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Citation: 2003TCC515
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Date: 20030905
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Docket: 2002-4898(IT)I
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BETWEEN:
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ANYA POESIAT,
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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
Woods J.
[1] Ms. Anya Poesiat appeals an income
tax assessment for the 2000 taxation year that disallowed a
medical expense tax credit in respect of the purchase of
homeopathic medicine.
[2] The appeal was heard under the
Court's Informal Procedure.
Facts
[3] Ms. Poesiat was a primary school
teacher for 28 years. She retired in 1991 because she was
severely affected by chronic fatigue syndrome.
[4] Ms. Poesiat's symptoms
are greatly relieved by homeopathic medicine prescribed by her
doctors. In the relevant taxation year, much of the medicine was
purchased at a health food store, Food For Life. However, one
product that was quite expensive was only available directly from
a distributor for the manufacturer.
[5] In the 2000 taxation year, Ms.
Poesiat incurred $10,041.12 for homeopathic medicine and claimed
this amount as a medical expense for purposes of the medical
expense tax credit in section 118.2 of the Income Tax Act,
R.S.C. 1985 (5th Supp.), c. 1 (the
"Act").
[6] The Minister of National Revenue
(the "Minister") took the position that these
expenditures were not "medical expenses" because they
were not the type of medicine described in paragraph
118.2(2)(n) as they were not recorded by a pharmacist.
[7] Ms. Poesiat had been allowed
the tax credit for this type of medicine for taxation years prior
to 2000. After the Minister communicated this new position, Ms.
Poesiat purchased medicine at a pharmacist at considerably higher
prices in order to clearly qualify for the tax credit.
Statutory Provision
[8] Paragraph 118.2(2)(n) of
the Act reads:
(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;
Submissions of Parties
[9] Counsel for Ms. Poesiat submits
that the Tax Court of Canada has been sympathetic to taxpayers in
similar circumstances. In particular, the Court has recently
interpreted the words "recorded by a pharmacist" in
paragraph 118.2(2)(n) to include a record on a
pharmacist's sales slip and has held that it is not necessary for
the drugs to be available only through prescription: Frank v.
R., [2001] 3 C.T.C. 2596 (T.C.C.) and Pagnotta v. R.,
[2001] 4 C.T.C. 2613 (T.C.C.). A recent decision of O'Connor J.
goes even further and finds that the requirement to be recorded
by a pharmacist is not necessary if "the medications are
prescribed by a doctor and they make the difference between life
and death or functioning or not functioning:" Ray v.
R., [2002] 4 C.T.C. 2590 (T.C.C.).
[10] Counsel for Ms. Poesiat also submits
that the Minister should be estopped from denying the tax credit
for the 2000 taxation year because the allowance of the tax
credit for prior years had led Ms. Poesiat to believe that it was
not necessary to purchase medicine through a pharmacist.
[11] The essence of the Crown's
submission is that the Ray decision is incorrect and that
the Frank and Pagnotta decisions are questionable
in light of dicta in Dunn v. The Queen, 2003 DTC
5029 (F.C.A.). In an oral judgment in Dunn, Rothstein J.
A. stated:
[6] Although we do
not need to decide the point, it would appear that the
requirement that medications 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.
[12] The Crown agrees that the disallowance
of the tax credit in situations such as this appears harsh and
referred to the following passage in a decision of
Bowman A.C.J. in Banman v. R., [2001] 2 C.T.C.
2111:
[6] Sooner or later,
however, I think the government is going to have to face the fact
that homeopathic medicines, alternative forms of treatment,
herbs, natural healing, that sort of thing are so prevalent it
should consider an amendment to the Income Tax Act that would
permit a tax credit in respect of these things. The appellant is
a very good example of a person who has used alternative methods
successfully. I am sorry that I can't give her any relief,
but I do commend her for her courage in coming to the court.
Analysis
[13] The issue is whether it is necessary to
purchase medicines through a pharmacy in order to claim the
medical expense tax credit. In order for the purchase of
medicines outside a pharmacy to qualify for the tax credit, it is
necessary to ignore the concluding words in paragraph
118.2(2)(n), "recorded by a pharmacist."
Regrettably I find that the words should be given some meaning.
It is a well established principle of statutory construction that
courts should endeavour, where possible, to attribute meaning to
each word in a statute: Morguard Properties Ltd. v.
City of Winnipeg (1983), 3 D.L.R. (4th) 1 (S.C.C.). The
meaning of the words "recorded by a pharmacist" is
unclear but it is possible to attribute meaning to them and
accordingly I find that the purchase of medicine outside a
pharmacy does not qualify as a medical expense for purposes of
paragraph 118.2(2)(n).
[14] The recent decision of Bowie J. in
Claussen Estate v. R., [2003] 2 C.T.C. 2363 (T.C.C.)
considered the inconsistencies in prior cases. Mr. Justice
Bowie's reasoning, with which I agree, is as follows:
[6] I accept that
the concluding words of paragraph 118.2(2)(n) of the Act,
considered in its context as part of a series of provisions
designed to provide a measure of relief from the burden of income
tax to people who suffer, or as in this case whose dependants
suffer, from illness, is capable of more than one meaning.
Conceivably, it might refer to the requirement imposed upon a
pharmacist who fills a prescription for a Schedule F drug under
the Food and Drug Regulations to maintain a record of the
prescriptions filled. This seems unlikely, however, as paragraph
(n) refers to substances that would certainly fall outside
Schedule F. It might refer to the requirement under provincial
statute law that pharmacists maintain a record for each patient
of the prescriptions filled, or it might, as the cases I have
referred to have found, refer simply to the recording by the cash
register of a sale of a product falling within the description
found in paragraph (n). However, it must mean something.
With due respect to Judge O'Connor, it is not, in my view,
open to this Court simply to write the words out of the statute
because their meaning is unclear. Iacobucci J. makes it clear in
Bell Express Vu that if ambiguity is found, the Court must then
go on to resolve that ambiguity through external aids to
interpretation and the canons of construction. It is a
fundamental canon of construction that words in a statute not be
rendered nugatory. It is not necessary, however, for me to decide
whether Judges Teskey and Miller were correct in their conclusion
that a sale by a pharmacy is all that is required to satisfy
paragraph (n); I am unable to find that a purchase which
does not involve a pharmacy or a pharmacist can qualify.
[15] There remains to be considered Ms.
Poesiat's submission that the Minister should be estopped from
denying the tax credit for the 2000 taxation year because the tax
credit had been allowed for several previous years. This argument
cannot succeed. A representation by the Minister regarding an
interpretation of the Act for one taxation year is not
binding on later taxation years: Ludmer v. The Queen,
95 DTC 5311 (F.C.A.).
[16] For the foregoing reasons, the appeal
is dismissed.
Signed at Ottawa, Canada this 5th day of September, 2003.
J.M. Woods J.
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