Citation: 2005TCC816
Date: 20051223
Docket: 2005-563(IT)I
BETWEEN:
WILLARD WOODROW WILSON,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
O'Connor, J.
Issue
[1] The issue in this
appeal is whether in the 2003 taxation year the Appellant is entitled to a
deductible tax credit for medical expenses totalling $1,920.89 in respect of
the cost of certain products ("products"), namely $81.19 for Vitalux
and $1,839.70 for "HMS-90". The Appellant originally also contested a
disallowance of medically related travel expenses, but that matter is no longer
in dispute. The Respondent ("Minister") submits the disallowance was
because the products were not recorded by a pharmacist.
Facts
[2] The Appellant is a
doctor. The other relevant facts are described in the following extracts from
the Minister's Reply to the Notice of Appeal ("Reply").
1. He admits the following facts as stated in the letters attached
to the Notice of Appeal ...
a) the Canada Customs and Revenue Agency
("CCRA") disallowed the Appellant's claim for medical expenses with
respect to the cost of "HMS-90" and "Vitalux" ... ;
b) HMS-90 is considered to be natural food
supplement, cannot be purchased at any pharmacy in Canada and the Appellant purchased said product from "Immunotec
Research Ltd." ("Immunotec") ... ;
...
d) HMS-90 is a natural substance and is
recognized by the medical profession as a treatment for Age Related Macular
Degeneration ("A.M.D.") ... ;
...
f) HMS-90 and Vitalux were disallowed as
medical expenses because they were not recorded by a pharmacist ...
...
11. In
so reassessing the Appellant's income tax return for the 2003 taxation year,
and in confirming said reassessment, the Minister relied on the following
assumptions of fact:
a) Mentions
the amount of the medical expenses disallowed - ...
b) the
Appellant suffers from A.M.D. ... ;
c) as
part of the treatment for A.M.D., the Appellant took Vitalux and HMS-90;
d) HMS-90
is considered to be a natural dietary supplement and Vitalux is a vitamin;
e) the
Appellant purchased HMS-90 from Immunotec as it was not sold at pharamacies in Canada;
f) Vitalux
was sold at pharmacies on an "over the counter" basis; and
g) the
purchase of Vitalux and HMS-90 did not require the recording of said purchase
by a pharmacist.
Appellant's
Submissions
[3] Appellant's submissions appear from the following
extracts from his Notice of Appeal and attachments thereto:
The Revenue Section at Summerside Tax
Centre made the arbitrary decision to put HMS-90 and Vitalux in the "waste
basket" group with herbs, vitamins and similar substances, so that they
could be disallowed as a medical expense. That arbitrary decision, which
completely ignored the medical facts, was illogical, unreasonable, unjust, and
wrong. The medical facts are that research has proved that HMS-90 and Vitalux
exert a beneficial effect in AMD. (Age Related Macular Degeneration).
...
If HMS-90 and Vitalux had existed when
regulations 118.2(2) and 118.2((1) were written, they certainly would have been
included in the group with insulin and B12 as a medical expense.
Medicine is not a static thing. Medicine
is an evolving science with new discoveries and new medications every year.
HMS-90 and Vitalux are fine examples, and medical research will bring forth
more such examples in the future. HMS-90 and Vitalux are not specifically named
in the group 118.2(2)(K) with insulin and B12, because they did not exist years
ago when those regulations were written. Therefore just because HMS-90 and
Vitalux are not specifically mentioned in 118.2(2)(K) does not validate the
arbitrary decision to place these medications in the "waste basket"
group with herbs, so that they could be disallowed as a medical expense.
The regulations governing drugs in
paragraph (48), especially the group in 118.2(2)(K) are out of date and
obsolete. In support of this statement I will mention liver extract, which is
specifically named in 118.2(2)(K). Liver extract cannot be purchased, because
it is no longer made, and is totally defunct.
A doctor will not prescribe any
medication that does not have a beneficial effect in a medical condition.
Therefore any medication that is prescribed by a doctor should qualify as a
medical expense. Nothing else makes any sense. Section 118.2(2)(K) should be
discorded and replaced with one simple sentence – namely – Is there written,
signed proof that the medication has been prescribed by a doctor. That would
cover all situations that exist at present and also in the future.
If proof is supplied that a medication
exerts a beneficial effect in a medical condition and also written signed proof
that a doctor has prescribed such medication, then there is something terribly
wrong with the system when Revenue Canada can disallow such medications as a deductible
medical expense.
Respondent's
Submissions
[4] Respondent submissions are set forth as follows in the
Reply:
13. He
relies on subsection 118.2(1) and paragraphs 118.2(2)(k) and 118.2(2)(n) of the
Income Tax Act (the "Act").
14. He
submits that the Appellant is not entitled to claim amounts expended for the
dietary supplement HMS-90 and the vitamin Vitalux totaling $1,920.89 as medical
expenses in the computation of non-refundable credits for the 2003 taxation
year pursuant to subsection 118.2(1) of the Act as said products were not
recorded by a pharmacist within the meaning of paragraph 118.2(2)(n) of the
Act, and furthermore, in the case of HMS-90, was not purchased from a pharmacy.
15. He
further submits that the Appellant is not entitled to claim amounts expended
for the dietary supplement HMS-90 and the vitamin Vitalux totaling $1,920.89 as
medical expenses in the computation of non-refundable credits for the 2003
taxation year pursuant to subsection 118.2(1) of the Act as said products were
not insulin, oxygen, liver extract injectible for pernicious anaemia or vitamin
B12 for pernicious anaemia as prescribed by a medical practitioner in
accordance with paragraph 118.2(2)(k) of the Act.
Analysis
[5] The relevant
provisions of the Act are paragraphs 118.2(2)(k) and 118.2(2)(n).
They provide in calculating the medical expense credit for the following
inclusions:
(k) for an oxygen tent or other equipment
necessary to administer oxygen or for insulin, oxygen, liver extract injectible
for pernicious anaemia or vitamin B12 for pernicious anaemia, for use by the
patient as prescribed by a medical practioner;
...
(n) for drugs, medicaments or other
preparations or substances (other than those described in paragraph (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;
[6] The products are not mentioned in paragraph 118.2(2)(k),
which does not contain the requirement of "recorded by a pharmacist".
Therefore the issue in this appeal narrows down to whether the costs of the
products were properly disallowed because, although they were prescribed by a
physician, they were not "recorded by pharmacist".
[7] This issue has been
dealt with in several decisions of this Court and of the Federal Court of
Appeal. Many of those decisions commented on the apparent unfairness and lack
of sensitivity in the Minister's strict adherence to the letter of the law but
one conclusion that emerges is that a court must interpret and apply the law as
enacted; it is up to Parliament and not a court to change the law. The decision
of the Federal Court of Appeal in Ray v. Canada, 2004 F.C.A. 1, a
decision binding on this Court ruled as follows:
4 The
basis of the Crown's application for judicial review is that the Tax Court
Judge erred in his interpretation of the phrase "as recorded by a
pharmacist" in paragraph 118.2(2)(n). The Crown argues that those words
limit the scope of paragraph 118.2(2)(n) to substances dispensed by a
pharmacist under the legally mandated procedure for prescription drugs, which
requires the keeping of certain records. If the Crown is correct, Ms. Ray is
not entitled to the tax relief claimed, because all of the substances in issue
were purchased off the shelf.
5 The
legal issue in this case has been considered many times by the Tax Court. In
all of those cases, except the one now under review, the phrase "as
recorded by a pharmacist" was considered to be an essential element of
paragraph 118.2(2)(n): see Poesiat Canada, [2003]
T.C.J. No. 503 (QL); Lajeunesse-Lebel v. Canada, [2002]
T.C.J. No. 46 (QL); Claussen Estate v. Canada, [2003]
T.C.J. No. 15 (QL); Bekker v. Canada, [2002]
T.C.J. No. 670 (QL); Lundrigan v. Canada, [2002]
T.C.J. No. 160 (QL); Melnychuk v. Canada, [2002]
T.C.J. No. 84 (QL); Noaille v. Canada, [2001]
T.C.J. No. 603 (QL); Bishoff v. Canada, [2001]
T.C.J. No. 597 (QL); Mauro v. Canada, [2001]
T.C.J. No. 415 (QL); Banman v. Canada, [2001]
T.C.J. No. 111 (QL); Mantha v. Canada, [1999]
T.C.J. No. 500 (QL); Williams v. Canada, [1997]
T.C.J. No. 1346 (QL); Mongillo v. Canada, [1994]
T.C.J. No. 831 (QL).
6 To
similar effect is the following obiter dictum in the decision of Justice
Rothstein, speaking for the Court in Dunn v. Canada, [2002]
F.C.J. No. 1816 (QL), at paragraph 6:
[6] Although
we do not need to decide the point, it would appear that the requirement that
medications be recorded by a pharmacist may be to limit the entitlement to
payments for medications that are only available upon prescription as opposed
to over the counter or other medications. In this case the Tax Court Judge found
that the medications provided were not available through regular pharmacies or
other medical supply sources and upon our review of the record, it is certainly
not obvious that the medications prescribed were prescription drugs.
7 Even
in Pagnotta and Frank, the two cases cited in the quoted portion of the Tax
Court decision under review, the phrase "as recorded by a pharmacist"
was held to be an essential element of paragraph 118.2(2)(n). However, in those
cases the recording requirement was held to be satisfied by pharmacist's sales
slips or invoices.
Standard of
Review
...
Meaning of the
words "recorded by a pharmacist"
11 In
my view, the Tax Court Judge erred in law when he concluded that the words
"as recorded by a pharmacist' in paragraph 118.2(2)(n) could be ignored. I
understand why he felt that those words represented an unjustifiable impediment
to tax relief for Ms. Ray. Like the Tax Court Judge, I sympathize with Ms. Ray.
However, it is not open to this Court, or the Tax Court, to disregard statutory
requirements imposed by Parliament, even if they are difficult to rationalize
on policy grounds. It is for Parliament alone to determine whether the words
"as recorded by a pharmacist" should be removed from paragraph
118.2(2)(n).
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.
13 I
cannot accept the suggestion that, in the case of a medication that is
prescribed by a physician but is purchased at a pharmacy off the shelf, a sales
slip or invoice from the pharmacist would be a sufficient "recording"
to meet the statutory requirement. A record in that form cannot meet the
apparent function of the recording requirement. There must be a record kept by
the pharmacist in his or her capacity as pharmacist. That necessarily excludes
substances, however useful or beneficial, that are purchased off the shelf.
14 Nor
do I think it relevant to the interpretation of paragraph 118.2(2)(n) that a
physician may dispense prescription medicines, and even sell them, without
breaching any legislation applicable to pharmacists. It appears that a patient
who purchases prescription medications from a physician may not be entitled to
a medical expense tax credit because there would be no recording by a
pharmacist: see Dunn (cited above). Some may consider that to be an unfair or inappropriate
result. Perhaps it is, but that cannot justify an interpretation of paragraph
118.2(2)(n) that ignores the words "as recorded by a pharmacist".
[8] In the present case I
have no alternative but to follow the decision of the Federal Court of Appeal. Since
the products are not specifically mentioned in paragraph 118.2(2)(k) and
since they were not recorded by a pharmacist their costs cannot be included in
the calculation of the medical expense credit.
[9] The appeal is
dismissed.
Signed at Ottawa, Canada, this 23rd day of December, 2005.
"T. O'Connor"
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