REASONS
FOR JUDGMENT
Lamarre J.
[1]
The appellant claimed a medical expense tax
credit for medical expenses totalling $80,808 incurred during his 2012 taxation
year.
[2]
The Minister of National Revenue (Minister)
disallowed the amount of $63,721.10 paid as compensation to a surrogate and for
medical expenses incurred by the surrogate.
[3]
Those expenses were disallowed on the basis that
the fees paid to the surrogate to carry the embryo and to deliver the baby for
the appellant and his spouse do not qualify as eligible medical expenses of the
appellant for the purposes of the medical expense tax credit, as such fees are
not described in paragraph 118.2(2)(a) of the Income Tax Act (ITA).
[4]
The Minister is also of the view that medical
expenses paid by the appellant on behalf of the surrogate are not allowable
medical expenses in respect of services provided to the appellant, to the
appellant’s spouse or common-law partner, or to the appellant’s dependant as
defined in subsection 118(6) of the ITA.
[5]
The Minister did, however, allow an amount of
$16,675 with respect to the in-vitro process on the basis, it is my
understanding, that those medical expenses related to services provided to the
appellant (Exhibit R-I and paragraph 7b) of the Reply to the Notice of Appeal).
[6]
The relevant legislative provisions read as
follows:
118 (6) Definition of “dependant” — For
the purposes of paragraphs (d) and (e) of the description of B in
subsection 118(1) and paragraph 118(4)(e), “dependant” of an individual
for a taxation year means a person who at any time in the year is dependent on
the individual for support and is
(a) the child or
grandchild of the individual or of the individual’s spouse or common-law
partner; or
(b) the parent,
grandparent, brother, sister, uncle, aunt, niece or nephew, if resident in Canada at any time in the year, of the individual or of the individual’s spouse or common-law
partner.
. . .
118.2 (1) Medical expense credit — For
the purpose of computing the tax payable under this Part by an individual for a
taxation year, there may be deducted the amount determined by the formula
A x [(B - C) + D]
where
A
is the appropriate percentage for the taxation year;
B
is the total of the individual’s medical expenses in respect of the individual,
the individual’s spouse or common-law partner or a child of the individual who
has not attained the age of 18 years before the end of the taxation year
. . .
C
is the lesser of $1,813 and 3% of the individual’s income for the taxation
year; and
.
. .
118.2(2) Medical expenses — For the
purposes of subsection 118.2(1), a medical expense of an individual is an
amount paid
(a) 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 (in this subsection
referred to as the “patient”) who is the individual, the individual’s spouse or
common-law partner or a dependant of the individual (within the meaning
assigned by subsection 118(6)) in the taxation year in which the expense was
incurred;
. . .
(g) to a person
engaged in the business of providing transportation services, to the extent
that the payment is made for the transportation of
(i) the patient, and
(ii) one individual who
accompanied the patient, where the patient was, and has been certified in
writing by a medical practitioner to be, incapable of travelling without the
assistance of an attendant
from the locality where
the patient dwells to a place, not less than 40 kilometres from that locality,
where medical services are normally provided, or from that place to that
locality, if
(iii) substantially
equivalent medical services are not available in that locality,
(iv) the route travelled
by the patient is, having regard to the circumstances, a reasonably direct
route, and
(v) the patient travels
to that place to obtain medical services for himself or herself and it is
reasonable, having regard to the circumstances, for the patient to travel to
that place to obtain those services;
(h) for
reasonable travel expenses (other than expenses described in paragraph (g))
incurred in respect of the patient and, where the patient was, and has been
certified in writing by a medical practitioner to be, incapable of travelling
without the assistance of an attendant, in respect of one individual who
accompanied the patient, to obtain medical services in a place that is not less
than 80 km from the locality where the patient dwells if the circumstances
described in subparagraphs (g)(iii) to (v) apply;
. . .
(l.1) on behalf
of the patient who requires a bone marrow or organ transplant,
(i) for reasonable
expenses (other than expenses described in subparagraph 118.2(2)(l.1)(ii)),
including legal fees and insurance premiums, to locate a compatible donor and
to arrange for the transplant, and
(ii) for reasonable
travel, board and lodging expenses (other than expenses described in paragraphs
118.2(2)(g) and 118.2(2)(h)) of the donor (and one other person
who accompanies the donor) and the patient (and one other person who
accompanies the patient) incurred in respect of the transplant;
(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.
[7]
In Zieber v. The Queen, 2008 CarswellNat
1716, 2008 DTC 4175, 2008 TCC 328, an informal procedure case, the Court
concluded that expenses related to a surrogacy arrangement qualified for the
medical expense tax credit on the basis that an embryo transplant is an organ
transplant for the purposes of paragraph 118.2(2)(l.1).
[8]
This decision was subsequently discussed but not
followed in other cases before this Court (Warnock v. The Queen, 2014
CarswellNat 2957, 2014 TCC 240 and Carlson v. The Queen,
2012-3063 (IT)I, unreported oral reasons for judgment dated
June 13, 2013).
[9]
In Warnock, Woods J. observed that the Zieber
decision did not discuss all relevant aspects of paragraph 118.2(2)(l.1)
of the ITA. She ultimately concluded that, considered as a whole, that
provision does not apply to surrogacy arrangements, the main reason being that
the surrogate who receives the transplant is not a patient as defined in
paragraph 118.2(2)(a) of the ITA. The same conclusion was reached by
Archambault J. in Carlson, supra. I agree with both decisions.
[10]
For the same reasons, the expenses for services otherwise
qualifying for the credit, set out in paragraphs 118.2(2)(g), (h)
and (o), were incurred on behalf of the surrogate and therefore do not
qualify as the surrogate is not the patient as defined in paragraph 118.2(2)(a)
of the ITA.
Discrimination
[11]
The appellant also argued that gay male couples
are being discriminated against by the application of paragraph 118.2(2)(a)
of the ITA. He said that they deserve the same treatment as heterosexual and
gay female couples who have the opportunity of claiming the medical expense tax
credit in respect of in‑vitro fertilization treatments. In his words,
because gay male couples do not have ovaries to produce eggs and wombs in which
to gestate a foetus, they must work with surrogates, which heterosexual and
female gay couples do not have to do.
[12]
The question is therefore whether paragraph
118.2(2)(a) infringes section 15 of the Canadian Charter of Rights
and Freedoms (Charter).
[13]
Subsection 15(1) of the Charter provides:
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.
[14]
There is a two-step process in analyzing section
15 of the Charter. In Eldridge v. British Columbia (Attorney General),
[1997] 3 S.C.R. 624 at paragraph 58, the two-step process is described as
follows:
. . . A person
claiming a violation of s. 15(1) must first establish that, because of a
distinction drawn between the claimant and others, the claimant has been denied
“equal protection” or “equal benefit” of the law. Secondly, the claimant must
show that the denial constitutes discrimination on the basis of one of the
enumerated grounds listed in s. 15(1) or one analogous thereto. . . .
[15]
In Auton (Guardian ad litem of) v. British
Columbia (Attorney General), [2004] 3 S.C.R. 657 at paragraph 27, the
Supreme Court of Canada states that, in order to succeed, claimants must first
show “unequal treatment under the law — more specifically that they failed to
receive a benefit that the law provided, or was [sic] saddled with a
burden the law did not impose on someone else”.
[16]
I agree with the respondent that the appellant
in the present case did not demonstrate that he was unable to receive a benefit
under the law that is provided to others. I am also of the view that the
appellant was not saddled with a burden that the law did not impose on someone
else.
[17]
Surrogacy fees are consistently non-deductible
for anyone, whether heterosexual couples, female gay couples or male gay
couples.
[18]
In both Warnock, supra, and Carlson,
supra, it was a heterosexual couple who paid for the services of a
surrogate mother (in Warnock, the taxpayer, and in Carlson, the
taxpayer’s wife, being women with infertility problems and unable to carry a
child).
[19]
In Ismael v. The Queen, 2014 CarswellNat
1817, 2014 DTC 1140, 2014 TCC 157, the female taxpayer underwent in-vitro
fertilization using an egg provided by an egg donor, which, after being
fertilized, was implanted into her body. All expenses related to the egg donor fees
were disallowed.
[20]
These are examples of cases where a woman
(either the taxpayer or the taxpayer’s wife), because of infertility, required the
services of either a surrogate or an egg donor in order to have a child and where
the taxpayers was not allowed to deduct the surrogacy or the egg donor fees.
[21]
The three cases referred to above show that,
regardless of gender or sexual orientation, no one can deduct surrogacy fees
under paragraph 118.2(2)(a). The burden imposed by the law on male gay
couples is no greater than that imposed on anyone else.
[22]
I therefore conclude that paragraph 118.2(2)(a)
of the ITA does not infringe section 15 of the Charter.
[23]
The appeal is dismissed.
Signed at Ottawa, Canada, this 1st day of October 2014.
“Lucie Lamarre”
Email this Content