Tax Court Criticizes CRA Forms in Recent Decision

In Gibson v. The Queen 2014 TCC 236, appellant Joan Gibson was forced to go through lengthy litigation, despite her severe fatigue syndrome to fight the tax man, but she prevailed.

The Honourable Justice Judith Woods criticized the standardized Disability Tax Credit form that the Canada Revenue Agency (CRA) uses to collect information from taxpayers and their doctors.

Ms. Gibson, a retired psychiatrist, had her claim for the credit denied by the CRA because, it was argued, her condition was not severe enough to qualify. But, upon hearing her testimony and facts about her condition, the Court believed it was clear that she satisfied Parliament’s intent at s. 118.4(1)(c.1) of the Income Tax Act regarding mental impairments that affect everyday life.  

Justice Woods took issue with the prescribed form because it is in a check-box format. This makes it difficult to adequately describe every condition. “Taxpayers should not be denied tax relief simply because the questions in the prescribed form do not neatly fit the circumstances,” she noted. Justice Woods went on to criticize the procedure for the disability tax credit:  

“In addition, I have a concern that physicians generally would not have first hand knowledge of a patient’s daily activities. The form, however, requires the doctor to give an opinion on this if the impairment is with respect to mental functions. Since this is the legislative scheme that Parliament has put in place, a physician may have to rely to a certain extent on information provided by the patient. I would imagine that some physicians would be reluctant to give an opinion on this basis, and this is something that should be taken into account.”

It remains to be seen whether CRA will take these comments into account to create a better application system for its tax credits, especially the disability credit.