Date: 20010525
Docket: 2000-3974-IT-I
BETWEEN:
ELEANOR M. DUNGAN,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Reasons for Judgment
Hamlyn, J.T.C.C.
[1] This is an appeal from a reassessment with respect to a non-refundable medical expense credit for the 1998 taxation year.
[2] Through her agent (her son Robert Dungan) the Appellant submitted the following:
The Appellant required constant assistance with respect to maintaining a balanced diet, following personal hygiene regiments and following her medication requirements;
Due to her constant needs, her family, with the concurrence of Dr. R.H. Friesen, M.D., her physician, decided to place her in a facility known as Peterborough Manor; and
Peterborough Manor is not a licensed nursing home. However, it contained the equipment, facilities and personnel specifically required by the Appellant to meet her survival needs.
[3] The Minister of National Revenue (the "Minister") submitted:
The non-refundable medical expense credit sought by the Appellant for the 1998 taxation year was in respect of total occupancy charges in the amount of $33,209.72 that were paid by the Appellant and her spouse, Bert Dungan, on behalf of themselves to Peterborough Manor;[1]
Peterborough Manor is a retirement home and not a nursing home;
The Appellant and Bert Dungan resided in Peterborough Manor as a retirement home in the 1998 taxation year;
In the 1998 taxation year, Peterborough Manor did not specifically provide the equipment, facilities or personnel to be considered a nursing home; and
A medical practitioner did not certify the Appellant and Bert Dungan as persons who by reason of physical or mental impairment required the equipment, facilities or personnel specifically provided by Peterborough Manor.
ISSUE
[4] Are the total occupancy charges in the amount of $26,009.00 that were paid in the 1998 taxation year by the Appellant to Peterborough Manor medical expenses within the meaning of subsection 118.2(2) of the Income Tax Act (the "Act")?
SIGNIFICANT EVIDENCE
[5] One witness only was called, the son of the Appellant, Robert Dungan. He described the deteriorating and disturbing state of his parents' health, leading to a crisis by June 1997 where in particular, his mother, the Appellant, had extreme personal care problems, was severely over-medicated to the point of organ damage and was not able to look after herself in terms of nutrition, medication and hygiene.
[6] He attempted in 1997 to find a nursing home facility but was unable to do so. He indicated there was a shortage of nursing homes in the Peterborough area and that entry into the nursing home system required entry through a 'care access agency'. He eventually found, through the local Peterborough community 'care access agency', a retirement home facility that provided a nursing care station, a nurse call system, emergency response system, medication supervision, safety equipment, bathrooms for handicapped, bathing assistance, mobility assistance and personal care supervision.
[7] Two documents were filed, both signed by the Appellant's medical doctor:
(1) Exhibit A-1, a Disability Tax Credit Certificate dated November 5, 1998, which stated in part:
Eleanor Dungan
...
... medical diagnosis relevant to the impairment ...
osteoarthritis
early dementia
...
If your patient requires an inordinate amount of time to perform one of these activities answer "no" to the applicable question.
...
2. Walking
(question) Is your patient able to walk, using an aid if necessary? (For example, at least 50 metres on level ground.) ...
(answer) No.
...
4. Mental functions
(question) Is your patient able to think, perceive, and remember, using medication or therapy if necessary? (For example, can he or she manage personal affairs or do personal care without supervision?) ...
(answer) No.
...
7. Elimination
(question) Is your patient able to control and personally manage bowel and bladder functions, using an aid if necessary? (For example, has uncomplicated ostomy or uses a catheter.) ...
(answer) No.
...
8. (question) Has the impairment lasted, or is it expected to last, for a continuous period of at least 12 months?
(answer) Yes.
9. 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?
...
I certify to the best of my knowledge, the foregoing information is true and complete.
"R.H. Friesen M.D."
and (2) Exhibit R-3, a letter dated September 8, 2000 reads as follows:
To Whom it May Concern:
Re: Eleanor M. Dungan, Tax Appeal
My credentials are: I am a duly qualified medical practitioner licensed to practice in the Province of Ontario. I graduated from the University of Toronto, then completed a two year residency in Family Medicine at the University of Western Ontario. I received my C.C.F.P. in 1981.
Mrs. Dungan first came under my care in June of 1997. At this time she and her husband had moved to Peterborough Manor after selling their house in Toronto. This was done because the couple could no longer look after themselves in an appropriate manner. They moved into Peterborough Manor because of the care provided by an institution of this nature. There was good supervision of Mrs. Dungan which was required because of her progressively worsening medical problems. This included early dementia, a diagnosis which was first entertained in 1997 in Toronto. This indeed became progressively worse to a point where she required hospitalization in February of 1999. She spent almost one year in hospital when she was finally discharged back into the community to the nursing home.
Her medical problems included a history of substance abuse including alcohol and analgesics as well as progressive dementia complicated by stroke.
There is no doubt that she will require the supervision provided by Peterborough Manor during the year of 1998. I trust this is the information required.
Yours truly,
"Dr. R.H. Friesen, MD, CCFP"
ANALYSIS
[8] Are the total occupancy charges that the Appellant paid in the amount of $26,009.00 in the 1998 taxation year to Peterborough Manor medical expenses within the meaning of subsection 118.2(2) of the Act?
[9] The types of medical expenses that qualify for the purposes of the credit are specified in paragraphs 118.2(2)(a) to (q). In the present case, there are two paragraphs that have been brought forth - paragraphs 118.2(2)(d) and 118.2(2)(e) of the Act. In paragraph 118.2(2)(d), the cost of providing full-time care in a nursing home is an eligible medical expense for a patient with a severe and prolonged mental or physical impairment. Also, the paragraph applies to a patient who is and will in the foreseeable future continue to be dependent on others for his/her personal needs and care because of a lack of normal mental capacity. Such a condition must be certified by a medical practitioner authorized to practice pursuant to the laws of the province or of the jurisdiction in which the taxpayer resides.
[10] In the present case, paragraph 118.2(2)(d) is not applicable for the main reason that Peterborough Manor is not a nursing home.
[11] Paragraph 118.2(2)(e) is applicable where the patient has been appropriately certified as a person who by reason of mental or physical impairment requires equipment, facilities or personnel specially provided by a school, institution or other place for the care and training of individuals with the same impairment. The care received does not have to be full-time to qualify under this paragraph.
[12] In The Estate of Harry Title v. The Queen,[2] the Minister denied the deceased Appellant the deduction of $71,361.60, which had been paid by the Appellant in respect of his stay in an uncertified nursing home. The estate of the Appellant appealed to the Tax Court of Canada. Judge Bell allowed the appeal by focusing on the requirements of paragraph 118.2(2)(e) of the Act. One of the requirements present in paragraph 118.2(2)(e) is the certification that the Appellant requires the assistance offered by the institution. Judge Bell concluded that the letter by the Appellant's physician stating "This person requires supervised setting since January 31, 1995 due to medical illness. This person requires a 24-hour companion." [3] was sufficient to meet this requirement. However, the Federal Court of Appeal[4] overturned the decision of the Tax Court. Sharlow J.A., speaking for the Federal Court of Appeal, stated:
In our view, a certificate under paragraph 118.2(2)(e) must at least specify the mental or physical handicap from which the patient suffers, and the equipment, facilities or personnel that the patient requires in order to obtain the care or training needed to deal with the handicap. The certificates in this case are simply too vague to meet that requirement.
CONCLUSION
[13] In this case the Appellant's Peterborough medical doctor certified the Appellant had osteoarthritis and early dementia and whose walking, mental functions and elimination activities were severely restricted by reason of the impairments (Exhibit A-1). The evidence shows Peterborough Manor in 1998 was a retirement home that provided, amongst other things, 24-hour emergency response, medication supervision, bathing and hygiene supervision and assistance, regular nutritionally balanced meals, mobility assistance, nurse call system and a staffed nursing station. In Exhibit R-3, the Appellant's medical doctor states that Peterborough Manor was an institution that provided the care she needed and the supervision she required because of her progressively worsening medical problems.
[14] I conclude, therefore, the expense of $26,009.00 was an amount paid for the care of the Appellant while at Peterborough Manor. The Appellant was certified by a medical doctor that by reason of her diagnosed physical and mental handicap, she required the facilities and personnel specially provided by Peterborough Manor for the care of those residents suffering from the handicaps suffered by this Appellant.
DECISION
[15] The appeal is allowed and the assessment is referred back to the Minister of National Revenue for reconsideration and reassessment on the basis that the amount of $26,009.00 paid by the Appellant to Peterborough Manor in the 1998 taxation year is medical expenses within the meaning of paragraph 118.2(2)(e) of the Act.
Signed at Ottawa, Canada, this 25th day of May 2001.
"D. Hamlyn"
J.T.C.C.
[1] From the evidence submitted, the total charges in the amount of $33,209.72 were paid in the 1998 taxation year by the Appellant and Bert Dungan to Peterborough Manor. The parties, after the evidence stage, agreed the charges in relation to the Appellant were $26,009.00 for the 1998 taxation year and the appeal was restricted to that amount.
[2] 2000 DTC 1991.
[3] Ibid. at 1992.
[4] Title Estate v. Canada, 2001 F.C.J. No. 530.