Date:
20080528
Docket: A-277-06
Citation: 2008 FCA 190
CORAM: NOËL
J.A.
BLAIS
J.A.
RYER
J.A.
BETWEEN:
SHARIFA ALI AND ROSE MARKEL
Appellants
and
HER MAJESTY THE QUEEN
Respondent
REASONS FOR JUDGMENT
RYER J.A.
[1]
This is an
appeal from a decision of Justice Woods (the “Tax Court Judge”) of the Tax
Court of Canada (2006 TCC 287) dated May 18, 2006, dismissing the appeals of
Sharifa Ali and Rose B. Markel (the “appellants”) from reassessments of the
2000 and 2001 taxation years, in the case of Ms. Ali, and the 2001 taxation
year, in the case of Ms. Markel, that were issued pursuant to the Income Tax
Act, R.S.C. 1985, c. 1 (5th Supp.) (the “ITA”), on the basis
that the cost of certain herbs, vitamins and supplements (the "Dietary
Supplements") that were purchased by each of them, pursuant to
prescriptions issued by a naturopath, does not qualify as a medical expense,
within the meaning of paragraph 118.2(2)(n) of the ITA.
[2]
For the
purpose of computing the tax payable under Part I of the ITA by an individual
for a taxation year, subsection 118.2(1) of the ITA permits that individual to
deduct an amount, referred to as the medical expense tax credit (the “METC”),
in respect of the total of the individual’s medical expenses that are
established to have been paid for by the individual within the time period
specified in that provision. For the taxation years under consideration in
these appeals, paragraphs 118.2(2)(a) to (q) of the ITA specify
the types of medical expenses that qualify for the purposes of the METC. It is
clear that the METC is not available in respect of all types of medical
expenses in those years.
[3]
In the
taxation years under consideration, the appellants purchased Dietary
Supplements and claimed that the cost of those items was a medical expense of
the kind referred to in paragraph 118.2(2)(n) of the ITA. That
provision reads as follows:
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(2) For the purposes of subsection
118.2(1), a medical expense of an individual is an amount paid
. . .
(n) for drugs, medicaments or
other preparations or substances (other than those described in paragraph
118.2(2)(k)) manufactured, sold or represented for
use in the diagnosis, treatment or prevention of a disease, disorder,
abnormal physical state, or the symptoms thereof or in restoring, correcting
or modifying an organic function, purchased for use by the patient as prescribed
by a medical practitioner or dentist and as recorded by a pharmacist;
[Emphasis added.]
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(2)
Pour l’application du paragraphe (1), les frais médicaux d’un particulier
sont les frais payés :
[…]
n) pour les médicaments, les produits pharmaceutiques et les autres
préparations ou substances — sauf s’ils sont déjà visés à l’alinéa k) — qui sont, d’une part, fabriqués, vendus ou offerts
pour servir au diagnostic, au traitement ou à la prévention d’une maladie,
d’une affection, d’un état physique anormal ou de leurs symptômes ou en vue
de rétablir, de corriger ou de modifier une fonction organique et, d’autre
part, achetés afin d’être utilisés par le particulier, par son époux ou
conjoint de fait ou par une personne à charge visée à l’alinéa a), sur ordonnance d’un médecin ou d’un dentiste,
et enregistrés par un pharmacien;
[Non souligne dans l’original.]
|
[4]
It is
common ground that the Dietary Supplements that were purchased by the
appellants were purchased “off the shelf” and that such purchases do not
satisfy the “recorded by a pharmacist” requirement in paragraph 118.2(2)(n)
of the ITA. It is also noted that the Crown takes issue with the assertion that
the naturopath who prescribed the Dietary Supplements is a “medical
practitioner” for the purposes of that paragraph.
[5]
In Ray
v. Canada, 2004 FCA 1, [2004] 2 C.T.C. 40, this Court determined that
amounts expended by an individual to purchase vitamins, herbs, organic and
natural foods, and bottled water (a list which includes items of the same
general nature as the Dietary Supplements) that were prescribed for the
treatment of myalgic encephalomyelitis, chronic fatigue and immune dysfunction
syndrome, multiple chemical sensitivity, and fibromyalgia (afflictions similar
to those from which the appellants suffer) do not qualify as medical expenses,
within the meaning of paragraph 118.2(2)(n) of the ITA, because those
items were purchased “off the shelf”, that is to say the “recorded by a
pharmacist” requirement in that provision was not satisfied in respect of the
purchase of those items. It is clear that Ray establishes that the
benefit of the METC in respect of the cost of Dietary Supplements and items of
that kind that are purchased “off the shelf” is not provided by paragraph
118.2(2)(n) of the ITA.
[6]
The
appellants complain that the “recorded by a pharmacist” requirement in
paragraph 118.2(2)(n) of the ITA violates their rights under subsection
15(1) and section 7 of the Canadian Charter of Rights and Freedoms, Part
I of the Constitution Act, 1982, being Schedule B to the Canada Act
1982 (U.K.), 1982, c. 11 (the “Charter”). Those provisions read as follows:
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7. Everyone has the right to
life, liberty and security of the person and the right not to be deprived
thereof except in accordance with the principles of fundamental justice.
|
7. Chacun a droit à la vie, à la
liberté et à la sécurité de sa personne; il ne peut être porté atteinte à ce
droit qu'en conformité avec les principes de justice fondamentale.
|
|
15. (1) Every individual is
equal before and under the law and has the right to the equal protection and
equal benefit of the law without discrimination and, in particular, without
discrimination based on race, national or ethnic origin, colour, religion,
sex, age or mental or physical disability.
|
15. (1) La loi ne fait acception
de personne et s'applique également à tous, et tous ont droit à la même
protection et au même bénéfice de la loi, indépendamment de toute
discrimination, notamment des discriminations fondées sur la race, l'origine
nationale ou ethnique, la couleur, la religion, le sexe, l'âge ou les
déficiences mentales ou physiques.
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[7]
The Tax
Court Judge undertook a detailed analysis of the afflictions suffered by the
appellants, the regulation of natural health products, the legislative history
of the deductibility and creditability of medical expenses under the ITA, as
well as the applicable income tax and Charter jurisprudence. In particular, at
paragraph 73, the Tax Court Judge stated:
[73] … One
empathizes with the fact that the tax credit does not extend to the costs
incurred by the appellants.
[8]
The Tax
Court Judge also referred to the decisions of the Supreme Court of Canada in Law
v. Canada (Minister of Employment and Immigration), [1999] 1 S.C.R. 497,
and Auton (Guardian ad litem of) v. British Columbia (Attorney General), [2004] 3 S.C.R. 657. In
particular, she noted that in Auton, the Supreme Court of Canada
concluded that because funding for a particular type of therapy that was
requested to pay for the treatment of autistic infants was not a benefit
provided by the legislation that was under scrutiny, subsection 15(1) of the
Charter was not infringed.
[9]
The Tax
Court Judge went on, unnecessarily in my view, to apply the well established Law
analysis and concluded that having regard to either the comparator group
proposed by the appellants or the comparator group that she found to be more
appropriate, the differential treatment element of the Law analysis was
not met. As a result, the Tax Court Judge concluded that an infringement of the
appellants' rights under subsection 15(1) of the Charter had not been made out.
[10]
With
respect to section 7 of the Charter, the Tax Court Judge held that a decision
on the part of the state not to provide an economic benefit, in this case the
METC, does not amount to a deprivation or a taking away of life, liberty or
security of the person. In addition, the Tax Court Judge held that even if a
failure on the part of the state to provide a positive economic benefit could
be said to constitute such a deprivation, the law in question is not arbitrary
and, therefore, any such deprivation would not be contrary to the principles of
fundamental justice so as to engage section 7 of the Charter.
[11]
As averted
to above, I am of the view that in addressing the subsection 15(1) issue, it
was not necessary for the Tax Court Judge to undertake the Law analysis
as she did, and I expressly refrain from commenting upon her analysis.
[12]
In my
view, this is a case in which the subsection 15(1) issue can be addressed in a
simpler manner. In Auton, the Supreme Court of Canada held that
subsection 15(1) of the Charter will not be infringed where the benefit that is
sought is not one that is provided by the law that is being challenged. In the
present case, the benefit claimed by the appellants is the METC in respect of
the cost of Dietary Supplements that are purchased “off the shelf”. That is
what they claimed in their tax returns and it is the entitlement to that claim
that they sought to establish in their notices of appeal to the Tax Court of
Canada. In Ray, this Court confirmed that such a benefit is not one
that is provided by paragraph 118.2(2)(n) of the ITA. How then can it be
discriminatory to deny the appellants a benefit (the METC in respect of the
cost of “off the shelf” drugs) that no one gets?
[13]
The
appellants wish to have the scope of the METC extended to cover “off the shelf”
drugs but Parliament has not chosen to do so. In this regard, the words of
Chief Justice McLachlin in paragraph 41 of Auton, are apposite:
41 It
is not open to Parliament or a legislature to enact a law whose policy
objectives and provisions single out a disadvantaged group for inferior
treatment; Corbiere v. Canada (Minister of Indian and Northern Affairs),
[1999] 2 S.C.R. 203. On the other hand, a legislative choice not to accord a
particular benefit absent demonstration of discriminatory purpose, policy or
effect does not offend this principle and does not give rise to s. 15(1)
review. This Court has repeatedly held that the legislature is under no
obligation to create a particular benefit. It is free to target the social
programs it wishes to fund as a matter of public policy, provided the benefit
itself is not conferred in a discriminatory manner: Granovsky v. Canada
(Minister of Employment and Immigration), [2000] 1 S.C.R. 703, 2000 SCC 28,
at para. 61; Nova Scotia (Attorney General) v. Walsh, [2002] 4
S.C.R. 325, 2002 SCC 83, at para. 55; Hodge, supra, at para. 16.
[Emphasis added.]
[14]
It is
apparent from the passage in Auton that a legislative choice to accord a
particular benefit under the legislation under consideration can potentially
give rise to a valid claim that subsection 15(1) of the Charter has been
infringed. Paragraph 42 of Auton informs that such an infringement can
arise if the legislation discriminates directly, by adopting a discriminatory
policy, or indirectly, by effect. With respect to the more difficult issue of
discrimination by effect, the Supreme Court of Canada stated, in that
paragraph, that the non-inclusion of a benefit is unlikely to be discriminatory
if that non-inclusion is consistent with the purpose and scheme of the relevant
legislation.
[15]
With
respect to the matter of direct discrimination, the definition of medical
expenses in subsection 118.2(2) of the ITA does not explicitly exclude the cost
of Dietary Supplements. Moreover, nothing in the provisions of the ITA dealing
with the METC points to the express adoption by Parliament of a discriminatory
policy with respect to the non-availability of the METC in relation to the cost
of Dietary Supplements. Accordingly, I conclude that the legislative choice not
to extend the METC to include the cost of Dietary Supplements in the definition
of medical expenses in subsection 118.2(2) of the ITA does not constitute
direct discrimination.
[16]
The matter
of discrimination by effect requires a consideration of whether the non-inclusion
of a particular benefit is consistent with the purpose and scheme of the
impugned legislation. In Auton, Chief Justice McLachlin determined that
the non-inclusion of the benefit that was sought was consistent with a
legislative scheme that did not purport to be comprehensive, stating at
paragraph 43:
43 The
legislative scheme in the case at bar, namely the CHA and the MPA,
does not have as its purpose the meeting of all medical needs. As discussed, its
only promise is to provide full funding for core services, defined as
physician-delivered services. Beyond this, the provinces may, within their
discretion, offer specified non-core services. It is, by its very terms, a
partial health plan. It follows that exclusion of particular non-core services
cannot, without more, be viewed as an adverse distinction based on an
enumerated ground. Rather, it is an anticipated feature of the legislative
scheme. It follows that one cannot infer from the fact of exclusion of ABA/IBI
therapy for autistic children from non-core benefits that this amounts to
discrimination. There is no discrimination by effect.
[17]
With
respect to the legislative scheme at issue in this case, the definition of
“medical expense” in subsection 118.2(2) of the ITA contains an enumeration of
the specific types of costs that are eligible for the METC. This indicates a
legislative purpose of limiting the availability of the METC to a specific list
of items. Paragraph 118.2(2)(n) of the ITA exemplifies this purpose by
drawing a line between items that meet the “recorded by a pharmacist”
requirement and those that do not. Thus, paragraph 118.2(2)(n) of the
ITA is fully consistent with the purpose and scheme of the METC legislation
which is to only provide the METC in respect of specifically enumerated types
of medical expenses and not with respect to all types of medical expenses.
[18]
This
distinction was recognized by this Court in Ray, in which Sharlow J.A.,
at paragraph 12, stated:
[12] In
my view, it is reasonable to infer that the recording requirement in paragraph 118.2(2)(n)
is intended to ensure that tax relief is not available for the cost of
medications purchased off the shelf. There are laws throughout Canada that govern
the practice of pharmacy. Although the laws are not identical for each province
and territory, they have common features. Generally, they prohibit a pharmacist
from dispensing certain medications without a medical prescription, and they
describe the records that a pharmacist is required to keep for medications
dispensed by prescription, including information that identifies the
prescribing person and the patient. There is no evidence that pharmacists
anywhere in Canada are required
to keep such records for the substances in issue in this case.
This conclusion was also reached by the Tax Court Judge who,
at paragraph 136 of her reasons, stated:
[136] In
summary, in enacting s. 118.2(2)(n), Parliament had to
decide where to draw the line between therapeutic substances that qualify for
tax relief and those that do not.
[19]
In my
view, it cannot be said that the non-inclusion of the cost of the Dietary
Supplements in the definition of medical expenses in subsection 118.2(2) of the
ITA, in general, or paragraph 118.2(2)(n) of the ITA, in particular, is
inconsistent with the purpose and scheme of the METC legislation. Rather, the
non-inclusion of that benefit is fully consistent with the purpose of only
extending the benefit of the METC to a specific enumeration of medical
expenses. Accordingly, I am of the view that the non-inclusion of the benefit
claimed by the appellants from the legislation in question does not constitute
discrimination by effect.
[20]
Having
reached the conclusion that the benefit sought by the appellants is not a
benefit provided by the law and that the legislative choice not to provide such
a benefit does not give rise to direct discrimination or discrimination by
effect, I am of the view that the appellants’ subsection 15(1) argument need
not be further considered. In so concluding, I note that a similar conclusion
was reached by the Supreme Court of Canada in Auton, at paragraph 47:
47 I
conclude that the benefit claimed, no matter how it is viewed, is not a benefit
provided by law. This is sufficient to end the enquiry.
[21]
In
addition to their subsection 15(1) argument, the appellants contend that the
reassessments that denied their METC claims in respect of the “off the shelf”
Dietary Supplements have caused them anxiety or stress such that the issuance
of those reassessments has led to a real or imminent deprivation of their life,
liberty or security of the person, contrary to section 7 of the Charter. It
would be a remarkable proposition if the demonstration of anxiety or stress at
the prospect of having to pay income taxes were a sufficient basis upon which
to be excused from having to pay such taxes. Moreover, there is no suggestion
that the appellants cannot have access to the Dietary Supplements without the
METC that they have claimed.
[22]
In my
view, the ability to resist an income tax assessment on the basis of section 7
of the Charter has been sufficiently dealt with by Justice Rothstein at
paragraphs 29 and 30 of the decision of this Court in Mathew v. Canada,
2003 FCA 371, in which he stated:
[29] I will
accept that the power of reassessment of a taxpayer implicates the
administration of justice. However, I do not accept that reassessments of
taxpayers result in a deprivation of liberty or security of the person.
[30] If there
is a right at issue in the case of reassessments in income tax, it is an
economic right. In Gosselin, McLachlin C.J.C., for the majority,
observed that in Irwin Toy Ltd. v. Quebec (A.G.), [1989] 1 S.C.R. 927 at
1003, Dickson C.J.C., for the majority, left open the question of whether
section 7 could operate to protect “economic rights fundamental to
human…survival”. However, there is no suggestion in Gosselin
that section 7 is broad enough to encompass economic rights generally or, in
particular, in respect of reassessments of income tax. I am, therefore, of
the view that the appellants have not demonstrated a deprivation of any right
protected by section 7 of the Charter.
[Emphasis
added.]
[23]
Since I
have reached the conclusion that the “recorded by a pharmacist” requirement in
paragraph 118.2(2)(n) of the ITA does not violate the rights of the
appellants under subsection 15(1) or section 7 of the Charter, it is
unnecessary for me to address the Crown’s assertion that the naturopath who
prescribed the Dietary Supplements is not a “medical practitioner” for the
purposes of that provision.
[24]
For the
foregoing reasons, I would dismiss the appeals with costs.
“C.
Michael Ryer”
“I
agree
Marc
Noël J.A.”
“I
agree
Pierre
Blais J.A.”
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