More MS news articles for Sep 2001

Tax breaks for air conditioning a cool rule: Exemptions for disabled

Financial Post - Canada; Sep 22, 2001

To claim medical expenses at tax time, you simply add up your prescriptions and dental bills, and claim the portion that's more than 3% of your net income, or $1,642, whichever is less.

But the claim is also complicated because the tax rules are changed constantly to help disabled Canadians more. For those planning a renovation, it pays to call your accountant before you call your carpenter.

Since 1990, if you have a prolonged and severe mobility problem, you are allowed to claim reasonable home renovations, if it allows you to get into or move around in your house. In 2000, a new rule was introduced to allow you to claim the incremental construction costs of building a new accessible home.

You could claim the cost of an air or water filter if you suffer from a severe and chronic respiratory ailment, since Dec. 17, 1991. Since 1992, you can claim the cost of a visual signalling device such as a visual fire alarm, if you are hard of hearing. You can also claim the cost of changing your driveway if it makes it easier for you to get on to a bus, starting in 1997.

Also in 1997, you could claim the lower of $1,000, or 50% of the cost of an air conditioner, if it helps you to cope with a severe and chronic ailment or disorder. It is worth telling you why we have this particular tax rule.

In 1983, Mary Brown of Toronto was diagnosed with multiple sclerosis, which restricted her mobility. By chance, she discovered that the cool air of a hockey rink helped her to walk. Her doctor then told her to install an air conditioner at home, and that helped her function "near normal."

Her husband, Nigel Brown, claimed the cost of air conditioning on his 1984 tax return. Ottawa disallowed the claim because the air conditioner was not a device that is designed to assist in walking, according to the taxman.

Mrs. Brown did her homework, and in a 1989 Tax Court of Canada case, she noted the air conditioner was first invented by a Dr. John Gorrie of Florida in the mid-1840s as a medical device. Dr. Gorrie discovered his patients benefited from the cooled air in their hospital rooms.

She then argued the air conditioner was a medical device designed to allow her to walk because it improved her mobility. Judge Alexander Sarchuk ruled although the air conditioner played a legitimate medical role, it was not designed as a walking aid and disallowed the claim.

The Browns appealed their claim and in 1994, at the Federal Court of Canada, Judge Sandra Simpson carefully noted the tax rule did not say a device must be "exclusively designed" for a purpose, just "designed." Without the word "exclusive," the judge figured the rule anticipates a device that could be used for more than just walking.

She also concluded that using an air conditioner improves a patient's well-being, which includes walking. She allowed Mr. Brown to claim the air conditioner.

After losing this federal appeal, Ottawa caved in. Then it went the extra mile by allowing anyone with a severe and chronic ailment, disease or disorder to claim the cost of an air conditioner, provided it helps the patient to cope. But in a cool sleight of hand, the claim was limited to $1,000.

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