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Citation: 2004TCC812
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Date: 20041230
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Docket: 2004-1996(IT)I
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BETWEEN:
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MICHAEL MELNYCHUK,
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Appellant,
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and
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HER MAJESTY THE QUEEN,
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Respondent.
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REASONS FOR JUDGMENT
(Delivered orally at Edmonton,
Albertaon November 17, 2004 and subsequently edited as to
form)
Paris, J.
[1] The Appellant is challenging the
Minister's disallowance in part, of the amount he claimed as
the medical expense tax credit in his 2002 taxation year.
[2] The Appellant suffers from chronic
heart disease. On the advice of his doctor, the Appellant
receives chelation therapy for his heart condition, and this
treatment has allowed him a higher quality of life, without
further surgery.
[3] In conjunction with the chelation
therapy, the Appellant has been taking certain vitamin
supplements which have been prescribed by his doctor. In 2002,
the Appellant had the prescriptions for these substances filled
at a pharmacy and he has claimed their cost as a medical expense,
under paragraph 118.2(2)(n) of the Income Tax Act
R.S.C 1985, c. 1 (5th supp.). These expenses have been
refused by the Minister in the determination of the
Appellant's medical expense tax credit.
[4] The relevant portions of paragraph
118.2(2)(n) read as follows:
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For the purposes of subsection 118.2(1), a medical
expense of an individual is an amount paid
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(2) Pour l'application du
paragraphe (1), les frais médicaux d'un
particulier sont les frais payés:
...
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(n) for drugs, medicaments or other
preparations or substances ... purchased for use by
the patient as prescribed by a medical practitioner or
dentist and as recorded by a pharmacist ...
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n) pour les médicaments, les
produits pharmaceutiques et les autres préparations
ou ... 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 ...
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(emphasis added)
The narrow issue in appeal is whether the vitamin supplements
prescribed by the Appellant's doctor and purchased by the
Appellant at a pharmacy meet the requirement in the Income Tax
Act that the substances be recorded by a pharmacist in order
for their cost to qualify as medical expenses.
[5] The Appellant's first witness was
Richard Fong, a pharmacist who works at Nutrition Plus Pharmacy
in Edmonton where the Appellant had the vitamin supplement
prescriptions filled. Mr. Fong gave evidence of the procedure
that is followed at Nutrition Plus in filling a prescription for
a customer.
[6] He said that the pharmacist first
verifies the information on the prescription and this information
is entered into a computer as part of a customer profile. The
medication is then prepared, labelled and given to the purchaser,
who is issued a receipt for it.
[7] A copy of the Appellant's
customer profile from Nutrition Plus was entered as an
exhibit. It consists of a listing of details relating to
prescriptions filled for him by Nutrition Plus. A copy of the
prescription receipts issued to the Appellant for the substances
in issue were also entered into evidence.
[8] Mr. Fong confirmed that all of the
vitamin supplements purchased by the Appellant in 2002, as listed
in Schedule B to the Reply to Notice of Appeal, were, with one
exception, available without a prescription.
[9] The one exception,
"L-Carnitine", was admitted by the Respondent's
counsel at the hearing to be a substance that could only be
obtained with a prescription, and she conceded that the cost of
the L-Carnitine, totalling $120.24 was a medical expense under
the Act.
[10] Mr. Fong testified that it is the
policy of Nutrition Plus to issue pharmacy receipts and labels
and to make entries on a customer profile for medicaments which
were prescribed by a doctor even when those substances are
available over the counter.
[11] Mr. Fong said as well that certain
medicaments at Nutrition Plus are kept behind the
pharmacist's counter, but are available without a
prescription. One of the substances purchased by the Appellant
- Nutrizyme - fell in this category. Mr. Fong
said items of this nature were kept behind the counter as a
result of store policy or manufacturer's requirements.
[12] Mr. Fong stated that the other
medicaments purchased by the Appellant from Nutrition Plus were
available off the shelves of the pharmacy and could have been
purchased without the intervention of a pharmacist.
[13] The Appellant also put into evidence a
report prepared by Dr. Wiancko, the Appellant's
physician in 2002 who prescribed the vitamin supplements to him.
The report provided background information on chelation therapy,
and stated that the vitamin supplements he prescribed were for
medical purposes. However, Dr. Wianko also states in his report
that "[v]itamins are not controlled under the Pharmacy Act,
nor are they a prescription item."
[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 v. The Queen, 2004 FCA 1. The
Court stated at paragraphs 12 and 13 of that decision:
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 a prescription, including information that
identifies the prescribing person and patient. There is no
evidence that pharmacists anywhere in Canada are required to keep
such records for the substances in issue in this case.
I cannot accept the suggestion that in a
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 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.
[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 except in the case
of L-Carnitine. I have reviewed the Pharmaceutical Profession
Act, R.S.A 2000, c. P-12, and the regulations made under it.
Subsection 15(6) of the Pharmaceutical Profession
Regulation provides that:
A pharmacist who dispenses a drug must ensure that a record
containing
the following information is created for each transaction:
(a) the name of the patient for
whom the drug was prescribed;
(b) the name of the prescriber
of the drug;
(c) the date the drug was
dispensed;
(d) the name, strength and
dosage form of the drug dispensed;
(e) the DIN of the drug
dispensed;
(f) the quantity of the drug
dispensed;
(g) a unique prescription
number;
(h) the name of the dispensing
pharmacist;
(i) the price of the
prescription, if applicable;
(j) any other information
required in the standards of practice
referred to in section 47.
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.
[16] The Appellant's representative
suggested that the cost of the Nutrizyme purchased by the
Appellant should be allowed as a medical expense because it was
kept behind the pharmacist's counter. She referred to the
following obiter comments of this Court in Selent
v. The Queen, 2004 T.C.J. 113, at
paragraph 16:
Overall, there may be some room for qualification under this
paragraph of the Act, in the circumstance where a medical
practitioner describes 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...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. ...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.
[17] I must respectfully disagree with this
conclusion, essentially for the reasons stated previously. 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.
[20] The appeal is allowed, in part, to the
extent of the concession made by the Respondent, to allow the
Appellant an additional medical expense of one hundred and twenty
dollars and twenty-four cents ($120.24).
Signed at Ottawa, Canada, this 30th day of December 2004.
Paris, J.
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