|
Citation: 2004TCC113
|
|
Date: 20040205
|
|
Docket: 2002-857(IT)I
|
|
BETWEEN:
|
|
DAVID H. SELENT,
|
|
Appellant,
|
|
and
|
|
|
|
HER MAJESTY THE QUEEN,
|
|
Respondent.
|
REASONS FOR JUDGMENT
Rowe, D.J.
[1] The appellant appeals from an
assessment of income tax for the 2000 taxation year. The Minister
of National Revenue (the "Minister") disallowed
expenditures in the sum of $5,135 incurred in respect of certain
vitamins, herbs and supplements which had been prescribed to the
appellant by a naturopathic physician. The Minister decided those
expenditures had not been recorded by a pharmacist licensed by
the Province of British Columbia and - therefore - could not be
claimed as medical expenses for the purpose of computing the
appellant's non-refundable tax credits for the 2000 year pursuant
to subsection 118.2(1) and paragraph 118.2(2)(n) of the
Income Tax Act (the "Act") and
Regulation 5700 thereunder.
[2] The appellant testified he sought
treatment from Dr. Ingrid Pincott, a licensed naturopathic
physician practising in Campbell River, British Columbia, in
respect of a liver condition. He produced a letter - Exhibit A-1
- dated December 6, 2002 - written by Dr. Pincott which
provided details of the ailment, the course of treatment and the
nutrients and remedies prescribed. Dr. Pincott wrote a letter -
dated June 18, 2002 - Exhibit A-2 - to Barry Fong, an official at
Canada Customs and Revenue Agency (CCRA) in which she included a
table of medical expenditures incurred by the appellant as well
as a list of the medicines she had prescribed. The appellant
produced a letter - Exhibit A-3 - dated November 29, 2002 -
written by Erika Gregory, a duly qualified pharmacist in British
Columbia. In said letter addressed - To whom it may concern -
Ms. Gregory listed the items David Selent had purchased from
Dr. Pincott's N.D. clinic and prepared a table setting forth the
date, description, amount and corresponding invoice number issued
by Dr. Pincott. In said letter, Ms. Gregory concluded with a
disclaimer, the relevant portion of which reads:
I did not prepare, dispense or supply any of the items listed
above. None of these items was supplied from a licensed pharmacy.
I was not involved at all in the treatment of this
individual.
[3] The appellant stated he purchased
all of the items from Dr. Pincott's clinic and - subsequently -
had attended upon Ms. Gregory and provided her with copies of all
the receipts for the products purchased from that clinic. He also
showed Ms. Gregory the letter - Exhibit A-2 - written by Dr.
Pincott in order to further substantiate his purchase of the
listed items as evidenced by the receipts. The appellant filed -
as Exhibit A-4 - the documents he had shown to Ms. Gregory. The
appellant referred to a compilation of his 2000 medical expenses
- filed as Exhibit A-5 - and a sheet - Exhibit A-6 -
entitled: Claiming Medical Expenses that he had obtained from
CCRA. The appellant stated his medical condition improved as a
consequence of having consumed the vitamins and other substances,
as prescribed by Dr. Pincott.
[4] In cross-examination by counsel
for the respondent, the appellant agreed the bulk of the
disallowed medical expenses were in respect of those items
prescribed by Dr. Pincott and purchased at her clinic.
[5] The appellant submitted that the
items purchased from Dr. Pincott had been prescribed by a
licensed physician and were "drugs, medications,
preparations or substances" that had been used in the
"diagnosis, treatment or prevention of a disease, disorder,
abnormal physical state" as required by the specific
provision of the Act and that the purchased items had been
duly "recorded by a pharmacist" In so submitting, the
appellant referred to a portion of reasons for judgment - dated
January 18, 2002 - I had written in the case of Dunn v.
Canada, [2002] T.C.J. No. 23. The Dunn decision
was concerned with whether that appellant's physician could be
considered to have fulfilled the role of a pharmacist - as
required by the Act - since the legislation governing
pharmacists in British Columbia did not prohibit any
qualified medical practitioner from dispensing a drug directly to
his or her patient. In deciding the case, at paragraph 13, I
commented:
As for the requirements of a licensed pharmacist in the
Province of British Columbia, sections 14 and 15 of the
Pharmacists Act set forth the necessary qualifications and
conditions that must be possessed and satisfied prior to an
individual becoming registered as a pharmacist and thereafter
entitled to use certain designations. The legislation is
extensive and provides for the establishment of a College of
Pharmacists, registration procedures, the licensing of pharmacy
operations, and provisions concerning the conduct of its members,
including the right to administer discipline in accordance with
procedures established in the legislation. The fact that
- pursuant to section 75 of the Pharmacists Act
- nothing in the remainder of that legislation is to be construed
as preventing a practitioner (as defined) from directly
dispensing a drug to the practitioner's patient does not mean the
practitioner will - without more - be entitled to attend the
annual Pharmacists Ball or to carry out a wider range of
professional services within that particular discipline. The
relevant provision - paragraph 118.2(2)(n) of the
Act - is not concerned with any exemption granted
by the Pharmacists Act in relation to the act of
directly dispensing a drug to a specific patient by a medical
practitioner. However, it does require that substances prescribed
by a medical practitioner - defined by the Act
- be recorded by a pharmacist. In my opinion, the medical
practitioners attending to the care of the appellant in the
within appeal were not pharmacists within the ordinary meaning of
the word nor as that term was intended to be used in the context
of the provision in question. It is not unreasonable for
Parliament to have desired to control the extent of allowable
medical expenses by requiring that any purchase of qualifying
substances be recorded by a pharmacist...
[6] This decision was upheld by the
Federal Court of Appeal (Dunn v. Canada, [2002]
F.C.J. No. 1816 (QL)) on the basis that none of the
taxpayer's medical practitioners was authorized by law to
practise as a pharmacist.
[7] Following is obiter dictum
- near the middle of paragraph 13 - from my reasons in
Dunn:
It will probably be an issue in another appeal but I tend to
agree with the approach taken by Judge Teskey in Frank v.
Canada, [2001] T.C.J. No. 416 (QL), in that a record made by
a licensed pharmacist of medications prescribed to the patient by
a medical practitioner - even though not prepared, dispensed or
supplied within that licensed pharmacy - would seem to satisfy
the requirements of the provision which - in my view - cannot be
read disjunctively. The alternative is to recognize - as a
medical expense - every drug, medicament, preparation or
other qualifying substance prescribed by a medical practitioner
to a patient - home-made red wine, perhaps -
notwithstanding that its issuance and delivery bypasses the
mechanism insisted upon by Parliament, simply that the drugs,
medicaments, etc., as prescribed, be recorded by a pharmacist.
[8] The appellant in the within appeal
had obviously been encouraged by my comments in Dunn and
had produced - in the form of a letter - a record made by a
pharmacist of the qualifying substances prescribed by Dr. Pincott
and also purchased at her clinic. In the appellant's view, it is
reasonable to accept that the prescribed medicaments and
substances had been recorded by a pharmacist, particularly since
there was no definition of "recorded" within the
relevant provision of the Act and a previous decision in
Frank, supra, had recognized that "recorded"
could consist of the pharmacist's purchase or sales slips. I
informed the appellant that the Crown had applied for judicial
review - by the Federal Court of Appeal - in respect of a
decision by the Tax Court of Canada in the case of Ray v.
Canada, [2002] T.C.J. No. 500 (QL), and that I
anticipated those reasons for judgment would clarify the point in
question in the within appeal because this issue had been the
subject of other appeals previously decided by judges of the Tax
Court of Canada. In those cases, somewhat different approaches
had been taken in order to interpret the intent of the
legislation as it specifically related to the prerequisite that
the prescribed purchases be "recorded" by a pharmacist,
and to reflect upon what action or event could be considered
sufficient to satisfy that requirement. In the Ray
decision, the Tax Court judge held he could ignore the
"recorded by a pharmacist" requirement under the
special circumstances of the case before him because it involved
a rare situation of a person suffering severe medical problems
who had - quite reasonably - attempted to alleviate his condition
through a variety of treatments that had been recommended by
various medical practitioners.
[9] The appellant and counsel for the
respondent agreed I should take the within matter in reserve in
order to await the outcome of Ray and counsel acknowledged
the sole issue in the within appeal was in respect of whether the
vitamins, herbs and supplements obtained by the appellant at Dr.
Pincott's clinic had been recorded by a licensed pharmacist
registered in British Columbia.
[10] On January 5, 2004, the Federal Court
of Appeal released reasons for judgment in Ray v. Canada,
[2004] F.C.J. No. 1, Justice Sharlow, speaking for the Court - at
paragraph 2 - and following - of her judgment stated:
[2] Ms. Ray's
claim for the medical expense tax credit is based on paragraph
118.2(2)(n) of the Income Tax Act, R.S.C. 1985, c.
1 (5th supp), which reads as follows:
|
(2) For the purposes of subsection 118.2(1), a medical
expense of an individual is an amount paid
|
(2) Pour l'application du paragraphe (1), les frais
médicaux d'un particulier sont les frais
payés :
|
|
|
|
|
...
|
...
|
|
|
|
|
(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 ...
|
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 ...
|
[3] The heart of the
decision of the Tax Court Judge is found at paragraphs 16, 17, 18
and 22 of his reasons:
[16] In the case at hand, the
facts and evidence sufficiently establish that the items in
issue, organic foods and bottled water, are
"medications" falling under 118.2(2) because without
them, the Appellant would be robbed of being a functioning and
productive member of society. To quote Judge Teskey [in
Frank v. Canada, [2001] T.C.J. No. 416 (QL)], the
items are "required to sustain the life of the
Appellant".
[17] In any event, the
medications in the case at hand, prescribed by a doctor and
purchased outside of a pharmacy, cannot possibly be recorded by a
pharmacist. This impossibility leads me to conclude that
requirement is not necessary for items that have been prescribed
by doctors and which truly cure the patient and render him or her
capable of living a normal life again.
[18] Going back to Judge
Teskey's question in Frank, "Can I ignore 'as
recorded by a pharmacist'", I would answer that question
with a "yes". I qualify that "yes" with that
this can only occur in very special circumstances. ...
...
[22] My answer to the question,
"Can I ignore 'recorded by a pharmacist'" was
"yes" but I qualified that "yes".
Specifically, my qualification mirrors that of Judge Miller in
[Pagnotta v. Canada, [2001] T.C.J. No. 582 (QL)] at
paragraph 30:
I wish to be clear that this is not intended to be an open
invitation to taxpayers whose lifestyle includes a regimen of
vitamins to rely on paragraph 118.2(2)(n) for obtaining a
credit on the basis that such costs constitute medical expenses.
This is limited to the rare situation of a taxpayer suffering
severe medical problems, attempting to relieve those problems
through a variety of treatments recommended by a number of
medical practitioners.
[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.
[11] Justice Sharlow - at paragraph 5 -
noted the legal issue had been considered many times by the Tax
Court and that in all of the cases except the Ray case,
the phrase, "as recorded by a pharmacist" was
considered to be an essential part of paragraph
118.2(2)(n) of the Act. At paragraph 6, Justice
Sharlow continued as follows:
[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.
[12] With respect to the meaning of the
words, "recorded by a pharmacist", Justice Sharlow
undertook the following analysis at paragraphs 11-16, inclusive
of her reasons:
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 whose 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".
[15] Counsel for Ms. Ray has
cited Gibson v. Canada, [2001] F.C.J. No. 1758 (QL)
(F.C.A.) and Hamilton v. Canada, [2002] F.C.J. No. 422
(QL) (F.C.A.), two decisions of this Court that adopted the
"compassionate construction" of the medical expense and
disability tax credit provisions of the Income Tax Act.
Both of those cases involved statutory provisions that expressly
or by necessary implication required a factual determination of
the degree to which a person was affected by a particular illness
or physical disability. The Tax Court Judge in this case has
interpreted paragraph 118.2(2)(n) as though the
application of its closing words, "as recorded by a
pharmacist", may vary depending on the severity of the
patient's condition, so that if the condition is sufficiently
severe, the words may disappear altogether. He has, in effect,
added an extra-statutory condition to
paragraph 118.2(2)(n). Neither Gibson nor
Hamilton mandates such an approach.
Conclusion
[16] I conclude that Ms. Ray is
not entitled to a tax credit for the $6,555 she paid in 1999 for
vitamins, herbs, organic and natural foods, and bottled water.
The Crown's application for judicial review should be
allowed, the judgment of the Tax Court should be set aside, and
this matter should be remitted to the Tax Court for judgment in
accordance with these reasons. Despite the success of the
Crown's application, Ms. Ray is entitled to her reasonable
and proper costs of this application pursuant to section 18.25 of
the Tax Court of Canada Act.
[13] From reading the reasons of Justice
Sharlow, I conclude it was the intention of the Court to exclude
from eligibility - as a medical expense under the specific
provision of the Act under consideration - any substance
that may be purchased off the shelf and that any record must be
kept by the pharmacist "in his or her capacity as a
pharmacist" in accordance with the applicable laws governing
that profession.
[14] Returning to the within appeal, it is
clear the pharmacist - Ms. Gregory - had not dispensed the
substances in the course of carrying out her duties as a
dispensing pharmacist. Further, none of the items was supplied
from a licensed pharmacy but had been obtained from Dr. Pincott's
clinic, as revealed by the invoices contained in Exhibits A-4 and
A-5. There is nothing in the evidence to suggest the purchase of
any of the substances prescribed by Dr. Pincott required the
intervention of a pharmacist acting in his or her professional
capacity in accordance with British Columbia legislation and/or
adherence to a professional code of conduct required by the
College of Pharmacists of British Columbia, the governing body of
the pharmacy profession.
[15] It is apparent the within appeal cannot
succeed as the decision of the Federal Court of Appeal makes it
certain the relevant provision of the Act contemplates the
dispensing of prescription drugs and medications by a pharmacist
within the defined and regulated role as a pharmacist.
[16] Overall, there may be some room for
qualification under this paragraph of the Act in the
circumstance where a medical practitioner prescribes a drug,
medicament, preparation or substance that is otherwise available
without a prescription but still requires the intervention of a
pharmacist or other qualified person - such as a pharmacy
technician, employed under the general supervision of a
pharmacist to perform procedures of a technical nature involved
with dispensing medicines - because the item is kept
in the pharmacist's working area - behind the counter - not
accessible to the public. In this instance, the product remains
subject to control by a pharmacist who may be required - in
accordance with professional ethics - to inquire about the
intended use of the product and - in some cases - issue warnings
and/or provide specific instructions regarding the manner of use
and/or precautions to be taken. Products within this category
would include painkillers with codeine, various types of inhalers
such as those used to control symptoms caused by asthma, cough
syrups with codeine, and similar substances that are not
available to the customer directly "off the shelf" in
the sense that phrase is commonly understood by anyone who has
ever been inside a drug store. However, where a medical
practitioner prescribes one of these quasi-restricted products to
a patient, the dispensing of that prescribed substance will
require the intervention of a pharmacist - acting in that
professional capacity - including the creation of the usual
record to indicate the prescription had been filled. Under these
circumstances, it seems reasonable to expect this type of
purchase would be eligible for inclusion as a medical expense for
the purpose of calculating the tax credit, provided the
pharmacist had issued the usual prescription dispensing label for
that item, as though it had been a drug or substance available
only upon prescription. In some provinces or territories, there
may be certain substances - such as quinine - that can be
dispensed only upon prescription while in other jurisdictions
this product may be available directly to the consumer subject
only to the restriction that it be kept behind the counter and
delivered to the purchaser in accordance with the rules in effect
in that jurisdiction.
[17] In accordance with the foregoing
reasons, the within appeal is hereby dismissed.
Signed at Sidney, British Columbia, this 5th day of February
2004.
Rowe, D.J.
Email this Content