Docket: 2012-3132(IT)I
BETWEEN:
RACHEL SHAPIRO,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
____________________________________________________________________
Appeal
heard on November 8, 2013, at Toronto, Ontario.
Before: The Honourable
Justice Robert J. Hogan
Appearances:
|
Counsel for the Appellant:
|
Robert
Shapiro
|
|
|
|
|
Counsel for the Respondent:
|
Rita Araujo
|
____________________________________________________________________
JUDGMENT
The appeal from the reassessment made under
the Income Tax Act for the 2010 taxation year is dismissed, without
costs, in accordance with the attached reasons for judgment.
Signed at Ottawa, Canada, this 7th day
of March 2014.
“Robert J. Hogan”
Citation: 2014 TCC 74
Date: 20140307
Docket: 2012-3132(IT)I
BETWEEN:
RACHEL SHAPIRO,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
Hogan J.
[1]
The Appellant, Rachel
Shapiro, claimed in her 2010 tax return a medical expense tax credit pursuant
to subsection 118.2(1) of the Income Tax Act (the “ITA”) in respect
of costs incurred for the storage of cord blood. The Minister of National
Revenue (the “Minister”) disallowed the medical expense tax credit on the basis
that the processing and storage of the cord blood was not an eligible medical
expense.
[2]
This appeal was heard
under the informal procedure.
Factual Summary
[3]
The Appellant gave
birth to a child in 2009. Given the Appellant’s family’s history of cancer, the
Appellant and her husband chose to investigate cord blood banking.
[4]
In general terms, cord
blood banking involves collecting stem-cell-containing blood from the child’s
umbilical cord and the placenta after delivery. The cord blood is then
processed and stored for potential use. Cord blood can be used in stem cell
therapy and in the treatment of diseases of the blood such as leukemia.
[5]
The Appellant chose to
store her child’s cord blood at a hematology laboratory operated by Progenics.
[6]
Progenics is a for-profit
private enterprise.
[7]
In 2009 and 2010, the
Appellant’s child was healthy and the cord blood was not required in order to
treat an illness.
Analysis
[8]
The Appellant argues
that cord-blood-banking expenses fall within paragraph 118.2(2)(o)
of the ITA. This provision refers to a medical expense:
118.2(2)(o) for laboratory,
radiological or other diagnostic procedures or services together with
necessary interpretations, for maintaining health, preventing disease or
assisting in the diagnosis or treatment of any injury, illness or
disability, for the patient as prescribed by a medical practitioner or
dentist;
[Emphasis added.]
[9]
Four conditions must be
satisfied in order for an expense to be deductible under this provision. The
expense must be incurred:
(a) in respect of a laboratory,
radiological or other diagnostic procedure or service together with necessary
interpretations;
(b) for maintaining health,
preventing disease or assisting in the diagnosis or treatment of any injury,
illness or disability;
(c) for the patient; and
(d) as prescribed by a
medical practitioner.
A Laboratory, Radiological or Other Diagnostic Procedure
or Service Together with Necessary Interpretations
[10]
While the first part of
the phrase is relatively clear (referring to diagnostic procedures or
services), the use of the phrase “together with necessary interpretations” (the
“generic term”) creates some ambiguity. Such language is present in both the
English and French versions of the provision. Applying basic principles of
statutory interpretation, one can construe the phrase as including medical
tests and procedures of a kind similar to diagnostic procedures and services
such as laboratory or radiological procedures or services.
[11]
Under this interpretation,
the storage of placental or cord blood stem cells qualifies as a medical
procedure or service similar in nature to laboratory or radiological
tests. A medical doctor is required for the extraction of blood containing
umbilical cord or placental stem cells (typically the obstetrician‑gynecologist
who delivers the child). The extracted blood is appropriately packaged for
delivery to the cryogenics laboratory. At the laboratory, the stem-cell-containing
component is extracted from the blood. An analysis is conducted to determine
the stem cell count and stem cell viability.
From this description, placental or cord blood stem cell storage would appear
to be similar to other laboratory procedures and services and would accordingly
meet the requirement under the first condition.
For
Maintaining Health, Preventing Disease or Assisting in the Diagnosis or Treatment
of any Injury, Illness or Disability
[12]
The ordinary meaning of this
portion of the provision is relatively clear. The purpose of the above-discussed
category of medical procedures or services must be maintaining health,
preventing disease or assisting in the diagnosis or treatment of injury,
illness or disability. Essentially, the person would not have to be sick, nor
be required to wait until diagnosed, nor necessarily have to be genetically predisposed
to an illness.
[13]
While there is a
question of whether the extracted stem cells would ever be needed to treat an
illness, this is a similar situation to the use of various diagnostic tests for
the prevention or early detection of diseases. For example, mammograms, which
are often done routinely after a certain age, qualify for the deduction under
the provision in question if all of the conditions are met, irrespective of
whether the person has been diagnosed with breast cancer.
For
the Patient
[14]
Counsel for the Crown argues that
there is no patient in this case because neither the child nor the parents were
ill at any point during the taxation year in question. The French version of the provision uses the words “du
particulier, de son époux ou de son conjoint de fait ou d’une personne à charge
visée à l’alinéa a)” instead of just “patient”. The French version does not support the interpretation
that the person in question must be a patient and suffer from an illness during
the taxation year in question. The Respondent’s argument also fails to make
allowance for the fact that the provision allows deductions for the purpose of
maintaining health and preventing disease. In neither of those cases is it
required that the person be ill. Therefore, the fact that neither the child nor
the mother was sick during the taxation year in question is irrelevant.
As Prescribed by a Medical Practitioner
[15]
The Appellant’s
obstetrician was not called at the hearing. There was no evidence emanating
from the Appellant’s obstetrician to suggest that the procedure was directed or
recommended by that physician.
[16]
During oral argument, counsel
for the Appellant suggested that, because the Appellant’s obstetrician
extracted the cord blood, it must be inferred that that physician prescribed
the processing and storage of the cord blood.
[17]
I do not agree with
this interpretation. In my opinion, “prescribed” means that the procedure or
service must be recommended by the medical practitioner. The evidence shows
that the Appellant and her spouse made a choice on their own to have their
child’s cord blood processed and stored. They did so because of a family
history of cancer. The evidence shows that the Appellant and her spouse
researched private cord blood banks and chose Progenics to provide the cord
blood processing and storage facilities. The Appellant has failed to persuade
me that the obstetrician had a role in recommending the cord blood processing
and storage.
[18]
For these reasons, the
appeal is dismissed.
Signed at Ottawa, Canada, this 7th day of March 2014.
“Robert J. Hogan”
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