Citation: 2008TCC328
Date: 20080604
Docket: 2007-4311(IT)I
BETWEEN:
COLIN G. ZIEBER,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
Beaubier, D.J.
[1] This appeal
pursuant to the Informal Procedure was heard at Lethbridge, Alberta, on June 2, 2008. The
Appellant was the only witness.
[2] The particulars of
the appeal are set out in paragraphs 1, 4, 7, 11, 12 and 13 of the Reply to the
Notice of Appeal. They read:
A. STATEMENT OF FACTS
1. With respect to the first unnumbered
paragraph of the Notice of Appeal,
(a) he admits:
(i) that the Appellant and his
spouse entered into a surrogacy agreement with another couple to carry an
embryo created earlier; and
(ii) that legal expenses related
to a surrogacy agreement are not listed in the Income Tax Act and, thus,
are not eligible expenses;
(b) he denies that the Appellant
submitted the legal expenses incurred in developing the surrogacy agreement at
the advice of a Revenue Canada (Canada Revenue Agency) Official; and
(c) he has no knowledge of and
puts in issue the remaining allegations contained therein.
…
4. In computing income for the 2005 taxation
year, the Appellant claimed, in calculating the medical expense credit, medical
expenses in the amount of $8,563.00.
…
7. On February 2, 2007, the Minister further
reassessed the Appellant for the 2005 taxation year, notice of which was issued
on that day, (the “February 2, 2007 Reassessment”) to allow medical expenses in
the amount of $5,941.00. In reassessing the Appellant, Minister did not allow
amounts claimed as medical expenses totalling $2,987.21 (the “Disallowed
Expenses”) as the Minister determined that the Disallowed Expenses were not
medical expenses or, if medical expenses, they were not medical expenses that
were paid in respect of the Appellant, his spouse or a dependent of the
Appellant.
…
11. In so reassessing the Appellant for the
2005 taxation year and in so confirming the February 2, 2007 Reassessment, the
Minister assumed the following facts:
(a) the Appellant’s spouse is Lori
Zieber (the “Spouse”);
(b) the Disallowed Expenses were
comprised of the following:
|
Legal Expenses
|
$2,451.75
|
|
Travel – Meals
|
90.00
|
|
– Accommodations
|
159.70
|
|
Hotel Reservation
|
106.44
|
|
Pelvic Ultrasound
|
100.00
|
|
Prescriptions
|
79.32
|
|
Total
|
$2,987.21
|
(c) the Disallowed Expenses were
paid to enable the Appellant and the Spouse to give birth to a child through a
surrogate mother;
(d) the Disallowed Expenses as
they relate to legal expenses were paid in respect of the preparation of a
legal agreement between the Appellant, the Spouse and the surrogate mother;
(e) the Disallowed Expenses as
they relate to Travel – Meals and Accommodations were paid in respect of
surrogacy information sessions for the Appellant and the Spouse;
(f) the Disallowed Expenses as
they relate to Hotel Reservation were paid in August, 2004; and
(g) the Disallowed Expenses as
they relate to Pelvic Ultrasound and Prescriptions were not provided in respect
of the Appellant, the Spouse or a dependent of the Appellant.
B. ISSUES TO BE DECIDED
12. The issue to be decided is whether the
Appellant is entitled to claim, as medical expenses for the 2005 taxation year,
amounts totalling $2,987.21 that were paid to enable the Appellant and the
Spouse to give birth to a child through a surrogate mother.
C. STATUTORY PROVISIONS, GROUNDS RELIED
ON AND RELIEF SOUGHT
13. He relies on section 118.2 of the Income
Tax Act, R.S.C. 1985 (5th Supp.) c.1, (the “Act”), as
amended, for the 2005 taxation year.
[3] The heart of the
appeal is paragraph 118.2(1)(a) and paragraph 118.2(2)(l.1) of the Income
Tax Act (“Act”). They read:
Medical expense credit
118.2 (1) 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, the
individual’s 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
(a) that are evidenced by receipts
filed with the Minister,
…
Medical expenses
(2) For the purposes of subsection 118.2(1), a
medical expense of an individual is an amount paid
…
(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;
[4] The Court accepts
the Appellant’s evidence that all the expenses claimed were paid by him either
on his and his wife’s behalf or for the surrogate mother in order to comply
medically with prerequisite conditions to enable the couple’s embryo to be
transplanted into the surrogate mother so that their child could be born.
[5] As a result, to
this Court, the question is whether that fertilized egg or embryo was an
“organ” as described in paragraph 118.2(2)(l.1) of the Act.
[6] The federal statute
under which this surrogate procedure occurred is the Assisted Human
Reproduction Act, S.C. 2004 c.2. Under section 3, “embryo” is defined as
follows:
"embryo"
«embryon»
"embryo" means a human organism
during the first 56 days of its development following fertilization or
creation, excluding any time during which its development has been suspended,
and includes any cell derived from such an organism that is used for the
purpose of creating a human being.
Which is to say that an embryo is a
human organism.
[7] The Shorter Oxford
Dictionary, 1973, defines an “organism” as:
2. An organized or organic system; a whole
consisting of dependent and interdependent parts, compared to a living being …
And it defines an “organ” as:
II. A part or member of an animal or plant
body adapted by its structure for a particular vital function …
In the view of the Court, a
fertilized egg or embryo such as the one in question, is adapted by its
structure to grow into a complete human being.
[8] For these reasons,
the Court finds that the embryo transplant in question constituted an organ
transplant within the meaning of paragraph 118.2(2)(l.1) of the Act and
the expenses allowable are those described therein. They were incurred by the
Appellant on behalf of the patient who required the organ transplant with one
exception. The Appellant stated that the claim for a hotel reservation of
$106.44 was mistaken, but he failed to claim a further $90 meal expense for the
surrogate mother to enable the birth to occur.
[9] As a result, the
appeal is allowed, in its entirety, except for the sum of $16.44, leaving a
balance allowed of $2,970.77 and this matter is referred to the Minister of
National Revenue for reconsideration and reassessment on that basis.
[10] The Appellant is awarded
his out-of-pocket disbursements for prosecuting the appeal including copying,
postage and parking which are fixed in the sum of $100.
Signed at Calgary,
Alberta this 4th day of June, 2008.
Beaubier,
D.J.
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