October 07, 2011

The Attorney General of Canada (Appellant) v. James W. Buchanan (Respondent), and the Council of Canadians with Disabilities, the Canadian Mental Health Association, and the Canadian Association for Community Living (Interveners)

Federal Court of Appeal
2002 DTC 7397
May 31, 2002

(Court File No. A-416-01.)

Disability tax credits ? Whether the taxpayer entitled to the disability tax credits claimed in the absence of a positive medical certificate ? Whether the Tax Court Judge entitled to treat the negative medical certificate as positive upon finding that the psychiatrist producing it misinterpreted the relevant provisions of the Act ? Income Tax Act, R.S.C. 1985 (5th Supp.), c. 1, as amended, ss. 118.3(1) and 118.4(1).

In support of his claim for a disability tax credit for 1997 and 1998, the taxpayer submitted a psychiatrist’s certificate. In such certificate, the psychiatrist stated that the taxpayer was permanently, markedly restricted in mental functions. However, he then answered “yes” to the question: Is your patient able to think, perceive, and remember, using medication or therapy if necessary? He also answered “no” to the question: Is the impairment severe enough to restrict the basic activity of daily living identified above, all, or almost all, the time, even with therapy and the use of appropriate aids and medication? In reassessing the taxpayer for 1997 and 1998, the Minister disallowed the tax credits claimed. The Minister appeared to have taken this position on the basis of the negative certificate produced by the psychiatrist. In allowing the taxpayer’s appeal, the Tax Court of Canada concluded: (a) that the psychiatrist’s certificate was not “indicative of an independent, unbiased medical opinion; (b) that the psychiatrist had misunderstood and misinterpreted the provisions of the Act dealing with disability in completing the certificate; and (c) that, as a result, the Minister should be ordered to reassess on the basis that the taxpayer was entitled to the credits claimed. The Crown applied to the Federal Court of Appeal for a judicial review of the Tax Court’s findings.

Held: The Crown’s application was dismissed. The requirement for a medical certificate was addressed in Attorney General v. McIsaac (FCA). Similarly, it was held in Partanen v. The Queen (FCA) that there must be a certificate by the doctor that the individual suffers impairments falling within the language of the relevant subsections of section 118.3 of the Act. The Partanen decision, moreover, is binding. In the case at bar, it was clear from the record and from the Tax Court Judge’s findings, that the taxpayer’s psychiatrist did misinterpret the definition of a basic activity of daily living in paragraph 118.4(1)(c) of the Act. He misinterpreted the statutory requirements in respect of what basic activities of daily living had to be markedly restricted in order to qualify for the credit. The basic activity in issue was only “perceiving, thinking and remembering” under subparagraph (i) of paragraph 118.4(1)(c), and not, as the psychiatrist thought, getting dressed, brushing teeth, looking after personal hygiene, climbing stairs, walking around the block or holding a simple conversation. However, the difficulty was that a positive medical certificate is a condition precedent to the Minister granting a disability tax credit. Nor is it open to a Tax Court judge to ignore that requirement, and simply to substitute his or her opinion for that of a medical practitioner. In the case at bar, on the other hand, there was a finding that, in completing the negative certificate, the psychiatrist made a legal error. In cases such as this, the question will be whether, with the judge applying the correct legal test, it is apparent that the physician would have issued a positive certificate, or whether there is still room for medical judgment to be exercised as to whether the certificate should be positive or negative. In the former case, it is open to the Tax Court judge to find that the certificate should be treated as positive and to remit the matter for reassessment on that basis. In the latter case, the recourse must be to dismiss the appeal or to remit the matter to the Minister for reassessment on the basis of the taxpayer filing a new positive certificate if one can be obtained (notwithstanding the difficulties which this might entail). Applying all of this to the case at bar, and based on the evidence given by the psychiatrist, it was open to the Tax Court judge to conclude that the taxpayer’s inability to perceive, think and remember was of such severity that the taxpayer was unable to perform the necessary mental tasks required to live and function independently and competently in everyday life. It was, therefore, also open to the Tax Court judge to conclude that the medical certificate was incorrectly completed and that, applying the correct legal test, the negative certificate should be treated as a positive one. Finally, it could not be said that the Tax Court judge had made palpable and overriding errors of fact, or that she had overlooked evidence. As a result of all of the foregoing, the Minister was ordered to reassess on the basis that the taxpayer was entitled to the credits claimed.