Citation: 2008TCC160
Date: 20080320
Docket: 2006-2016(IT)G
BETWEEN:
PETER MUDRY,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
Rossiter, J.
Background
[1] The Appellant received
medical services at the Institute of Integrative Medicine in New York and New Jersey, United States
("Institute"), administered under the supervision and direction of a medical
doctor. The Appellant received similar medical services at the Toronto Clinic
for Preventative Medicine ("Clinic"), under the supervision and
direction of medical doctors but administered by nurses. Payments were made by
the Appellant to the Institute and the Clinic respectively for these services.
Neither the Institute nor the Clinic was a private or public hospital but were facilities
with medical doctors and nurses on staff. The Appellant sought to claim medical
expense credits for the payment of these medical services, but the Canada
Revenue Agency (“CRA”) denied the claim since the payments were not made to a
medical practitioner as required under paragraph 118.2(2)(a) of the Income
Tax Act ("Act").
Facts
[2] The Appellant is an
85 year old retired school teacher and principal. The Appellant suffered a
massive heart attack in 2004 and shortly thereafter suffered a stroke. After hospitalization
his situation seemed to stabilize. He sought advice from the Clinic on
Chelation Therapy. The Clinic would not provide treatment due to the extent of
the Appellant’s condition and he was referred to an expert in Chelation Therapy,
Dr. Majid Ali at the Institute. The Appellant travelled to New York and New Jersey where he received Chelation
Therapy treatments at the Institute under the supervision and direction of Dr.
Ali, a medical doctor and licensed physician in the States of New York and New Jersey. The Appellant incurred
$5,457.78 in expenses for the Chelation Therapy treatments in New York and
New Jersey, $2,138.51 being for the
therapy treatments and the balance for travel, lodging and meals associated
with his trips to and from New York and New Jersey.
[3] Upon recommendation
of Dr. Ali, the Appellant continued Chelation Therapy treatments at the Clinic,
which were administered by registered nurses under the authorization and at the
direction of Dr. Bryn Waern and Dr. Louis Spencer. Both Dr. Waern and
Dr. Spencer are medical practitioners providing consulting services to the
Clinic in conjunction with Dr. Ali. According to the Appellant’s daughter’s
testimony, Chelation treatment at the Clinic typically would involve a
registered nurse taking the Appellant’s temperature, blood pressure, the doctor
checking his chart, and the nurse inserting the IV for the treatment flow. Dr.
Waern and Dr. Spencer were always involved giving directions with respect to
the treatments. The Appellant incurred $21,136.13 in expenses for the Chelation
Therapy treatments received at the Clinic; $14,673.85 for the therapy
treatments and the balance for travel, lodging and meals associated with trips
to and from Toronto.
[4] Based on the
letters from Dr. Ali dated February 23, 2006, the Appellant’s family physician Dr.
Thomas J. Barnard dated January 23, 2006 and Dr. Bryn Waern’s letter
dated February 7, 2006, it can be said the therapy was successful. The Appellant
made a good recovery and some three years later was present in Court throughout
the hearing of the appeal.
[5] The Institute had registered
nurses, numerous medical doctors, some of whom were professors of medicine and staff
providing nutritional counselling, performing research and laboratory work. The
Clinic is affiliated with the Institute as noted on its website where it states
in part:
Affiliations
The Toronto Clinic for Preventative
Medicine has a professional affiliation with the Capital University of
Integrative Medicine of Washington, D.C., and is sponsored by Dr. Majid Ali's
Institute of Integrative Medicine of Denville, New Jersey. Dr. Ali acts as a consultant to the Clinic and is
regularly consulted on difficult cases.
[6] Payments for the
medical services provided at the Clinic or Institute by the medical doctors -
Dr. Ali at the Institute and Dr. Spencer, Dr. Waern and Dr. Ali at the
Clinic, were made by the Appellant or by the Appellant’s daughter to the
Institute or Clinic, with the Appellant reimbursing the daughter. For the 2004
taxation year the Appellant had submitted receipts to the CRA claiming the
medical expenses in relation to the Chelation Therapy but these were rejected
as insufficient and returned to the Appellant. The Appellant then obtained
additional receipts including correspondence from the Institute dated February
23, 2006 and signed by the Office Manager, which stated in part as follows:
The above patient attended
our offices on October 6, 7 and 8, 2004 for examination and consultation with
Dr. Ali as well as for several intravenous treatments and specialized medical
tests.
The total medical expenses
for these services was $1,554.00 U.S.
In addition, the above
patient paid $105.00 US each for 2 follow-up telephone consultations with Dr.
Ali on November 15, 2004 and March 31, 2005, for a total of $210.00 US.
The grand total for the above
medical expenses is $1,764.00 US.
This figure is for medical
expenses only and does not include any of the patient's travel or lodging
expenses.
[7] The Appellant also produced
a receipt for the total amount billed by the Clinic of $14,673.85 signed by Dr.
Cristina Radulescu, Director of the Clinic, which identified the Appellant as
the patient and Dr. Waern as the authorizing physician.
[8] Attached to the Clinic
receipt was a schedule showing the date and the medical service rendered, the
blood pressure and pulse of the patient at the time the service was rendered, who
made the entries and the bill for each medical service by date. A Patient
Medical Expense Report, which was an official prescription receipt for the
medications acquired by the Clinic doing intravenous treatment of the Appellant,
showed the drugs which were acquired through Dr. Waern and Dr. Spencer the
consulting physicians with the Clinic. The acquisition of these drugs on the Patient
Medical Expenses Report co-relates generally with the timelines for the medical
services provided to the Appellant by the Clinic.
[9] For the Chelation Therapy
treatments received by the Appellant at the Institute, the Respondent admits
that (1) Dr. Ali is a qualified medical practitioner and appropriately licensed;
(2) the treatment at the Institute was provided by and administered to the Appellant
by Dr. Ali or under his supervision; (3) the Chelation Therapy treatments were
received in 2004 and paid for in 2004 by the Appellant; and (4) if the
Chelation Therapy treatment expenses are allowed as medical expenses, the
expenses associated with the same, namely the travel would also be acceptable.
[10] The documentation
given to CRA by the Appellant in relation to medical services provided at the
Clinic identifies the doctors by name, Dr. Spencer and Dr. Waern who authorized
the treatment, the address of the Clinic, confirms the treatment dates, the
expenses by treatment date and identifies the patient. It was admitted by the
Respondent that treatment was received in 2004 and paid for in 2004, and if the
Chelation Therapy treatment expenses are allowed as medical expenses, the expenses
associated with the same, namely travel would be accepted.
[11] According to the
testimony of the CRA Litigation Officer, Denis Deloges, to establish medical
expense claims, the documentation must collectively, identify the doctor,
provide the address of the doctor, confirm the treatment dates, the total
expense amounts and identify the patient. The documentation does not have to be
signed by the doctor nor is any break-down required. This same witness further stated that it is reasonable
to assume: (1) some of the monies would be paid to the doctors; (2) some would
be used to pay other expenses associated with operating a medical office; and
(3) these medical practitioners were in the business of providing medical
services for a fee. The correspondence from the Institute dated February 23, 2006 and the
receipt issued by the Clinic both meet all the documentation requirements
listed by the CRA Litigation Officer, but CRA refused to grant the medical
expense credit because payment was to the Institute or Clinic and not a medical
practitioner and in the case of the Clinic because the medical service was not
provided by a medical practitioner or nurse.
Issues
[12] (1) Does the phrase, “an amount
paid to a medical practitioner…”, include an amount paid to a clinic or
institute, when the clinic or institute has the medical service provided by a
medical practitioner or nurse in its employ?
(2) Were the medical services provided by the Clinic
administered by a medical practitioner or nurse?
Law and Analysis
[13] Paragraph 118.2(2)(a)
of the Act states in part as follows:
(2) Medical expenses. For the purposes
of subsection (1), a medical expense of an individual is an amount paid
(a) [medical and
dental services] – to a medical practitioner, dentist or nurse or a
public or licensed private hospital in respect of medical or dental services
provided to a person ... . [Emphasis added].
There is no issue here as to whether
or not the medical services were provided by a public or licensed private hospital
as the Institute and Clinic were neither. Also based on the evidence presented
at trial it has been established that the medical services received at the
Clinic were administered by a nurse under the direction of a medical
practitioner.
[14] In this appeal we are
concerned with amounts paid by the Appellant to the Institute or Clinic for
medical services provided by a medical practitioner or nurse in the employ of
the Institution or Clinic. The Respondent asserts that this section must be
read strictly and literally - medical expense is an amount that must be paid to
a medical practitioner, dentist or nurse and no-one else - insisting that the
payment be made “directly” to a medical practitioner. The Respondent goes so
far as to say that the payment for the medical services cannot be paid to a corporation,
a proprietorship, a partnership, a clinic or an institute even though the medical
service was provided by a medical practitioner or nurse in the employ of a corporation,
proprietorship, partnership, clinic or institute.
[15] I believe there is
an ambiguity in paragraph 118.2(2)(a) as the Act fails to stipulate
whether the payment must be made directly to a medical practitioner or if it
may be made indirectly. The Respondent, on behalf of CRA, states the payment must
be made directly but why would the Crown read this word into the Act any
more so than to read the word “indirectly” into the Act?
[16] I take judicial notice
of the fact, that in today’s society, it is a rarity that any person pays for
medical services directly to a medical practitioner – the payment almost always
go to a professional corporation, clinic, health centre, medical centre, health
group, health or medical institute, partnership, or business name where the
medical practitioner is an employee, the operator or in a consultative role. Medical
services are performed in a variety of business environments, in a variety of
physical settings from out of his/her home to large franchise clinics or
institutes with multiple offices and qualified personnel in many jurisdictions.
Being a business it operates in a fashion which best suits its business
objectives, whether it be for marketing, tax planning or business development.
[17] In interpreting statutes, the
textual, contextual, purposive (TCP) approach was set out in The Queen v. Canada Trustco Mortgage
Co., 2005 SCC 54, at paragraphs 10 and 11 where the Supreme Court of Canada
states the following:
It has been
long established as a matter of statutory interpretation that "the words
of an Act are to be read in their entire context and in their grammatical and
ordinary sense harmoniously with the scheme of the Act, the object of the Act,
and the intention of Parliament": see 65302 British Columbia Ltd. v. Canada, [1999]
3 S.C.R. 804 (S.C.C.), at para. 50. The interpretation of a
statutory provision must be made according to a textual, contextual and
purposive analysis to find a meaning that is harmonious with the Act as a
whole. When the words of a provision are precise and unequivocal, the ordinary
meaning of the words play a dominant role in the interpretive process. On the
other hand, where the words can support more than one reasonable meaning, the
ordinary meaning of the words plays a lesser role. The relative effects of
ordinary meaning, context and purpose on the interpretive process may vary, but
in all cases the court must seek to read the provisions of an Act as a
harmonious whole.
As a result of
the Duke of Westminster principle (Commissioners of Inland Revenue v.
Duke of Westminster, [1936] A.C. 1 (U.K. H.L.)) that taxpayers are entitled
to arrange their affairs to minimize the amount of tax payable, Canadian tax
legislation received a strict interpretation in an era of more literal
statutory interpretation than the present. There is no doubt today that all
statutes, including the Income Tax Act, must be interpreted in a textual,
contextual and purposive way. However, the particularity and detail of many tax
provisions have often led to an emphasis on textual interpretation. Where
Parliament has specified precisely what conditions must be satisfied to achieve
a particular result, it is reasonable to assume that Parliament intended that
taxpayers would rely on such provisions to achieve the result they prescribe.
[18] The application of the TCP analysis was clarified in
the Ontario (Minister of Finance) v. Placer Dome Canada
Limited, 2006 SCC 20, in
which LeBel J. stated the following at paragraphs 21 to 24:
In Stubart Investments Ltd. v. The Queen, [1984] 1 S.C.R.
536 (S.C.C.), this Court rejected the strict approach to the
construction of taxation statutes and held that the modern approach applies to
taxation statutes no less than it does to other statutes. That is, "the
words of an Act are to be read in their entire context and in their grammatical
and ordinary sense harmoniously with the scheme of the Act, the object of the
Act, and the intention of Parliament" (p. 578): see 65302 British
Columbia Ltd. v. Canada, [1999] 3 S.C.R.
804 (S.C.C.), at para. 50. However, because of the degree of
precision and detail characteristic of many tax provisions, a greater emphasis
has often been placed on textual interpretation where taxation statutes are concerned:
Canada Trustco Mortgage Co. v. Canada, [2005] 2 S.C.R.
601, 2005 SCC 54 (S.C.C.), at para. 11. Taxpayers are entitled to rely on the clear
meaning of taxation provisions in structuring their affairs. Where the words of
a statute are precise and unequivocal, those words will play a dominant role in
the interpretive process.
On the other hand, where the words of a statute give
rise to more than one reasonable interpretation, the ordinary meaning of words
will play a lesser role, and greater recourse to the context and purpose of the
Act may be necessary: Canada Trustco,
at para. 10. Moreover, as McLachlin C.J. noted at para. 47, "[e]ven where
the meaning of particular provisions may not appear to be ambiguous at first
glance, statutory context and purpose may reveal or resolve latent
ambiguities". The Chief Justice went on to explain that in order to
resolve explicit and latent ambiguities in taxation legislation, "the
courts must undertake a unified textual, contextual and purposive approach to
statutory interpretation".
The interpretive approach is thus informed by the level of
precision and clarity with which a taxing provision is drafted. Where such a
provision admits of no ambiguity in its meaning or in its application to the
facts, it must simply be applied. Reference to the purpose of the provision
"cannot be used to create an unexpressed exception to clear
language": see P. W. Hogg, J. E. Magee and J. Li, Principles of
Canadian Income Tax Law (5th ed. 2005), at p. 569; Shell Canada Ltd. v.
R., [1999] 3 S.C.R.
622 (S.C.C.). Where, as in this case, the provision admits of
more than one reasonable interpretation, greater emphasis must be placed on the
context, scheme and purpose of the Act. Thus, legislative purpose may
not be used to supplant clear statutory language, but to arrive at the most
plausible interpretation of an ambiguous statutory provision.
Although there is a residual presumption in favour of the
taxpayer, it is residual only and applies in the exceptional case where
application of the ordinary principles of interpretation does not resolve the
issue: Notre-Dame de Bon-Secours, at p. 19. Any doubt about the meaning
of a taxation statute must be reasonable, and no recourse to the presumption
lies unless the usual rules of interpretation have been applied, to no avail,
in an attempt to discern the meaning of the provision at issue. In my view, the
residual presumption does not assist PDC in the present case because the
ambiguity in the Mining Tax Act can be resolved through the application
of the ordinary principles of statutory interpretation. [Emphasis added].
[19] I believe the words
of paragraph 118.2(2)(a) can support more than one reasonable meaning –
the payment by the taxpayer might have to be made “directly” to a medical
practitioner, on the other hand it may be made indirectly to a medical
practitioner i.e. where the medical practitioner is in the employ of another or
uses some entity name, so long as the medical service is provided by a medical
practitioner. By application of the TCP approach the ordinary meaning of that
paragraph plays a lesser role. I must look to the context and purpose in the
interpretation process so as to find harmony with the Act as a whole.
[20] The medical expense
credit is for payment of a medical service provided. What purpose would be
served within the taxation scheme if it was required that the payment for a
medical expense be made directly to a medical practitioner as opposed to the
professional corporation, partnership or employer of the medical practitioner
providing the service? It is: (1) the provision of medical service; (2) by one
of several enumerated persons in subsection 118.2(2), i.e. medical practitioner,
nurse, et cetera, that is important. A medical service is no less a medical
service because it is paid for to some entity not defined in the Act
when it is the qualification of the person providing the service that is
important. Obviously, it was the intent of Parliament to give financial relief
to taxpayers who incur medical expenses, for medical services provided by
certain enumerated professionals, whom Parliament felt could provide such
required services.
[21] The position of the
Respondent does not take into consideration the facts of which I took judicial
notice of and which are very prevalent in society today. Medical services
provided by a medical practitioner or someone enumerated in paragraph 118.2(2)(a)
of the Act should be suffice to qualify as a medical expense credit.
[22] Also, CRA realized
the absurdity that would result from requiring a taxpayer to pay medical
practitioners directly for medical services received, in its Interpretation
Bulletin IT 519R2 (“IT”).
[23] The CRA’s published
IT provides their administrative policy in respect of the application of the
medical expense credit. My understanding of interpretation bulletins is that
they are to advise the public as to a position CRA would take with respect to a
particular issue, in this case medical expense credit. At paragraph 20 of the
IT, CRA establishes, in part, as to what payments will be eligible for the
medical expense credit, and which reads as follows:
20. Payments made to partnerships, societies and
associations for medical services rendered by their employees or partners are
qualifying medical expenses as long as the person who provided the service is a
medical practitioner, dentist or nurse authorized to practice in accordance
with the laws discussed in paragraph 3(a) to (c) above. For example,
the Arthritis Society employs physiotherapists to provide medical services to
persons suffering from arthritis and rheumatism. Payments made to that society
for the services of such employees are qualifying medical expenses. Other
similar organizations are the Victorian Order of Nurses and The Canadian Red
Cross Society Home Maker Services. Payments qualify only to the extent that
they are for the period when the patient is at home. Payments for a period when
the nurse is simply looking after a home and children when the patient is in
hospital or otherwise away from home do not qualify since these would be
personal or living expenses. In some instances, such as that of the Canadian
Mothercraft Society, the visiting worker instead of the society may give the
receipts but, if the worker can be regarded as a practical nurse, those
receipts will be accepted. [Emphasis added].
The
disallowance of the Appellant’s medical expense credits because cheques were
made payable to an institute or clinic, is in contradiction of CRA’s position
enunciated in the IT.
[24] The IT makes
reference to payments being made to societies, associations or partnerships,
but provides no guidance as to what constitutes these structures and if either
the Clinic or Institute fall within the purview of one of these entities.
Neither the IT nor the Act defines these terms and as such reliance is
placed on jurisprudence in other areas of law.
[25] In R. v. AFC Soccer, 2004 MBCA 73, 2004 CarswellMan 212,
32 C.P.R. (4th) 53, Steel J.A. defined a “society” in the context of determining
whether AFC Soccer was capable in law of being subject to
prosecution stemming from copyright infringement, the following was stated at paragraph 9:
A business name is obviously not a public body or body
corporate. Nor is it a society or company. A "company" is defined in
Black's Law Dictionary, 6th ed., as a "[u]nion or association of persons
for carrying on a commercial or industrial enterprise; a partnership, corporation,
association, joint stock company". A "society" is
defined in that same dictionary as:
An association or company of persons (generally
unincorporated) united together by mutual consent, in order to deliberate,
determine, and act jointly for some common purpose. [Emphasis
added].
[26] The concept of an
“association” was discussed in Archibald v. Canada
(Wheat Board), (1997), 44 C.R.R. (2d)
105 (Fed. T.D.), by Muldoon J., at paragraph 58 and 59, in which it was
being decided whether parts of the Canadian Wheat Board Act were
unconstitutional, the court stated the following:
Freedom of association has everything to do with
the meaning of "association". In The Oxford English Dictionary, 2nd
ed. 1989, Clarendon Press, the first and paramount definition of
"association", 1.a, is "The action of combining together for a
common purpose; the condition of such combination; confederation, league."
It is obvious that the reference is to a confederation of persons, not things.
In the 1985 update Le Petit Robert, dictionnaire de la langue française, Paris, the first and third definitions convey the
same thought: "1o Action d'associer qqn à qqch. V. Participation, collaboration, coopération * *
* 3o Groupement de personnes qui s'unissent en vue d'un but déterminé. * * *
"Le but de toute association politique est la conservation des droits
naturels et imprescriptibles de l'homme"." Again, the joint combining of people, not
things, for a determined objective.
Both official languages have the
same derivation of "association" in the Latin language:
associare, "To join (to), associate (with)", and even more basic:
societas: "1. The fact or condition of being associated for a common
purpose, partnership * * * 2. A body of persons associated for a common
purpose. * * * 3. Partnership (between peoples or sovereigns) in war, etc.,
alliances". (Oxford Latin Dictionary, combined ed. 1985, Oxford University
Press.) Broad, ancestral definitions can lead one in many diverse
directions, but here the point is that the kind of association whose freedom is
guaranteed by the Charter, means an association of people, and not just
people's things, chattels, commodities or other property. The plaintiffs'
leading counsel conceded before the Court, without a shadow of doubt, that the
grain which is a subject of this litigation is a commercial commodity (as is
quite obvious, in any event), in fact, a thing, but not a person. Therefore
Charter paragraph 2.(d) has nothing to do with different producers' grain being
mixed together in rail cars, elevators and bins of any kind: grain, being
inanimate and non-human, is incapable of "association" in the sense
of paragraph 2.(d) of the Charter. Having their grain mixed together does not
thereby push the producers into any sort of constitutional association. [Emphasis
added].
[27] The Partnerships
Act, R.S.O. 1990, c. P.5, defines partnership at section 2, which states
the following:
Partnership is the relation that subsists between persons
carrying on a business in common with a view to profit, but the relation
between the members of a company or association that is incorporated by or
under the authority of any special or general Act in force in Ontario or
elsewhere, or registered as a corporation under any such Act, is not a
partnership within the meaning of this Act.
[28] In Continental
Bank Leasing Corp. v. The Queen, [1998] S.C.J. No. 63 at
paragraph 22, it was noted that the wording in section 2 of the Partnerships
Act is common to the majority of partnership statutes which requires three
essential components to establish a partnership: (1) a business, (2) carried on
in common, (3) with a view to profit.
[29] There is no evidence before the Court as to what is the
nature of the Institute or the Clinic, that is, whether they are a body
corporate, partnership, proprietorship, society, association, and neither the Canada
Business Corporations Act ("CBCA") nor the Ontario Business
Corporations Act ("OBCA") provides any assistance in defining
institute or clinic. Both terms are, however,
defined in Webster’s Ninth New Collegiate Dictionary as follows:
in.sti.tute • something that is
instituted: as a (1): an elementary principle recognized as
authoritative (2)plural
: a collection of
such principles and precepts; especially : a legal compendium b: an organization for the promotion of a
cause : association <a research institute> <an institute for the
blind> c: an educational institution and especially one devoted
to technical fields d: a usually brief intensive course of instruction on selected
topics relating to a particular field <an urban studies institute>
clin.ic • 1: a class of medical instruction in which
patients are examined and discussed 2: a group meeting devoted to the analysis
and solution of concrete problems or to the acquiring of specific skills or
knowledge in a particular field <writing clinics> <golf clinics>3 a: a facility (as
of a hospital) for diagnosis and treatment of outpatients b: a group practice
in which several physicians work cooperatively
[30] When one looks at the letterhead of the Institute it is
quite evident that the clinical and consulting staff at the Institute are
associated in some form or another for a common purpose or cause, which is to
provide medical services in relation to chronic immune, allergic, ecologic,
nutritional, degenerative and stress related disorders. The same can be said
with respect to the Clinic. Doctors Spencer, Waern and Ali are all consulting
physicians at this clinic as well as others including a Dr. Cristina Radulescu.
[31] Although not law, Interpretation Bulletins issued by
CRA can be used by the Courts as interpretative aids as was discussed in the
Ontario Court of Appeal decision of Placer Dome Canada Ltd. v.
Ontario (Minister of Finance), 2004 CarswellOnt 3491, 190 O.A.C. 157, where
the following was noted:
[49] While
prior administrative policy is not determinative of the correct interpretation of a statutory provision, such policy is
entitled to appropriate consideration by the court. In my view, it goes too far
to say that the task of interpretation in this case should not be affected by
the Minister's policy which existed for a number of years and is directly on
point. In Will-Kare Paving & Contracting Ltd. v. R., [2000] 1 S.C.R.
915 (S.C.C.) at para. 66, Binnie J. stated:
Administrative
policy and interpretation are not determinative but are entitled to weight and
can be an important factor in case of doubt about the meaning of legislation
(citations omitted).
[50 Binnie
J.'s observation in Will-Kare is particularly apt in a case where there
is some ambiguity or lack of clarity in the legislative provision under
consideration. While I have concluded that there is no ambiguity in the
definition of "hedging" under the Act, the trial judge clearly came
to a different conclusion. If he is right that the definition of
"proceeds" under the Act produces redundancy, and therefore affects
the interpretation of the definition of "hedging", then it is my view
that he would and should have been assisted by the Minister's administrative
policy. The policy expressly rejected the decision in Echo Bay upon which the
trial judge's decision is largely based.
[51] One
of the authorities relied upon by Binnie J. in Will-Kare was Harel v.
Quebec (Deputy Minister of Revenue) (1977), [1978] 1 S.C.R. 851 (S.C.C.) where De
Granpré J. stated at p. 859:
Once
again, I am not saying that the administrative inter-pretation could contradict
a clear legislative text; but in a situation such as I have just outlined, this
interpretation has real weight and, in case of doubt about the meaning of the
legislation, becomes an important factor.
[52] In a more recent case, Sexton J.A. made a similar point
in Silicon Graphics Ltd. v. R. (2002), [2003] 1
F.C. 447 (Fed. C.A.) at
para. 52:
Of course, statements by Revenue Canada officials are not declarative of the law. However, in the recent
case of Canadian Occidental U.S. Petroleum Corp. v. Canada (2001), 2001
D.T.C. 295 (T.C.C.), Bowman A.C.J. noted that while the
administrative position of Revenue Canada is not declarative of the law, it is
nonetheless of assistance in circumstances where the Minister seeks to reassess
the taxpayer in a manner inconsistent with its own administrative position. Associate Chief Justice Bowman wrote,
at paragraph 30:
The
Court is not bound by departmental practice although it is not uncommon to look
at it if it can be of any assistance in resolving a doubt: Nowegijick v. The
Queen et al., 83 D.T.C. 5041 at 5044. I might add as a corollary to
this that departmental practice may be of assistance in resolving a doubt in
favour of a taxpayer. There can be no justification for using it as a means of
resolving a doubt in favour of the very department that formulated the practice
(emphasis added).
[32] As noted by Chief Justice Bowman, Interpretation Bulletins
can, nonetheless, be of assistance in circumstances when the Minister seeks to
reassess the taxpayer in the manner inconsistent with his own administrative
position, which is the situation in the case at bar. The Minister is
disallowing medical expenses in circumstances which are inconsistent with its
own administrative position as stated in its own IT. The application of the IT
in this particular case assists in resolving doubt in favour of the taxpayer.
[33] Given the interpretation set out in the IT, definitions
referred to above, the facts which I took judicial notice of and the other
facts of this case, I find that the Clinic and Institute fall within the
definitions of society or associations, as contemplated by the IT. The Clinic
or Institute could have been business names used by the medical practitioners
for business purposes, whether it be marketing, tax purposes, profile purposes,
or bringing together a variety of professionals to provide medical services and
as such, when payments are made to the Clinic or the Institute they are being
made to the medical practitioner who provided the medical services.
[34] The Court should give a most equitable and broad
interpretation as possible to subsection 118.2(2) in dealing specifically with
medical expenses. I refer to Johnston v. R., 98 DTC 6169 wherein Mr. Justice Létourneau, speaking on behalf of the
Federal Court of Appeal, stated in part as follows at paragraphs 10 and 11:
[10] The purpose of sections 118.3 and 118.4 is
not to indemnify a person who suffers from a severe and prolonged mental or
physical impairment, but to financially assist him or her in bearing the
additional costs of living and working generated by the impaiment. As Bowman
T.C.J. wrote in Radage v. R. at p. 2528:
The legislative intent appears to be to provide a
modest relief to persons who fall within a relatively restricted category of
markedly physically or mentally impaired persons. The intent is neither to give
the credit to every one who suffers from a disability nor to erect a hurdle
that is impossible for virtually every disabled person to surmount. It
obviously recognizes that disabled persons need such tax relief and it is
intended to be of benefit to such persons.
The learned Judge went on to add, at p. 2529, and I
agree with him:
If the object of Parliament, which is to give to
disabled persons a measure of relief that will to some degree alleviate the
increased difficulties under which their impairment forces them to live, is to
be achieved the provisions must be given a humane and compassionate
construction.
[11] Indeed, although the scope of these
provisions is limited in their application to severely impaired persons, they
must not be interpreted so restrictively as to negate or compromise the
legislative intent.
[35] I believe the interpretation taken by the Respondent in
this particular matter is so restrictive as to negate or compromise the
legislative intent. I believe the objective of Parliament was to give to
taxpayers, who have incurred medical expenses, for medical services provided by
a medical practitioner, some measure of relief that will to some degree
alleviate increased financial burden which they have incurred as a result of
the medical expense. The restrictive interpretation taken by the Respondent
does not achieve the objective of Parliament, nor is it consistent with the
views of CRA enunciated it its IT.
[36] I find that the Appellant has also met all the
conditions enumerated by the Respondent’s own witness, the CRA Litigation
Officer, as necessary to meet the requirements of paragraph 118.2(2)(a)
of the Act, allowing the Appellant to receive the medical expense credit
for the duration of treatments he received at the Institute and Clinic
including the travel expenses put forthwith in respect to same.
[37] I thank the parties
for narrowing the issues and focusing their evidence before the Court. I allow
the appeal and direct that the matter be referred back to the Minister of
National Revenue for reconsideration and reassessment on the basis that:
For the 2004 taxation
year the appeal is allowed and the Appellant shall be allowed:
(a) medical
expenses and travel expenses in the amount of $5,457.78 in relation to
Chelation Therapy treatments received by the Appellant at the Institute of Integrative Medicine;
(b) medical
expenses and travel expenses in the amount of $21,136.13 in relation to
Chelation Therapy treatments received by the Appellant at the Toronto Clinic
for Preventative Medicine;
(c) by
consent, $1,139.80 for medical expenses for treatments received at the Victoria
Hospital in London, Ontario;
(d) by
consent, $138.50 for parking expenses for various medical facilities at which
the above medical expenses were incurred; and
(e) by
consent, a rollover under subsection 60(l) of the Act, of Scotiabank
RRSP number 2398197, plan number 009543158 in the amount of $16,745.63 from the
RIF of the Appellant's
deceased wife to the Appellant in the 2004 taxation year resulting in a
reduction of income to the Appellant in the 2004 taxation of $16,745.63.
[38] With respect to
costs under the Tax Court of Canada Rules (General Procedure),
Rule 147(1), the Court has the discretionary power over the payment of costs to
all parties involved in any proceeding including the amount of the allocation
of those costs in determining the persons by whom they are to be paid. In
exercising the above-noted discretionary, I have considered the following:
1. The
result of the proceedings - The Appellant has been successful in these
proceedings and the Respondent unsuccessful with the appeal being allowed.
2. Amounts
in issue - Although the amounts in issue are not huge, they are certainly of
significance to this 85 year old taxpayer.
3. Importance
of the issues - These issues are not only significant to the taxpayer but most
certainly of significance to the public in general. The taxpaying public would
on a regular basis incur medical expenses as a result of paying for medical
services provided by medical practitioners - this issue is very important to
the taxpaying public at large given the ambiguity in the section in question.
4. Offers
of settlement made in writing - I have confirmed within the Court file that there
are no filed-sealed Offers of Settlement from either party, in this litigation.
5. Volume
of work - Although the issue was relatively narrow and I thanked the parties
for keeping the evidence focused, this file required a considerable amount of
work because of the novel question before the Court and there was little
jurisprudence with respect to the interpretation of the section in question.
6. Complexity
of the issue - The issue in this case was relatively complex and difficult. Interpreting
statutes and trying to determine Parliamentary intent by applying textual,
contextual and purposive approach in statutory interpretations is always an
arduous task.
7. Conduct
of any party - Both parties were very attentive to the issue and focused their
case before the Court.
8. Denial
or refusal of a party to make an admission – Neither party was neglectful in
any fashion with respect to failure to admit anything that should have been
admitted. The parties were most helpful to each other and the Court in focusing
the Court on the issue at hand.
9. Improper,
vexatious or unnecessary proceedings - There were no improper or vexatious steps
at any stage of the proceedings that were unnecessary.
10. I
feel there is one other factor which is relevant to the issue of costs. CRA
took a very narrow, strict interpretation with the section in question and this
is of particular concern given IT 519R2, where CRA appears to take the position
which is contrary to the position they took with respect to the Appellant in
this appeal.
[39] I award costs of the
appeal to the Appellant and after considering the applicable Tariff, fix costs
at the sum at $3,000 plus disbursements and applicable taxes.
Signed at Ottawa, Canada, this 20th day of March, 2008.
"E. P. Rossiter"
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