In an April 3, 2019 Tax Court of Canada case, at issue was whether the impact of an individual’s mental impairment entitled her to the disability tax credit (DTC). The taxpayer suffered from social anxiety, depression and phobias.
A taxpayer may be eligible for the DTC if the impairment(s) represents a marked restriction in the ability to perform a basic activity of daily living. In particular, the impairment must affect and permeate the individual’s life to the degree that they are unable to perform the mental functions that would enable them to function independently and with reasonable competence. This is to be examined in the context of:
- memory;
- adaptive functioning; and
- problem-solving, goal-setting and judgment (taken together).
Each of the three elements are to be considered separately.
A taxpayer may be eligible for the Disability Tax Credit if the impairment(s) represents a marked restriction in the ability to perform a basic activity of daily living.
Taxpayer wins
The Court found that although the taxpayer did not have trouble with memory, she did have a marked restriction with respect to the other two elements, either of which would qualify her for the DTC.
The Court noted that adaptive functioning was described in the explanatory notes to the legislation as abilities relating to self-care, health and safety, social skills, and common simple transactions. Also, the Court referred to a provincial government publication which described it as how well a person handles common demands in life and how independent they are compared to others of similar age. While the taxpayer was able to dress, bathe, feed herself, do her own laundry, manage her medications, and live on her own, these were all primarily done in a controlled environment (her apartment). In respect of social skills and common simple transactions, the taxpayer could not work except to a limited extent in the family business, avoided social interactions with all but family and close friends, and remained in her apartment as much as possible. She was heavily reliant on her mother for almost all external daily life functions. The Court determined that she had a marked restriction in respect of adaptive functioning.