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Citation: 2003TCC888
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Date: 20031208
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Docket: 2003-1847(IT)I
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BETWEEN:
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JAMES D. DONAHUE,
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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
O'Connor, J.
[1] This appeal was heard at
Saint-John, New Brunswick on November 18, 2003.
[2] In reassessing the Appellant for
the 2001 taxation year the Minister of National Revenue (the
"Minister") disallowed medical expenses claimed by the
Appellant in his income tax return consisting of the
following:
Earplugs
$130.00
Massage
therapy
$326.25
Hot
tub
$8,154.65
Total
$8,610.90
[3] The Appellant suffers from severe
chronic back problems and receives massage therapy for his back
in the province of New Brunswick. He purchased the earplugs and
the hot tub on the advice of his physician.
[4] I find that the massage therapy in
the amount of $326.25 was properly disallowed, as massage
therapists are not recognized as medical practitioners in the
province of New Brunswick. I also find that the cost of the
earplugs $130 was properly disallowed as earplugs are not
prescribed medical devices within the meaning of the provisions
cited below.
[5] Subsection 118.2(1) of the
Income Tax Act (the "Act") provides
as follows:
For the purpose of computing the tax payable under this Part by
an individual for a taxation year, there may be deducted an
amount determined by the formula
[The formula describes the percentage of reasonable medical
expenses that may be deducted]
[6] Having agreed with the
Minister's disallowance of the expenses related to massage
therapy and ear plugs the issue narrows to whether the deduction
for the cost of the hot tub should be allowed. This brings into
play paragraphs 118.2(l.2) and (m) which read:
118(2) For the purposes of subsection (l), a medical expense of
an individual is an amount paid:
(l.2) for reasonable expenses relating to renovations
or alterations to a dwelling of the patient who lacks normal
physical development or has a severe and prolonged mobility
impairment, to enable the patient to gain access to, or to be
mobile or functional within, the dwelling;
...
(m) for any device or equipment for use by the patient
that
(i) is of a prescribed kind,
(ii) is prescribed by a medical practitioner,
(iii) is not described in any other paragraph of this subsection,
and
(iv) meets such conditions as are prescribed as to its use or the
reason for its acquisition;
...
[7] Section 5700 of the Income Tax
Regulations reads in part as follows:
For the purposes of paragraph 118.2(2)(m) of the Act, a
device or equipment is prescribed if it is a
(i) device that is designed to assist an individual in
walking where the individual has a mobility impairment;
[8] As mentioned, the Appellant
suffered from severe back pain. He is a totally honest individual
and his evidence receives full credibility.
[9] The hot tub greatly alleviated the
Appellant's back problems thus enabling him to walk whereas
previously he had to use canes to achieve mobility.
[10] He acquired the hot tub on his own but
the Reply to the Notice of Appeal admits that the Appellant did
so on the advice of his physician. Further part of Exhibit A-2 is
a written document signed by Doctor Andrea Canty. It is dated
after the acquisition of the hot tub but Doctor Canty indicates
that she was the Appellant's family physician from November
1992 to April 2002 and she states:
Because of the observed beneficial and therapeutic and
preventative effects of these two devices [whirlpool tub and ...]
I would, in restrospect, have prescribed them for
Mr. Donahue.
[11] In my opinion the cost of the hot tub
should have been allowed as a medical expense; it can be
considered as a prescribed device since I believe it qualifies
under subparagraph (i) of Regulation 5700 as a
device that is designed to assist an individual in walking where
the individual has a mobility impairment. Moreover it may qualify
under subparagraph 118.2(2)(m) of the Act since it
is of a prescribed kind and since it was purchased on the advice
of a medical practitioner. Subparagraph
118.2(2)(m)(ii) states "is prescribed by a
medical practitioner". The word 'prescribed' is used
three times in subparagraph (m). It is also used in many
other provisions of subsection 118.2(2) of the Act. With
respect to its use in the expression prescribed "by a
medical practitioner" there is no indication that the
prescribing must be in writing and, as mentioned, the Appellant
acquired the hot tub on the advice of a medical practitioner and
further Doctor Canty is satisfied that she would have prescribed
the hot tub. In any event the hot tub greatly alleviated the
Appellant's problem, thus enabling him to be mobile both
within and outside of his home and without the use of the hot tub
he would not have been able to continue his work which was the
sale of heavy equipment.
[12] In Wood v. The Queen
(2000-10-19) TCC 2000-1272(IT)I, Beaubier, J. of this Court
stated as follows:
[14] Provisions such as Section
118.2 - the "medical expense credit", the disability
tax credit and the child tax credit (which has replaced the
former federal family allowance) appear to have been inserted by
the federal government into the Income Tax Act for two
reasons:
(1) To enable the
federal government to participate in social welfare programmes as
a part of its policy, and
(2) To alleviate the
heavy income tax burden on individuals and, where provincial
governments adopt the Income Tax Act, to share that alleviation
with provincial governments.
Similarly, other provisions have been legislated to provide
incentives for various kinds of investments or expenditures to
bring about increased production, to further environmental
causes, to assist cultural endeavours or to bring about changes
in living standards or habitats or investments in provinces or
other geographic areas such as the north.
[15] It is in light of these
occurrences in the Income Tax Act that Section 118.2 and
the Regulation must be examined. In Corporation Notre-Dame de
Bon-Secours v. Communaute Urbaine de Quebec and City of
Quebec, 95 DTC 5017, Gonthier, J. stated at the end of
Section A of his analysis:
The rules formulated in the preceding pages, some of which
were relied on recently in Symes v. Canada [1993] 4 S.C.R.
695, may be summarized as follows:
- The
interpretation of tax legislation should follow the ordinary
rules of interpretation;
- A
legislative provision should be given a strict or liberal
interpretation depending on the purpose underlying it, and that
purpose must be identified in light of the context of the
statute, its objective and the legislative intent: this is the
teleological approach;
- The
teleological approach will favour the taxpayer or the tax
department depending solely on the legislative provision in
question, and not on the existence of predetermined
presumptions;
-
Substance should be given precedence over form to the extent that
this is consistent with the wording and objective of the
statute;
- Only
a reasonable doubt, not resolved by the ordinary rules of
interpretation, will be settled by recourse to the residual
presumption in favour of the taxpayer.
[16] The purpose of Section
118.2 and the Regulation is to assist people such as the Woods.
Objectively, the hot tub in question is not a piece of custom
equipment designed exclusively for Mrs. Wood. She couldn't
afford anything like that. But, looked at objectively, the hot
tub in question allowed room for her to conduct her prescribed
exercises and had hot water jets at locations that would assist
her to ease her impediments and to walk and move. It was of a
design that assisted her and while it was not customized for her
and it did not have everything that Mrs. Wood needed, within the
Woods' means, it can be said that it was exactly right for
her. In substance and objectively speaking, it was designed for
her and to assist her.
[17] Section 118.2 and
Regulation 5700(i) are not to be interpreted to hinder the
Woods from purchasing a device. Rather, they are intended to help
them to do so.
[18] As a result, the Court
finds that this hot tub is a device designed to assist Mrs.
Wood's walking and mobility both in and out of her
dwelling.
[13] Beaubier, J. made similar comments in
Galipeau v. The Queen, (2000-10-19) TCC
2000-1651(IT)I and Gordon v. The Queen, (2000-02-29)
TCC 98-1553(IT)I.
[14] For all of the foregoing reasons the
appeal is allowed to the extent that the cost of the hot tub,
$8,154.65, is an allowed medical expense in the 2001 taxation
year of the Appellant and the matter is referred back to the
Minister for reconsideration and reassessment on this basis.
Signed at Ottawa, Canada, this 8th day of December 2003.
O'Connor, J.
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