellant's return of income for the 1996 taxation year was due to be filed on or before April 30, 1997 and was not filed until July 22, 1997;
(h) the Appellant had taxes payable for the 1996 taxation year that were unpaid at April 30, 1997.
B. ISSUES TO BE DECIDED
11. The issue is whether the Appellant is entitled to a non-refundable medical expense tax credit in respect of any of the disallowed medical expenses in the 1996 taxation year.
C. STATUTORY PROVISIONS, GROUND RELIED ON AND RELIEF SOUGHT
12. He relies on sections 67, 118.2, 118.3, 118.4, 161 and 162, subsections 118.2(1) and 248(1) and paragraphs 118.2(2) (e) and 118.2(2) (1.2) of the Act and section 5700 of the Income Tax Regulations as amended for the 1996 taxation year.
13. He submits that the Student is not a patient as described in paragraph 118.2(2) (e) of the Act and therefore the Appellant is not entitled to include the disallowed tuition fees in the amount of $11,040.00 as medical expenses in the determination of the medical expense tax credit provided by subsection 118.2(1) of the Act.
14. He also submits that disallowed medical expenses in the amount of $11,040.00 are tuition fees and are not medical expenses as described in subsection 118.2(2) of the Act and therefore the Appellant is not entitled to include the disallowed tuition fees in the amount of $11,040.00 as medical expenses in the determination of the medical expense tax credit provided by subsection 118.2(1) of the Act.
15. He submits that disallowed medical expenses in the amount of $77,667.09 for renovation costs are not reasonable expenses relating to renovations or alterations to a dwelling of a patient who lacks normal physical development or has a severe and prolonged mobility impairment, to enable the patient to gain access to, or to be mobile or functional within, the dwelling, as described in paragraph 118.2(2) (1.2) of the Act and therefore the Appellant is not entitled to include the disallowed renovation costs in the amount of $77,667.09 as medical expenses in the determination of the medical expense tax credit provided by subsection 118.2(1) of the Act.
16. He also submits that disallowed medical expenses in the amount of $77,667.09 for home renovations of the Appellant's principal residence are personal expenses of the Appellant and are not medical expenses as described in subsection 118.2(2) of the Act and therefore the Appellant is not entitled to include the disallowed renovation expenses in the determination of the medical expense tax credit provided by subsection 118.2(1) of the Act.
17. He further submits that the disallowed medical expenses are not medical expenses as described in subsection 118.2(2) of the Act and therefore the Appellant is not entitled to claim the disallowed expenses in the determination of the medical expense tax credit provided by subsection 118.2(1) of the Act.
[4] Paragraph 118.2(2)(e) reads:
118.2(2) "For the purposes of subsection (1), a medical expense of an individual is an amount paid
...
(e) 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;
[5] Mr. and Mrs. Attas entered into their marriage in late 1995. At that time Mrs. Attas was divorced and had custody of her two sons, Bob and Matthew. Matthew was born on March 18, 1981, and has an academic standing of a 10-year-old. His older brother, Bob, is now 22. Mr. Attas was also divorced and had custody of his son Darcy, who was born September 8, 1984. Matthew had been regularly certified as disabled for income tax purposes by his family physician, Dr. MacKenzie, until the Act respecting the disability credit was amended retroactively in 1994 to restrict the disability tax credit to basic activities of daily living as specified in those amendments. Dr. MacKenzie's last certificate, dated April 26, 1995 however states that Matthew has a "learning disability. Requires individual tutoring on an ongoing basis". (Exhibit R-1) Dr. MacKenzie also advised Mrs. Attas at that time that Matthew no longer qualified under the amendments. Therefore, Mathew's medical needs are accepted by the Court as constituting those which qualified him under the Act in earlier years since, by the end of 1995 Matthew was expelled from school, because his needs were greater than could be provided for by the school system. In 1996 Mrs. Attas placed Matthew with Dr. Rodgers.
[6] When Matthew first attended upon Dr. Rodgers, she diagnosed him as illiterate. Matthew and Mrs. Attas described Dr. Rodgers' treatment of Matthew and, among other things, her use of a computer with Matthew. Dr. Finlayson described the methods necessary to treat Matthew and approved of Dr. Rodger's treatment. Dr. Rodgers diagnosed and treated Matthew's disabilities in relation to speech and to spatial and geographic concepts and instructed Mrs. Attas on them and their alleviation. Dr. Rodgers determined that a computer, as distinct from handwriting, would enable Matthew to overcome some of his learning disabilities. Until then, Mrs. Attas did not have a diagnosis of the extent of Matthew's disability or the need for a computer to treat Matthew. Mrs. Attas could not afford a computer at that time. In these circumstances, Dr. Rodgers let Matthew stay in her office premises and use her computer.
[7] Respecting the disallowed medical expenses claimed of $11,040 paid to Dr. Rodgers for Matthew Ross, the following assumptions were not refuted – 10(a) and (b). Assumptions 10(c) and (d) raise the important questions on this subject, namely:
(1) Was Matthew certified to be a patient who, by reason of a physical or mental handicap, requires the facilities and personnel specifically provided by a "school, institution or other place" for care or care and training.
(2) Was Dr. Rodger's office an "other place".
(3) Were the fees paid to Dr. Rodgers medical expenses?
Subsection 118.2(2) of Mrs. Attas' claim for a medical expense for the care and training of Matthew "must have been certified by an appropriately qualified person" (Paragraph 118.2(2)(e)). No certificate was filed in evidence respecting this requirement. However the Act does not require that a "certificate" should either exist or be filed. Nor does it state the calling of the person who must certify or how the certification must occur. Mrs. Attas and Dr. Finlaysen testified that Matthew suffers from a learning disorder and from an attention deficit disorder. The Respondent's counsel stipulated that there is no issue as to Matthew's disability. Mrs. Attas testified that Matthew was expelled from the City of Toronto's school system because of his disabilities and this is believed. Thereupon Mrs. Attas took Matthew to Dr. Rodgers, whose qualifications are not in evidence, but who was engaged in speech therapy. Mrs. Attas had learned of Dr. Rodgers from a friend and was not referred to Dr. Rodgers by another professional person. The Court accepts it as true (and Dr. Finlayson's unequivocal confirmation of the fact) that Dr. Rodgers' care and training was successful for Matthew and finds that Dr. Rodgers did provide him with care and training within the meaning of the Act. Mrs. Attas is and at all material times was a qualified teacher of those with mental disabilities who worked in the Toronto school system. Therefore was she a "qualified person" within the meaning of paragraph (c)? That expression is not defined in the Act.
[8] In the Court's view she was. She was a professional teacher, qualified to teach, and teaching students in the Toronto school system who had learning disabilities. She had tried various schools for Matthew which hadn't worked. By her actions in contacting and retaining Dr. Rodgers after Matthew was expelled, she certified that Matthew required the facilities, personnel and treatment provided by Dr. Rodgers at her place of practice in Toronto for the care and training of Matthew respecting his physical or mental handicaps. It was an "other place" at which care and training was provided to Matthew. The Respondent quite properly acknowledged these handicaps and the Court finds that they were at all times medical and that Matthew was a medical patient respecting them within the meaning of the Act. The evidence is that Matthew attended at Dr. Rodgers' office as a patient who received treatment for speech and learning disabilities (as distinct from mere training) and received care and training from her there. Thus, Dr. Rodgers' office was a place at which Matthew received care and training and the fees paid to Dr. Rodgers for her service and facilities constitute medical expenses within the meaning of the Act.
[9] The requirements of the Act were met and this portion of Deborah Ross Attas' appeal is allowed.
[10] With respect to the remaining portion of Mrs. Attas' appeal and the appeal of Mr. Attas, paragraphs 9 to 11 inclusive of the Reply to his Notice of Appeal read:
9. In assessing the Appellant for the 1996 taxation year, Notice of Assessment thereof dated January 26, 1998, the Minister of National Revenue (the "Minister") disallowed all amounts claimed as medical expenses for tuition in the amount of $11,040.00 and renovation costs in the amount of $77,667.09 (the "disallowed medical expenses") and did not allow a non-refundable medical expense tax credit in respect of medical expenses. Arrears interest in the amount of $50.74 was assessed in accordance section 161 of the Income Tax Act (the "Act") and a late filing penalty in the amount of $55.85 was levied in accordance with section 162 of the Act.
10. In so reassessing the Appellant, the Minister made the following assumptions of fact:
(a) in the 1996 taxation year, the Appellant spouse paid and was allowed medical expenses in the amount of $2,029.89;
(b) disallowed medical expenses in the amount of $11,040.00 were paid to Professor Lorna Rodgers Ph.D, Consultant, as tuition fees for Matthew Ross, the son of the Appellant's spouse (the "Student");
(c) the Student has not been certified to be a person who, by reason of a physical or mental handicap, requires the equipment, facilities or personnel specifically provided by a school, institution or other place for the care, or care and training of the Student;
(d) the disallowed medical expenses in the amount of $11,040.00 are tuition fees of the Student and not medical expenses;
(e) the renovation costs in the amount of $77,667.09 claimed as medical expenses are costs of home renovations of 272 Homewood Avenue, Toronto, Ontario which at all material times was the Appellant's principal residence;
(f) the renovation costs in the amount of $77,667.09 claimed as medical expenses are not reasonable expenses relating to renovations or alterations to the Appellant's residence to enable a patient who lacks normal physical development or has a severe and prolonged mobility impairment, to gain access to, or to be mobile or functional within, the Appellant's residence;
(g) the Appellant's return of income for the 1996 taxation year was due to be filed on or before April 30, 1997 and was not filed until July 22, 1997;
(h) the Appellant had taxes payable for the 1996 taxation year that were unpaid when due at April 30, 1997.
B. ISSUES TO BE DECIDED
11. The issue is whether the Appellant is entitled to a non-refundable medical expense tax credit in respect of any of the disallowed medical expenses in the 1996 taxation year.
[11] These reasons have already dealt with assumptions 10(a) to (d) inclusive and for the same reasons, Mr. Attas' appeal is allowed insofar as the expenses claimed in relation to $11,040 paid to Dr. Rodgers remain in dispute.
[12] The total of $77,667.09 home renovations claimed by both Appellants relates to Mr. Attas' son Darcy, who at all material times suffered from cerebral palsy. He was confined to a wheelchair with the loss of use of both his legs and his right arm. In about 1995 he had to be placed in an electric wheelchair. It is larger than a hand-operated wheelchair and required wider halls, a larger bathroom and larger doorways. Moreover Darcy's increasing disability required Mr. and Mrs. Attas to assist him more; required a special bath and bath chair if he was to bathe himself and more bedroom space and study space. As a result an addition was designed, contracted for and built. The Appellants reduced the design from the architect's plans because they could only afford a modest addition with modest fixtures. It is a bare-bones addition designed for and occupied solely by Darcy. It has a bathroom, a bedroom, a small study and a hallway. There is no basement. It conforms to CMHC handicap standards and is modest and reasonable. There is nothing about it that is not a necessity for Darcy or the structure of the addition and its attachment to the kitchen portion of the house.
[13] Darcy's bedroom, bathroom and study constitute the rooms of the alteration. He uses his wheelchair for access to the kitchen, dining area and living room. He is now unable to enter the basement at all. At the evening meal the Attas' require Darcy to put on his leg braces and, by himself, walk to the dinner table. This is so that he practices being erect to prevent his lungs and ribcage from collapsing. For use of the bathroom and his bed, it appears that the degree of assistance varies. It is only because of the alteration that Darcy can remain at home. The couple's total gross income was only in the low $80,000 range, so that a new home, or an expensive residence for Darcy was out of the question. The structure in question was seriously reduced from the architect's plans in order to meet the Attas' budget.
[14] The question is whether this modest and very reasonable addition is a renovation or alteration to the existing house. Subparagraph 118.2(2)(1.2) of the Income Tax Act (the "Act") reads:
(2) Medical expenses, For the purposes of subsection (1), a medical expense of an individual is an amount paid
...
(l.2) for reasonable expenses relating to renovations or alterations to a dwelling of the patient who lacks normal physical development or has a severe and prolonged mobility impairment, to enable the patient to gain access to, or to be mobile or functional within, the dwelling;
[15] "Alteration" is defined by The Oxford English Dictionary, 1st Ed. as:
"Alteration.
1. The action of altering or making some change in a thing ...
2. A change in the character or appearance of anything, viewed as a fact; an altered or changed condition ...
3. A distemper ... "
And:
"Renovation
1. The action of renovating, or the condition of having been renovated; renewal; restoration; an instance of this, a change effected by renewal ... "
[16] The addition constitutes "a change in the character or appearance" or the "condition" of the Appellants' home. The claims constituted reasonable expenses relating to the alteration of the dwelling of Darcy, who had and has a severe and prolonged mobility impairment. It enabled Darcy to be mobile and functional within the dwelling. It is an alteration as that is defined in The Oxford Dictionary.
[17] For these reasons, the appeals of both Appellants are allowed.
[18] The Appellants are awarded costs respecting any disbursements incurred for the expert evidence presented at the hearing including consulting fees and attendances, reports and any subpoena fees. In addition they are awarded costs of $100.00 each on account of any other out-of-pocket disbursements respecting their appeals over and above their filing fees.
Signed at Ottawa, Canada, this 21st day of July, 2000.
"D.W. Beaubier"
J.T.C.C.