Simser v. The Queen

Simser v. The Queen
Court (s) Database
Tax Court of Canada Judgments
Date
2003-05-22
Neutral citation
2003 TCC 366
File numbers
1999-3963(IT)G
Judges and Taxing Officers
Dwayne W. Rowe
Subjects
Income Tax Act
Decision Content
Docket: 1999-3963(IT)G
BETWEEN:
SCOTT IRWIN SIMSER,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
____________________________________________________________________
Appeal heard on November 12 to 15, 2002 at Toronto, Ontario,
Before: The Honourable Deputy Judge D.W. Rowe
Appearances:
Counsel for the Appellant:
Ena Chadha
William Holder
Counsel for the Respondent:
Tracey Harwood-Jones
____________________________________________________________________
JUDGMENT
The appeal from the assessment made under the Income Tax Act for the 1997 taxation year is dismissed in accordance with the attached Reasons for Judgment.
Signed at Sidney, British Columbia, this 22nd day of May 2003.
"D.W. Rowe"
D.J.T.C.C.
Citation: 2003TCC366
Date: 20030522
Docket: 1999-3963(IT)G
BETWEEN:
SCOTT IRWIN SIMSER,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
Rowe, D.J.T.C.C.
[1] The appellant appeals from an assessment of income tax for his 1997 taxation year. In computing the appellant's income for that taxation year, the Minister of National Revenue (the "Minister") included into income the sum of $1,500 ($2,000 minus the $500 exemption) in respect of a Province of Ontario bursary which the appellant received but had not reported as income in his return. The inclusion of this bursary amount resulted in an assessment of additional federal tax.
[2] First, the appellant's position is that the funds obtained from the Special Opportunity Grant (SOG) in the form of a Bursary for Students with Disabilities (BSWD) was used solely to enable him to purchase the accommodation services - sign language interpretation and real-time captioning - required in order to compensate for his disability - profound deafness - and, although identified as a "Disabled Student Bursary" on the T4A issued to the appellant, this amount was actually a form of Canada Study Grant, authorized by the Canada Student Financial Assistance Act, and designated under the Regulations as "Special Opportunities Grant for Students with Permanent Disabilities". As a result, the appellant maintains the sum received is not subject to inclusion into income under paragraph 56(1)(n) of the Income Tax Act (the "Act") because it does not meet the definition of "bursary"," scholarship", "fellowship" or "prize" as contemplated by that provision.
[3] Second, the appellant appealed on the basis that if the SOG did fall within the meaning of said paragraph, the inclusion into income of the amount received from the Province of Ontario is contrary to s. 15(1) of the Charter of Rights and Freedoms (the "Charter") and discriminates against him based on a physical disability and such violation cannot be justified on the basis it is a reasonable infringement under s. 1 of the Charter.
[4] Upon consent of counsel, the following exhibits were entered:
Exhibit A-1 - Brief of Documents for Scott Simser - tabs 1 to 21, inclusive.
Exhibit A-2 - Brief of Documents - Federal Task Force on Disability Issues, tabs 1 to 3, inclusive.
Exhibit A-3 - Brief of Documents - Financial Assistance for Students with Disabilities - tabs 1 to 6, inclusive.
Exhibit A-4 - Binder containing sheets of calculations entitled Summary of Scenarios.
Exhibit A-5 - Expert Report of Professor Lisa Philipps.
Exhibit A-6 - Expert Report of Dr. Carol Musselman.
Exhibit A-7 - Binder containing transcript of evidence of Frank Thomas Smith as recorded on September 26, 2000, in the matter of the complaint of Scott Wignall before the Canadian Human Rights Commission.
Exhibit A-8 - a binder of documents previously entered was later withdrawn.
Exhibit A-9 - Brief of Documents - In Unison: A Canadian Approach to Disability Issues.
[5] Counsel agreed the transcript of the testimony of Frank Thomas Smith - from the Wignall hearing - could be used in the same manner as though received viva voce in the within appeal.
[6] In the course of the within appeal, the appellant - Scott Simser (Simser) - utilized real-time captioning technology which permitted him to read words on a screen almost contemporaneously as they were being spoken and also relied on the services of sign language interpreters.
[7] In oral testimony, Simser stated he is a lawyer residing and working in Toronto. He has a wife and 3-year old son and was called to the Ontario Bar in February, 1999 after having completed his studies at Osgoode Hall Law School under York University. Following his admission, he worked as a tax litigator for the Department of Justice. Simser stated he suffers from a bi-lateral sensory loss and had become deaf at the early age of 7 months. The medical examinations revealed he had suffered a hearing loss of 105 decibels (dB) in both ears and had been classified as profoundly deaf. The condition has not - and cannot - improve. Simser stated he cannot talk on the telephone except with immediate family members and cannot understand radio broadcasts or television programs without captioning. Originally, he wore hearing aids but - at age 30 - contracted a virus which affected his eardrums to the point where during a period of nearly 3 years he could no longer use these devices most of the time. At age 33, he received a cochlear implant, a surgical procedure which bypasses the eardrum and picks up sound in the form of electronic signals. Earlier, the appellant had taken speech therapy, a long process during which he learned sounds of the English language, one by one. He also learned lip reading and attributes 80% of his overall comprehension to this acquired skill. The balance of his understanding of speech results from a combination of hearing the spoken words and interpreting body language. However, in a classroom setting, Simser stated he would be totally lost without the aid of real-time captioning. At the time of his early diagnosis, his family was living in Kanata, Ontario. He attended public elementary school there because his parents declined to follow medical advice - offered by three physicians - that he become educated at a special school for the deaf. Instead, the appellant's mother consulted with the principal of the local school who permitted Simser to use an FM transmitter in the classroom - to increase sound levels - and agreed the appellant could take speech therapy three times per week during the regular lunch hour. Throughout his schooling, there was never any additional cost to the appellant or his parents because all educational support to accommodate his disability was paid for by the local school board. In Montréal, he took speech therapy at McGill pre-school. As time progressed, he was able to instruct his parents on the methods by which they could teach him and his mother later followed a course of study which led to her becoming a teacher for the deaf, a career which she currently pursues on an international basis. Simser stated he did not learn American Sign Language (ASL) until age 20 and described his years in high school as a period of extreme isolation due to the nature of his disability. Following high school, the appellant attended the University of Ottawa and graduated - in 1988 - with a Bachelor of Administration degree. During his three-year course of study, he utilized the services of a note taker who had been provided - free of charge - by the university's own Office of Students with Disabilities. He worked for one year at an accounting firm in Toronto and then attended York University - in 1989 and 1990 - in order to obtain his Master of Business Administration (MBA). While pursuing this academic goal, he was provided with note takers and also relied on the services of sign language interpreters. All persons providing assistance were supplied - at no cost - by the university pursuant to a provincially-funded Vocational Rehabilitation Services Program designed to assist students with disabilities in order to permit them - as much as possible - to be placed on an equal footing with other students. After obtaining his MBA, the appellant worked at IBM Canada until February, 1992, at which point be became employed by the Ministry of Environment of Ontario where he remained until 1995. During this period, he enrolled in the Certified Management Accountant (CMA) program and obtained his designation in October, 1994. The study was undertaken by correspondence and through attendance at weekend seminars during which he used the services of ASL interpreters who were paid directly by his employer. In late 1995, the appellant accepted a severance payment as part of a downsizing program pursued by the provincial government. Earlier - in 1994 - he had decided to enroll at Osgoode Hall Law School. Simser stated he wanted to become the first deaf lawyer in Ontario and - thereafter - use his professional skills to assist others with hearing disability. During his first year at law school, he used the services of an ASL interpreter as well as note takers who were fellow students. In 1996 and 1997, he had the benefit of either real-time captioning or sign language interpretation but not at the same time. Simser stated he did not want to incur debt in order to attend law school and continued to work at the Ministry of Environment until February 1, 1996. The law school paid for his note takers, interpreters and real-time captioners and he was never subject to any income tax liability as a result of receiving these services. While employed by the Ministry of Environment, sign language interpreters were provided - and paid for - by the provincial government. Following graduation from law school, Phase 1 of the requisite Bar Admission Course began in May, 1997, and continued for one month. During morning sessions, Simser was able to follow the lectures by using real-time captioning but during the more interactive afternoon sessions, he had to rely on sign language interpretation in order to participate in the proceedings. At that point in his academic and professional career, Simser stated he was accustomed to reading books and manuscripts so it was much easier to use real-time captioning in order to understand course material. However, the technology is not sufficiently mobile for purposes of group interaction and role playing where spoken language is fast, fluid and responsive. Prior to commencing the Bar Admission Course, Simser had been advised by the Law Society of Upper Canada (Law Society) that it would not provide the real-time captioning services required. As a result, he decided to seek a bursary for students with disabilities. Simser referred to the binder - Exhibit A-1 - and the brochure - at tab 1 - describing therein various aspects of a student loans program as it related to students with permanent disabilities including the SOGs - at page 8 - which - at that time - had a $3,000 limit (unless otherwise stated, future reference to tabs in the course of Simser's testimony will indicate the document(s) are to be found in Exhibit A-1). Simser stated he was aware this grant would cover the cost of interpreters and note takers and assumed it would also include real-time captioning services. On January 22, 1997, the appellant applied for financial assistance - tab 2 - in the sum of $3,625, based on his calculation of the expense associated with meeting his requirements for completing the Bar Admission Course. He received a reply - tab 3 - indicating he had qualified for assistance under the BSWD program but was advised the maximum amount available was $2,000. Simser stated that since the purpose of his application for financial assistance had been to receive sign language interpretation and real-time captioning, he had to sign a declaration certifying that funds had been spent for the intended purposes and was required to provide receipts - to a maximum of $2,000 - within 30 days of receiving his cheque. At tab 4, the appellant wrote to the funding office and, although he had spent additional amounts totalling $850.65 - tab 5 - enclosed individual receipts totalling $1,978.50 - tab 4 - so as to remain within the $2,000 limit. The total expenditure for interpretation and real-time captioning services provided to the appellant during the one-month Bar Admission Course was $4,341.65. Simser stated he understood the sum of $2,000 would - ordinarily - be included into the income of a grant recipient for tax filing purposes but advised the funding source that he was prepared to appeal any subsequent assessment of income tax based on said inclusions, on several grounds including an invocation of the Charter, if required. For the third phase of the Bar Admission Course - lasting more than three months - the Law Society agreed to provide interpreting and captioning services to the appellant. Simser rated his ability to hear spoken words in a classroom setting at 1 or 2 on a scale ranging from 0 to 10. In his opinion, the provision of captioning and/or sign language interpretation services was necessary just to enable him to comprehend course content in accordance with the level already enjoyed by classmates who were not profoundly deaf. Certain invoices - tab 5 - issued by an interpreting service and a real-time captioner were paid directly- on the appellant's behalf - by the Department of Justice because he was articling there at the time. The value of those services - $2,363.15 - was not regarded as a taxable benefit or otherwise included into his income. Simser described a note taker as a student - taking the same course - who records salient portions of lectures for his subsequent perusal. However, law school is more complex than undergraduate studies and Simser stated he preferred to utilize real-time captioning rather than sign language interpretation. In his view, he would never have been able to qualify as a lawyer without having had access to those services. On August 6, 1997, the appellant wrote a letter - tab 6 - to the Rulings Committee at Revenue Canada in which he advised that he would be completing an income tax return by April 30, 1998 - for the 1997 taxation year - but would be taking the position that the sum of $2,000 received from the Province of Ontario - in the form of an SOG - was not taxable for the reasons stated in the letter which are consistent with the grounds for this appeal from the Minister's subsequent assessment. In effect, the appellant was attempting to obtain an advance ruling regarding those funds he had received under the SOG program as it pertained to students with disabilities. He followed up with further correspondence - tab 7 - and received a reply - dated September 26, 1997 - tab 8 - stating that no advance ruling would be forthcoming and advising him that his letters had been forwarded to the Department of Finance (DOF) since it was responsible for legislative changes. Mr. Louis Lévesque, Director, Personal Income Tax Division, Department of Finance, replied to the appellant by letter - tab 9 - dated October 28, 1997 - in which he advised the government had announced that the list of expenses eligible for the medical tax credit would be expanded to included sign language interpreter's fees. In addition, Lévesque offered the opinion that "[I]n many cases, the tax relief provided through the medical expense tax credit will fully offset the tax on the grant". The appellant stated that - for his 2000 taxation year - he had claimed the $9,000 cost of a cochlear implant and the ongoing expense of purchasing batteries as well as the cost of some devices to assist him in daily living such as flashing doorbells and a telephone/teletype (TTY) device which enables him to communicate by telephone but requires special, expensive paper. He also incurred the cost of listening and speech therapy which was billed out at $55 per hour by the particular service provider. In contrast, Simser stated he considered the expenses associated with merely gaining access to a classroom as being in a different category due - in part - to the requirement that said expenses only become deductible once they exceed 3% of net income. He explained his position in a letter to Lévesque (tab 10). The Ministry of Education and Training of the Province of Ontario issued a T4A - tab 11 - to the appellant describing the sum of $2,000 paid to him as a "disabled student bursary". The appellant received another letter - dated March 30, 1998 - tab 12 - from Louis Lévesque detailing the effect - on personal income tax - of claiming a disability tax credit in addition to qualifying medical expenses. Simser stated he has claimed the disability tax credit each year since 1985 on the basis that he satisfied the requirements of the provision because his inability to hear affected a basic activity of daily living. On March 30, 1998, the appellant completed his tax return - tab 13 - for his 1997 taxation year and attached the T4A received from the Province of Ontario. However, he made a deliberate choice not to enter the sum of $2,000 - at line 130 - under the category of other income. He sent a letter - tab 14 - dated April 7, 1998 - to Revenue Canada - with a copy to Louis Lévesque - setting out his calculations concerning the effect of inclusion into income of the sum of $1,500 from the bursary ($2,000 less an exemption of $500) even if he chose to claim the interpreting and captioning costs under the head of eligible medical expenses. On April 30, 1998, the Minster issued an assessment - tab 15 - accepting the appellant's tax return as filed. On January 18, 1999, another assessment - tab 16 - was issued to the appellant in which the entire sum of $2,000 received from the government of Ontario was included into income. On January 26, 1999, the appellant directed a letter - tab 17 - to Revenue Canada in which he pointed out that the first $500 of the bursary was exempt from taxation and - on April 7, 1999 - filed a Notice of Objection - tab 18 - to the assessment. On May 3, 1999, the Minister issued a Notice of Reassessment - tab 19 - in which the sum of $500 was deducted from the bursary amount previously included into the appellant's income but otherwise confirming that the balance of $1,500 was a taxable amount. On June 21, 1999, another reassessment was issued - tab 21 - but it merely corrected an earlier mathematical error on the part of the appellant when filing his return. The appellant stated he made his position known to Revenue Canada - and to DOF - because he believed he should not have to beg for accommodation in order to be able to enter a classroom. In that sense, Simser stated he did not feel it proper that he should be taxed on an amount that merely enabled him to participate fully in a classroom in order to receive instruction. He had totally expended the amount of the SOG in order to obtain accommodation services but was required to pay additional income tax - federal and provincial - in the sum of nearly $600 as a result of the SOG payment being included into income. As a result, Simser stated he felt discriminated against because of his deafness and regarded mere accommodation for his disability as a right when it pertained to his education. In taking that position, Simser stated he accepted that he must pay for his disability in many ways including the purchase of certain equipment and accessories - required to assist him in his daily life - such as expensive batteries which often last less than one day - and considered his deafness has been an obstacle to earning an annual income generally associated with someone holding several degrees and/or certifications in business, law and accounting.
[8] Counsel for the respondent did not cross-examine.
[9] William Holder - co-counsel for the appellant - conducted the examination-in-chief of Rosaria Zompanti. She testified she is a Chartered Accountant and has a Master of Accounting in Taxation. She is currently employed - in Toronto - as a senior staff accountant in the tax division of the accounting firm BDO Dunwoody and in the course of her career has prepared several hundred income tax returns. She was provided with the appellant's 1997 tax return and the assessment and reassessments relating thereto. No medical expense tax credit (METC) had been claimed by the appellant. In accordance with instructions received from counsel for the appellant, she prepared a report - Exhibit A-4 - in which various scenarios were presented in order to identify different tax treatment under theAct. At page 3 of her report, Ms. Zompanti set out - in schedule form - the calculations pertaining to four different scenarios itemized at the top of page 1 of said report. In each scenario, the Disability Tax Credit (DTC) is claimed. Scenario #1 is based on Simser's original filing (minus the original mathematical error); scenario #2 includes the bursary amount in the sum of $1,500 and used the sum of $530.27 as the allowable portion of medical expenses; scenario #3 is based on the situation as set forth in the third assessment by the Minister in which the $1,500 amount is included without any allowance for medical expenses since none were claimed by the appellant in filing his return. The difference in total federal and provincial tax owing in this instance - as opposed to the original filing represented by scenario #1 - is $588.90 (the difference in federal tax is $390 plus $11.70 in individual surtax). In scenario #2, if Simser had included the bursary amount as income but claimed language interpretation services within the allowable amount of medical expenses, the resulting federal tax would have been $299.85 more than in scenario #1, based on the appellant's original return. For purposes of illustration and comparison, Zompanti structured scenario #4 on the basis the sum of $1,500 had been received as a research grant in which case the amount would have been reduced to zero after deducting the expense of his real-time captioning and sign language interpretation services. At page 5 of Exhibit A-4, Zompanti set out three scenarios. In scenario 5(a)(1), using the sum of $10,000 as employment income without claiming an METC resulted in federal tax - including surtax - payable in the total amount of $620.55. In scenario 5(b)(1), the same amount of income is used but $1,500 in bursary income is included and the sum of $1,155 is claimed as the allowable portion of the medical expenses for purposes of the tax credit. In that instance, the total federal tax payable is $680.96. In scenario 5(c)(1), the amount of $10,000 is used as employment income and the amount of the bursary is included resulting in total income of $11,500. No medical expenses are claimed and the total federal tax payable is $883.20. In the report, Zompanti dealt with other scenarios including those - at page 15 - based on employment income in the sum of $29,000. At that time, there was a bracket change where federal tax increased to 26% on any income in excess of $29,590. In scenario 7(a)(2), the sum of $29,000 represented income and the DTC was claimed. In scenario 7(b)(2) the sum of $1,500 from the bursary is included into income and the allowable portion of medical expenses - in the sum of $585 - is claimed together with the DTC. The difference in federal tax between those two situations is $244.26. In scenario 7(c)(2), the disability grant is included into income, and, although the DTC is claimed, there is no claim for medical expenses. Zompanti stated the conclusion to be drawn is that inclusion into income of funds from a disability grant has the effect of increasing income tax payable and the difference in tax becomes greater as income rises to those levels which are taxable at higher rates.
[10] In cross-examination, Rosaria Zompanti was referred to a binder - Exhibit R-2 - prepared at the request of counsel for the respondent - containing several scenarios for purposes of illustrating the effect of different methods of tax filing. In scenario #2 - in Exhibit A-4 - Zompanti agreed she had used the sum of $1,500 as the total amount of medical expense even though Simser's actual expenses were in the sum of $2,825 which would have increased the amount of the tax credit. Zompanti agreed that once the threshold is reached - after 3% of net income - the amount of the excess medical expense was multiplied by 16% and this sum was used to reduce tax otherwise payable. Zompanti agreed that the average taxpayer - if entitled - usually claims medical expenses but the appellant had chosen not to do so. Zompanti agreed that in her example at scenario #4 - in Exhibit A-4 - she had considered the theoretical taxpayer to have received a research grant - reduced to zero by offsetting expenses - but had also claimed tuition and education amounts applicable to a student. Zompanti accepted counsel's suggestion that the majority of students are within the lowest tax bracket. Referring to scenario #3 in Exhibit A-4 and comparing it with scenario 8(a) in Exhibit R-2 where the sum of $1,500 was attributed to an SOG for women in doctoral studies - rather than a grant relating to disability - Zompanti agreed the net result was the same with regard to tax payable. She also agreed that - in 1997 - if the $1,500 bursary amount was added into income and $2,000 had been expended in eligible medical expenses that the percentage rate of the lowest tax bracket and the rate used to calculate the resulting tax credit on medical expenses was the same.
[11] In re-examination, Zompanti stated there can be a difference if someone is entitled to receive a medical expense supplement at line 452 of the 1997 tax return. In addition, if money is spent on real-time reporting or captioning services, that amount was not eligible for inclusion within the category of medical expenses even though it had been spent and could not be used to offset inclusion of a disability grant into income. Having regard to the examples in Exhibit R-2, Zompanti was unable to offer an opinion as to whether the terms and conditions pertaining to other SOGs were as stringent as those imposed upon the appellant in respect of the amount at issue in the within appeal.
[12] Lisa Philipps was qualified as an expert in the field of social equality and tax policy. She is an Associate Professor at Osgoode Hall Law School where she has taught taxation law since 1996. Earlier, she was a professor at the Faculty of Law at the University of Victoria and at the University of British Columbia. Philipps also practiced taxation law with a firm in Toronto. Her expert report was filed as Exhibit A-5 (her complete curriculum vitae can be found at pages 12 and 13). An accompanying Brief of Documents was filed as Exhibit A-12. Philipps has written numerous articles and papers for publication in a variety of academic journals and reviews including a recent article - 2001 - entitled "Disability, Poverty, and the Income Tax: The Case for Refundable Credits" (Exhibit A-12 - tab 7). Philipps stated her field of expertise involves examining the impact of the income tax system on different groups within society and their relationship to the Charter. In her opinion, it is evident the tax system is used as an instrument of social policy and is a convenient mechanism to achieve social objectives beyond the mere raising of revenue. In performing her work, she uses an inter-disciplinary method of analysis utilizing statistics and social studies. Some recent issues concern whether unpaid care - by family members - for a disabled family member should be recognized in the form of a caregiver tax credit. Other discussions relate to "costs of disability" which refers to the added expenses of accommodating a disability in order to lead a life more closely associated with normality. Philipps stated the costs of disability include both direct and indirect costs including those related to medical treatment, pharmaceuticals, apparatus, equipment and supplies which are eligible medical expenses for purposes of claiming the relevant tax credit. Other direct living expenses - not required in the absence of the particular disability - are often incurred but do not qualify for inclusion as a medical expense for which a tax credit may be available. As an example, Philipps referred to costs associated with the purchase of special foods or the need to pay someone for home delivery. In her opinion, these extra expenditures lead to an inability to purchase another needed item, therefore contributing to an overall lower standard of living. Indirect costs are due to an inability to generate adequate income as a result of living with disability. Philipps stated it is difficult to categorize or itemize costs of disability within the confines of a tax system or to particularize expenses associated with a disability. In her opinion, two groups are impacted negatively; one is comprised of persons with significant disability costs and the other concerns individuals who are making the transition from a program of study to earning income in the workplace. In her view, the METC is inadequate for severely disabled persons so that imposing income tax on payments received solely as accommodation funding will lead to further disadvantage. In the event the receipt of accommodation funding has the effect of bumping the disabled recipient into a higher tax bracket, the METC will be inadequate to offset the costs arising from the disability. Philipps stated she is familiar with the report of the Federal Task Force on Disability Issues (Exhibit A-2 - tab 1) In 1996, that group was given a mandate to examine the appropriate role of the federal government concerning issues arising from disability. In chapter 7 of said report - commencing at page 85 - the Task Force chaired by Andy Scott M.P. - delved into the matter of dealing with costs of disability. At page 86 - Recommendation #41 - the Task Force recommended that the federal government "should recognize that measures that deal with the costs of disability need to be separated from measures that provide income to persons with disabilities". In the course of the following recommendation, the Task Force recommended the federal government receive fair tax treatment - as opposed to subsidy based on "sympathy or charity" - in order to cope with their disabilities. Included in that passage, were statements recognizing that costs associated with disability are more onerous when borne by individuals with limited income and costs associated with disability are not limited to those with taxable income. The Task Force also appreciated that some costs were general and intangible while others could be supported by receipts for expenditures and offered the opinion that tax recognition of disability-related costs should encourage - not discourage - employment of persons with disabilities. In Philipp's opinion, the report recognized that accommodation funding consists of whatever remedial efforts are required to eliminate the negative effect of barriers flowing from disability. At page 96 of said report, recommendation #50 stated, "The Government of Canada should not treat Special Opportunity Grants for students with disabilities under the Canada Student Loans Program as taxable income". The government did not act on that recommendation nor was any other specific credit made available to offset the effect of tax imposed on SOG payments. In 1988, the Disability Tax Credit was created to replace the former deduction - introduced in 1944 - and has remained in that form. Philipps stated the purpose of the DTC is to offset some non-itemizable items associated with everyday living with a disability that are not covered by the METC provisions. Further, in the course of her work, she has not seen any document or publication to suggest the DTC was intended to offset costs associated with pursuit of education by disabled persons. Philipps characterized the DTC as extremely restrictive because the disability must satisfy legislative definitions and the credit is based on a fixed dollar amount multiplied by the percentage rate - 16% - in effect in 1997. As a consequence, the maximum tax reduction available was $720 and can be applied only against tax owing by an individual or through transfer to an eligible person pursuant to provisions of the Act. However, it rarely provides any relief in respect of costs associated with mental disabilities, learning disabilities or episodic disabilities that are cyclical - such as bi-polar disorder, fibromyalgia or multiple sclerosis - at certain stages - rather than those medical conditions lasting for a specified continuous period as required by the legislation. At page 5 of her report - Exhibit A-5 - Philipps considered the situation where a student is required to pay in excess of $10,000 for attendant care services while attending post-secondary education and claims the METC in respect of said services. As a result, the student is not entitled to claim the DTC in order to offset any tax resulting from a grant to fund other types of accommodations. Philipps stated the federal government had proposed amendments to further restrict the availability of the DTC and Canada Customs and Revenue Agency (CCRA) was in the midst of a current campaign to require taxpayers to demonstrate they were still qualified to receive the credit. In the course of preparing her report, Philipps referred to an article - Exhibit A-12 - tab 2 - written by David G. Duff - entitled: Disability and the Income Tax. In that paper, Duff traced the development of the DTC from its inception in 1942, when it pertained to a limited number of medical expenses to a maximum of $400 for a single person but only to the extent said amount exceeded 5% of the taxpayer's net income. In 1961, the maximum limit on medical expenses was removed and ongoing amendments lowered the threshold on deductible expenses to 4% of net income - and then 3% - while increasing the categories of eligible expenditures. By way of example, in 1998, sign language interpretation was recognized as a qualifying expense but the wording utilized in the new provision still refers to the individual as a "patient" and any payment must have been made to a person engaged in the business of providing sign language interpretation services. In 2001, the threshold was 3% of net income or $1,678 if that was the lesser of the two amounts. In 1997, the threshold was $1,614 and the total of the allowable expenses was multiplied by 16% in order to arrive at the amount of the actual credit. The relevant provisions identify the person incurring the expenditure - or on whose behalf the funds are spent - as a "patient". Any expenditure must be supported by receipts and must qualify in accordance with specific language used in the provisions. Amounts spent for nutritional items, vitamins and supplements are not considered eligible medical expenses nor are repairs to a wheelchair. Philipps stated that paragraph 56(1)(n) of the Act is an omnibus provision designed to include into income items that might not otherwise be covered. Although the non-taxable portion of a bursary was $500 in 1997, that exemption later been increased to $2,000 but the term "bursary" is not defined in the taxing provision and CCRA utilizes the ordinary dictionary meaning. Philipps referred to the different tax treatment accorded a research grant - applicable to many graduate students - in that certain expenses are permitted to be deducted in accordance with paragraph 56(1)(o) of the Act. In Philipps' opinion, even though a student may have a disability, many disabilities are not capable of meeting the criteria required to qualify for a DTC. The services provided by note takers or by real-time captioning reporters are not included in the category of allowable medical expenses for purposes of the METC. An expense incurred to pay tutors is not included at the post-secondary level. Because the DTC is intended to offset the cost of living with a disability - in a general sense - a person could obtain an SOG but remain ineligible for the DTC. Tax on the SOG might well be taxed at a higher rate while the DTC is calculated on the basis of 16%. In Philipps' opinion, the METC will probably not offset the effect of inclusion of an SOG amount into income because expenses such as real-time captioning are not included and there is still a threshold of 3% of net income to be reached prior to qualifying for any credit in relation to excess amounts. Philipps stated she considered any payment or grant designed to permit a disabled person to enter a classroom on a more or less equal footing with other students should not be seen as conferring an advantage. In her view, including the amount of an SOG payment into income inflates it - artificially - and can have an impact on a taxpayer's entitlement to a Goods and Services Tax (GST) credit or a child tax credit. Inclusion of this sort of payment can also have the effect of increasing the tax burden of a person defined as a supporting person under the Act. Philipps stated that students with high costs associated with permanent disability are a vulnerable group of individuals in transition from study to earning income from a business or employment. Once employed, certain disability-related employment benefits are excluded from income pursuant to subsection 6(16) of the Act. Pursuant to paragraph 56(1)(u) of the Act, a social assistance payment is included into income and a corresponding provision - paragraph 110(1)(f) - removes it. As late as the 1980's, Philipps stated Revenue Canada - the predecessor of CCRA - was still abiding by a series of former rulings and technical interpretations to the effect that SOG-type funds were considered to be non-taxable and were treated in the same manner as social assistance payments. Philipps stated that as a result of a technical interpretation undertaken by CCRA - in 1998 - in relation to the Alberta Skills Development Program - payments made under that program were considered to be non-taxable. In her opinion, payments to students with disabilities for accommodation services should be characterized as "a social assistance payment made on the basis of a means, needs or income test" within the meaning of paragraph 56(1)(u) because the particular term "social assistance" is not defined by reference to provincial programs commonly referred to in that manner. If costs incurred as a result of securing the appellant's attendance in a classroom - in order to permit him to participate in the Bar Admission Course - are equal to the amount of the SOG, the question posed by Philipps is whether it can be said there is truly income to the appellant under those circumstances because some means or income testing was a pre-condition to receipt of the grant. In her experience, there are several instances where mere receipt of funds does not attract income tax - such as amounts received in compensation for personal injuries or strike pay - and the courts have been reluctant to include other unusual payments not caught by the wording of specific, enumerated provisions of the Act. Turning to the specific matter of the funds received by the appellant in the within appeal, Philipps stated Simser had expended nearly $2,000 in sign-language interpretation services and - in accordance with the strict terms of the SOG - had no discretion to use any portion of that amount for any other purpose. In Philipps' experience, a bursary or scholarship would not ordinarily be as restrictive and - generally - would require enrolment in a course of study or at a particular institution without additional terms and conditions. Philipps examined the criteria contained in manuals pertaining to the Canada Student Loans Program Policy and Procedures Manual - Exhibit A-3 - tab 1A - and discovered that within the SOG program - designed to offset exceptional education-related costs - most of the funding was based on a set amount per week without restrictions on spending or any requirement to produce receipts. At tab 2, the SOG for Female Doctoral Students did not have specific restrictions on spending the amount received except that it was to be used for the intended purposes of the course of study. In Philipps' opinion, the payment of funds to Simser was different and had been provided specifically on the basis of need in order to offset his disability and the resultant exceptional education-related costs.
[13] In cross-examination by counsel for the respondent, Professor Philipps stated that, although she was not certain if the programs in the 1980's - referred to earlier - were the same as the SOGs relevant to the within appeal, they seemed to be similar in nature as revealed by the language of the rulings she had studied. Philipps acknowledged that there may be grants with specific use requirements and agreed that if a disabled student were to receive an ordinary bursary, it would be taxable. Philipps acknowledged disabled persons are specifically mentioned in s. 15 of the Charter but added that historically - and currently - vulnerable groups face a different set of difficulties that one might consider as a barrier - other than physical - to the pursuit of higher education. A lack of income or having to pay exceptional expenses can detract from resources that might otherwise be devoted to educational purposes. Philipps was referred to her own article - Exhibit A-12, tab 7 - and agreed that even if the SOG payment had been regarded as a social assistance payment, it would remove the federal tax but might continue to be considered as income for other purposes by one or more provinces or by governmental and/or non-governmental agencies. Philipps re-stated her opinion that a payment clearly identifiable as an accommodation grant - in the context in which this term is used - should not be included into income along with ordinary bursaries, scholarships, fellowships, as enumerated in paragraph 56(1)(n) of the Act. She agreed that the list of eligible medical expenses is amended from time to time in an effort to remain current but pointed out that some anomalies remain.
[14] Dr. Carol Musselman was qualified as an expert in the field of barriers and access to education experienced by students with disabilities and in the importance of accommodation services within an educational setting. Musselman has been a registered psychologist with the Ontario College of Psychologists since 1996. She is also a Professor (Emeritus) with the Department of Human Development and Applied Psychology at the Ontario Institute for Studies in Education at the University of Toronto (OISE/UT). She received her PhD in Social Psychology - in 1970 - from the University of Michigan. She worked - as a Research Associate - with the Toronto Board of Education until 1974 when she became an Assistant Professor within the Department of Special Education at the University of Toronto. Between 1979 and 1994, she was an Associate Professor at OISE/UT and upon obtaining her full Professorship - in 1994 - remained in that capacity until 2001. For more than 25 years, Musselman has studied and taught in the field related to the development and educational needs of deaf and hard of hearing students and has published a variety of articles and research papers which are detailed in her curriculum vitae which is attached as Appendix A to her expert report filed as Exhibit A- 6. There are three volumes of documents related to her expert report: Volume I, Exhibit A-13; volume II, Exhibit A-14; volume III, Exhibit A-15. In the course of her career, Musselman stated she studied the educational needs of students who were deaf and/or hard of hearing and children with communication exceptionalities including learning disabled and autistic children or those who were developmentally impaired. She taught courses at the Master and Doctoral level and investigated educational interventions to determine the best methods to assist deaf and hearing-impaired children to become educated. She participated in studies of deaf children - aged 3 to 15 - and was able to track a broad range of development over many years in the course of a study - funded by University of Toronto and others - involving fairly large numbers of children. Beginning in 1978, the study was completed in 1992 and is widely known within that particular discipline. Musselman stated Simser would have missed being included in the study - in 1978 -- due to his age. The study revealed that deaf children have enormous difficulties in acquiring language skills even for use in a social setting let alone in a classroom. The result is that literacy suffers due to a lack of both reading and writing skills. Sign language became the choice of many deaf children as a means of becoming capable of communicating more complex concepts. Musselman stated that during their early years, deaf children are able to cope better because language is not so important when - for example - playing at the beach and most have some ability to hear and commence learning in an auditory or spoken language program. However, at the high school level, spoken communication drops to 25% by members of that group. Later, most deaf adults have sufficient spoken language skills to order and pay for simple items at the corner store but could not communicate symptoms of distress to a doctor. Musselman described American Sign Language or ASL as a visually-based language with its own vocabulary and grammar. There are several varieties of English-based sign systems and certain signs are used to represent the plural, past tense, gerund or present participle. Among deaf people, ASL is probably the most popular since it is more comprehensive than other forms. In terms of defining an accommodation within an educational setting, Musselman explained it is more likely to relate to a specific disability. The service provided by a tutor would be included in that sense whereas an intervention is considered to be a broad term used to define a service or program employed by an educator, such as phonics or sight recognition techniques used to teach reading. As a student advances through the system, Musselman stated there is a clear link between disability and attainment of educational goals. In her opinion, deaf and hard of hearing students face systemic barriers that prevent them from accessing education on an equal basis and many studies have ascertained the number of disabled students obtaining university degrees is 50% less than non-disabled students and only 1.7% of profoundly deaf students are able to attain that level of education as opposed to 14% of the general population. A report - Exhibit A-13 - tab 6 - prepared for The Canadian Hearing Society - indicated that deaf people are more likely to be unemployed, under-employed or working less than full time. Although deaf students can access education at the community college level, most choose to study in the United States at Gallaudet University in Washington, D.C., or at the Rochester Institute in New York state because there are no university programs - for the deaf - in Canada. In the report to the Hearing Society, various barriers to university attendance were discussed including physical barriers for wheelchair users and faulty acoustics in classrooms or a lack of FM systems or TTY apparatus to aid understanding and communication. The paper also dealt with attitudes of teachers and other students towards disabled people and referred to a reluctance - or refusal - on the part of some educators to cooperate in accepting the presence of the accommodation services required. Often, people are evaluated on the basis of communication skills and that ability is equated to intelligence. Musselman noted that even among deaf people who speak very well, most will continue to have a "deaf accent". In financial terms, there are costs both direct and indirect. Direct costs include paying for accommodation services - not provided by a university or other institution - such as expenditures for material to be recorded or the cost associated with recording services or specialized transportation. Indirect costs flow from an inability to work part-time during school or to obtain summer jobs at the same rate as other students because initial job training takes longer to complete. Other direct costs include those pertaining to sign language interpreters, note takers, real-time captioners, tape recording, photocopying, tutors, editorial assistance to improve written grammar, ongoing speech therapy, costs associated with hearing devices, and TTYs for offices together with specialized software for computers. The usual fee for a sign language interpreter is $50 per hour with a 2-hour minimum. Usually, two interpreters will be required over an extended period since signing is a very strenuous activity physically and is also so mentally fatiguing that most interpreters need to be relieved after 30 to 45 minutes. In Musselman's opinion, attendance in class by a profoundly deaf person without interpreters or real-time captioning is nearly useless and, even with that expert assistance, the deaf person receives only 85% of the information delivered. There is also the added expense of vocational and personal counselling due to frustration caused by communication barriers not only in a classroom but through other interaction with other students. The disability - itself - creates stress and nearly all expenditures stem from communication problems and are incurred with the intent to accommodate those barriers. Reading is arduous for deaf children since words in print are related to sound and learning to speak is extremely difficult depending on the degree of hearing loss. Musselman stated most deaf people have a sensory bilatera