Citation: 2007TCC254
Date: 20070430
Docket: 2006-378(IT)I
BETWEEN:
BARRY BREGER,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
McArthur J.
[1] This appeal is from an assessment of the Appellant’s
2004 taxation year. The Minister of National Revenue denied the Appellant’s
claim for a medical expense credit under paragraph 118.2(2)(n) of the Income
Tax Act, for the cost of medicinal, nutritional and herbal supplements in
the amounts of $227.30 and $6,512.78, for the treatment of his wife's less
common ailments. The issue is whether the cost of the supplements that were
prescribed by a medical doctor and dispensed and recorded by a pharmacist may
be included in computing a medical expense credit.
[2] The Appellant is
a qualified medical doctor who practices orthomolecular medicine. This is not
commonly practiced in Quebec and is the practice of the using of molecules “known
to the body” in the treatment and/or prevention of disease and certain chronic
conditions. Using orthomolecular medicine, the Appellant has been treating his
wife, who has a heavy medical history of various and severe ailments, with a
specific dietary and vitamin regime.
[3] In the course of
her treatment, the Appellant has prescribed certain medicinal, nutritional and
herbal supplements. These prescriptions were filled by a licensed pharmacist,
duly recorded, and official receipts were issued. However, it is admitted that
the supplements are not listed as a prescription drug in any of the Schedules
to the Quebec Pharmacy Act
or its accompanying regulations.
[4] Despite the fact that the supplements in question were
both prescribed by a medical doctor and recorded by a pharmacist, it is the Minister's
position that the Appellant's claim should be disallowed because the medications
were not required to be recorded by a pharmacist and could have been purchased
“over the counter” without the intervention of a pharmacist.
[5] In reassessing
the Appellant’s 2004 taxation year, the Minister made the following assumptions
of fact:
(a) The Appellant is a doctor by profession and in filing the
income tax return for the taxation year claimed medical expenses incurred for
himself, spouse and child in the amount of $10,038;
(b) The Minister issued a letter to the Appellant, August 3,
2005, by which the Appellant was informed that the claim for the medical
expenses for the 2004 taxation year was under review and he was requested to
submit receipts, medical certificates, and/or supporting documentation
applicable for the period;
(c) The Minister received and reviewed the submitted
documentation and informed the Appellant on October 14, 2005, that the claim
for eligible medical expenses was reduced to $3,369 as:
(i) “The fees you pay for medical services must be
paid to a medical practitioner. Naturopath and massage therapist are not
recognized as medical practitioners in the province where you received the
services.” And
(ii) “Vitamins, herbs, including over-the-counter
medicaments, and similar substances are not deductible as a medical expense.”
(d) Following the Notice of Objection the Minister concluded
that there was an additional amount, $39.00 that was an eligible medical
expense;
(e) The expenses
disallowed were:
(i) For amounts claimed by the Appellant for
non-prescription nutrients, vitamins and mineral supplements for himself;
(ii) For amounts claimed by the Appellant for
non-prescription nutrients, vitamins and mineral supplements as prescribed by
the Appellant for his spouse, and dispensed by a pharmacist.
[6] Paragraph
118.2(2)(n) of the Act stipulates as follows:
118.2(2) For the purposes of subsection (1), a medical
expense of an individual is an amount paid
(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; (emphasis
added)
This
statutory provision sets out three criteria for a drug or other medicament to
be considered an eligible medical expense under paragraph 118.2(2)(n).
The medicament must be:
(i) used 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;
(ii) prescribed
by a medical practitioner; and,
(iii) recorded
by a pharmacist.
In this appeal only the third
criterion, “recorded by a pharmacist”, is at issue.
[7] The meaning of
“as recorded by a pharmacist” was considered by the Federal Court of Appeal in Ray
v. Canada.
The Court reversed the common sense
finding of the trial judge,
and, writing for a unanimous court, held
that the statutory requirement of “as recorded by a pharmacist” must be met
before expenses may qualify as “medical expenses” for the purpose of the tax
credit under paragraph 118.2(2)(n). Sharlow
J. stated:
[11] … 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. [emphasis added]
[8] It is the
Respondent’s position that the computation of the medical expense credit, pursuant
to subsection 118.2(1) and paragraph 118.2(2)(n) of the Act, is
restricted to items that are classified as “prescription medications” and which
pharmacists are required by law to maintain a record of their issuance.
[9] A distinction
between a substance having been prescribed and being a prescription drug was
suggested in obiter dictum found in Dunn v. The Queen at paragraph 6:
Although we do
not need to decide the point, it would appear that the requirement that
medication 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.
Counsel for the
Respondent relied on the decisions of the Federal Court of Appeal in Ray
and Dunn to distinguish between prescription drugs and drugs having been
prescribed.
[10] Counsel also
referred to the decision of this Court in Herzig v. The Queen as an example
of sympathetic cases denied by the finding in Ray on the basis that the
items at issue were not recorded by a pharmacist. In Herzig,
Bowman J. regretfully dismissed the appeal in “a most deserving case” stating
that this Court was bound by the narrow interpretation of paragraph 118.2(2)(n)
according to Ray.
[11] Counsel for the
Respondent added that “the law looks at the medications” and emphasized that
“there is no evidence that pharmacists anywhere in Canada are
required to keep records for the dispensing of nutrients, vitamins and mineral
supplements”. In support of this
position, counsel referred to the
decision of this Court in Melnychuk v. The Queen, wherein the taxpayer
sought to claim the cost of vitamin supplements which were prescribed by
a physician but equally available over the counter without a prescription.
Evidence was introduced at the hearing that it was store policy to issue pharmacy receipts and labels and to make entries on a
customer profile for all medicaments prescribed by a physician. Further to the
particular pharmacy’s policies or manufacturer’s requirements, certain
medicaments were kept behind the pharmacist’s counter and required the
intervention of a pharmacist even though they were available without a
prescription.
[12] The trial judge in
Melynchuk disallowed a deduction for some medications for the following
reasons:
[14] In light of all of the evidence before the Court, I am not
satisfied that it has been shown that the Appellant's purchases of the vitamin
supplements were recorded by a pharmacist, as required by paragraph 118.2(2)(n)
of the Act. The interpretation to be given to the words "recorded
by a pharmacist" was decided by the Federal Court of Appeal in the case of
Ray …
[15] As
in the Ray case, there is no evidence before me that the pharmacist who
filled the Appellant's prescriptions was required by law to keep records
relating to the filling of those prescriptions …
He went on to review the Alberta
Pharmacy Professions Act, and specifically, regulation 15(6):
[15] … The Pharmaceutical Profession Act defines
"drug" in paragraph 1(h) as a substance or combination of
substances listed in the Schedules to that Act. The evidence in this
case does not show that the vitamin supplements in question are listed in those
schedules such that a pharmacist would be required by law to keep a record of
their dispensation. Mr. Fong described the supplements as non-prescription
items, which further supports the conclusion that they were not
"drugs" within the meaning of the Pharmaceutical Profession Act.
…
[17] ... The requirement that a medication be recorded by a
pharmacist refers to the recording requirements found in legislation governing
pharmacists in each province and territory. Unless that legislation requires a
pharmacist to keep a record of the sale of a particular medication, the cost of
the medication will not be a medical expense under the Income Tax Act,
regardless of how it is sold or treated within a particular pharmacy.
[18] The notion of what meets the requirement in the Income
Tax Act of being "recorded by a pharmacist" cannot be determined
by a particular store's policy in handling the sale of over-the-counter
medications. To hold otherwise would result in a difference in tax treatment
based on where a taxpayer chose to shop for over-the-counter medication rather
than on the identity of the medication purchased. I do not believe that this
could have been the intention of Parliament when enacting paragraph 118.2(2)(n)
of the Income Tax Act.
Respectfully,
I disagree. The Court must apply the clear language of the Act and interpret
the statute as it finds it.
[13] The Appellant contends
that the three requirements of paragraph 118.2(2)(n) have been met in
this matter. Unlike the facts in Melnychuk, the Appellant’s medications
were recorded by a pharmacist. The Appellant further submits that his case
should be distinguished from the facts in Ray and Selent because
in those cases, no record was kept by the pharmacist nor was one required to be
kept by law. By contrast, the Appellant relies on the provisions of the Quebec
Pharmacy Act and accompanying regulations as the legislation governing
pharmacists in his province to argue that a pharmacist in Quebec is
required to record the issue of any medications prescribed by a medical doctor. I
agree with the Appellant.
[14] Section 21 of the
Quebec Pharmacy Act states:
21 A pharmacist must fill a prescription
according to its integral terms.
And
section 2.01 of the Regulation Respecting the Keeping of Records, Books and
Registers by a Pharmacist in the Practice of his Profession, states:
2.01 Subject to sections 2.04 and 2.05, a pharmacist shall
keep at the place where he practices his profession a record for each
patient in respect of whom a prescription is filled. [emphasis
added]
The following definitions
provided in section 1 of the Quebec Pharmacy Act are also relevant to
this analysis:
(c) "pharmacist” or
“member of the Order”: any person entered on the roll;
(d) "physician”: any
member of the Ordre des médecins du Québec;
…
(h) "medication”: any
substance or mixture of substances which may be used:
(i) for the diagnosis,
treatment, remission or prevention of any disease, ailment, any abnormal
physical or mental condition, or their symptoms in man or animal; or
(ii) to restore, rectify
or change organic functions in man or animal;
…
(j) "prescription”: an
authorization to supply a medication,
(i) given by a person
authorized to prescribe medication by a law of Québec;
(ii) given by a person
authorized to prescribe medication by a law of another province or of a
territory in Canada to the extent that such person would be authorized to
prescribe such medication by a law of Québec if he were practicing in Québec;
[15] Paragraph 118.2(2)(n) states plainly that a medication that is
prescribed by a medical practitioner as defined in the Act and recorded
by a pharmacist is an eligible medical expense. In the case before me, the
prescriptions for the supplements were written by a qualified medical doctor
and were recorded by an authorized pharmacist. These facts are not in dispute.
[16] Moreover,
it is clear from the reasons in Ray and Melynchuk, that
substances which could be purchased off the shelf were excluded because the
Court was not presented with any evidence that a pharmacist was required by law
to keep a record of its issuance in his or her capacity as a pharmacist and was
only presented with a store receipt or invoice. In the present case, I am
satisfied that in Quebec, section 2 of the Quebec Pharmacy Act, when read in conjunction with the
regulations concerning the recordkeeping practices required of pharmacists,
clearly indicates that the prescriptions were filled and recorded by the
pharmacist in his professional capacity as a pharmacist.
[17] In my view, it
would be a departure from the finding in Ray and the plain meaning of
paragraph 118.2(2)(n) of the Act to interpret the provision so
narrowly as to limit its application to prescription drugs as listed in
specified schedules alone. This would add another requirement, which in most
cases would be coincident, but is not contemplated by the Act.
[18] From my reading
of the provision, eligibility under paragraph 118.2(2)(n) of the Act
is determined not by the classification of the medication but by the execution
of certain actions by the authorized professionals who control the access to
that medication. A licensed medical practitioner and pharmacist must fulfill
their professional duties when prescribing and dispensing medication,
respectively, as authorized by law; these are the statutory hurdles set out by
Parliament, and the Appellant has met them.
[19] In light of my
conclusion, it is unnecessary to consider the effect of the ruling the
Appellant had previously received from the Canada Revenue Agency.
[20] For the foregoing
reasons, I allow the appeal and refer the matter back to the Minister for
reconsideration and reassessment on the basis the Appellant is entitled to
include the amounts paid for the supplements that were prescribed by a doctor,
and recorded by a pharmacist in computing a medical expense credit in
accordance with paragraph 118.2(2)(n) of the Act.
Signed at Ottawa, Canada, this 30th
day of April, 2007.
McArthur
J.
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