Leff v. R., [1998] 1 CTC 3142

Taylor T.C.J.:

This is an appeal heard in Toronto, Ontario on February 21, 1997 against assessments for the years 1992 and 1993, in which the Respondent had denied to the Appellant deductions claimed for “medical expenses”, under subsection 118.2(2) of the Income Tax Act (the Act). The details are provided in the Notice of Appeal, and for assistance I quote extensively from it:

I am writing to appeal my 1992 and 1993 tax return. I was sticken with Multiple Sclerosis some years ago, in August of 1992 due to severe attacks of my M.S. I was medically no longer able to work due to extreme fatigue, pain and weakness. My ability to walk is very limited. As I am under the care of several doctors and it is necessary for me to have a car at my disposal so I am able to see my doctors on short notice which is often the case, as well as trying to lead as normal as a life as is now possible.

I am an extremely allergic person and unable to take the drugs that are used to treat M.S. Last fall my neurologist arranged for me to be seen at the Cleveland Clinic by an M.S. Specialist, I was put on Beta Seron in March of this year. Beta Seron is an injectable drug given every other day to help keep my M.S. from progressing by slowing down the amount of attacks and there severity. So far I am finding the drug to be helpful. As this drug is not yet approved in Canada, my drug plan will not help pay for this drug. I have to see my doctor in Cleveland every three-six months and pick-up my drug in Lewiston, N.Y. every month.

I am therefore appealing to have my tax returns adjusted to allow for my deducting my car and it’s expenses.

I am enclosing a letter from my doctor and listing as well as sending as many bills as I am able.

Although I started this drug in 1994 I am enclosing a copy of my Beta Seron bill as proof of my statement.

I am unable to afford to fly to Cleveland or Lewiston which therefore makes the need to have my car more imperative.

1992	Jan-July	I was still working
		although disable
1992	Aug-Dec.	1989 Chrysler New Yorker
			Total
1992	Payments	$500 per	$2,500.00 /yr
		month
	Repairs	-	578.15
	Insurance	-	1,815.00 /yr
(mileage 10,000)	Gas	-	608.00
(less medical trips then	Lie. Plates	-	90.00 /yr
1993)
		1992-$5,591.15	Total
		1993-$15,440.96	Total
1993	Payments	$500 per	$6,000.00 /yr
		month
	Repairs	-	3,545.69
	Insurance	-	3,631.00
(mileage 33,287 km)	Gas (several medical trips)		2,174.33
(based on repair mileage)	Lie. Plates		90.00 /yr

For the year 1992, the Appellant had not fulfilled the requirements under section 169 of the Act, and that part of the appeal is to be dismissed. For the year 1993 the salient facts and the Respondent’s position are set out in the Reply to Notice of Appeal as follows:

(a) in 1993, the Appellant sought to deduct the amounts of $6,000.00, $3,546.00, $3,631.00, $2,174.00 and $90.00 for automobile payments, repairs, insurance, gas and licence, respectively as medical expenses;

(b) the automobile expenses were incurred for the acquisition and operation of an automobile for the Appellant’s personal use and were not for reasonable travel expenses incurred in respect of the Appellant to obtain medical services in a place not less than 80 kilometres from the locality where the Appellant dwells;

(c) the amount of $15,441.00 claimed by the Appellant as medical expenses was not an amount paid for the transportation by ambulance to or from a public or licensed private hospital for the Appellant;

(d) the amount of $15,441.00 claimed by the Appellant as medical expenses was not an amount paid to a person engaged in the business of providing transportation services, although such transportation services were readily available to the Appellant.

Ms. Leff provided additional information regarding her condition, and in particular the difficulty, virtual impossibility of obtaining medical assistance when and where it was critically needed, in any way except by using personal automobile transportation. She described her situation in this Way:

MS. LEFF: I have multiple sclerosis. I have a lousy case of it. I’m also a horrendously allergic person. I’m one of these unlucky people who can’t take the drugs that are available. My doctors are in Cleveland, Ohio. I mean, this has all been done through my doctors here. They’re basically searching for something to help me.

When I originally wrote this^, at that time, we were going to Cleveland and we were more or less in search or my doctors were of finding something for me. The way it stands at this point in my life, I no longer have the ability I had when I wrote the letter. Okay. Now, for me to be able to even basically go to the corner store, okay, I have to have a vehicle, and right now, I have to have somebody with me. I mean, hopefully a month from now, okay, I’ll settle down, I’ll be able to do it on my own again, but it’s, like I say, my legs to me.

In 1992 I was stricken with a violent attack. That’s when they found out I was allergic to everything. It was recommended at that time that I seek medical advice in Cleveland because they were doing a tremendous amount in multiple sclerosis and I couldn’t take what was available in Canada. So that’s when our little adventure started out to Cleveland.

At that time, they actually put me on a drug called Beta Seron which was not available in Canada, now is, which I ended up being violently allergic to, but in the meantime, we spent month after month after month travelling back and forth to see the doctors and for me to be able to be given this. I mean, because I had to be, it was an experimental situation.

So that a lot of those expenses — plus the fact that my situation, I can be in a car for about three or four hours, so there’s no way we could do that trip all at once. Some of the expenses were hotels. Plus, when I was down there, not everything could be done in one day. At times we had to stay three or four days just for results so they could do the next step.

HIS HONOUR: Okay. So generally speaking what you’re saying is that these amounts were amounts accumulated in that travelling either to Cleveland or in direct relationship to the disease you have.

Is that a fair statement?

MS. LEFF: Yes, it’s a fair, totally fair statement.

Additional data were provided through the careful but considerate cross- examination by Counsel for the Respondent:

MS. REMY: In 1992 and 1993, I understand that you took a trip to Boston?

A. Yes. That was to Women’s & Bigham’s Hospital, also to see and M.S. specialist.

Judges’ Note - Her Notice of Appeal in 1994.

Q. And you flew? How did you get to -

A. Yes, we flew.

Q. Okay. Now, how many trips did you make to the United States during the 1993 taxation year?

A. You know what, we were down there so often, I was so ill, that it’s really difficult for me to be able to tell you off the top of my head. I mean, we were down there, if I’m correct, I think about once a month, but you know, I really, in all fairness, couldn’t tell you exactly - I note that you say that, “I had to see my doctor in Cleveland every three to six months”, and you had to pick up drugs in Lewiston every month.

A. Yes.

Q. So that was the amount of trips that you basically took.

A. Well, actually, I was actually down there more often. I ended up taking a horrendous allergy to the drug, so when I became sort of deathly ill because they couldn’t deal with it up here, they kept shipping me five and a half hours down there. So, yes, Lewiston was definitely every month, that went without saying.

Q. Okay.

A. And the three to six months it should have been; unfortunately, it was a lot more than that.

Q. So you’re saying it was more than what you indicated.

A. Yes. But again, in all fairness, because I didn’t have a complete 100% diary of the dates, that’s why I put every three to six, because that’s what it was really supposed to be.

Q. Okay. Now, I understand the car, based on the attached information, was a 1989 New Yorker.

A. Yeah, I guess that’s what we had at the time.

Q. Yes. And did you own or lease the car?

A. We owned it, I believe.

Q. You owned it.

A. Yeah, because I think during this course of time I think our vehicles changed, but I cannot tell you 100%.

Q. Okay. Did you use the car for any other purposes?

A. You know something, when you say any other purposes, anything that it going on in my life, like I say, since ’92 has all been part and parcel of getting me from point A to point B. So, if you’re asking, yes, of course we went out for dinner, okay, things like that, because I’d be a liar if I told you I didn’t, but I mean, it was used, I’d say probably 85% of it was used for me. The other 15% was used — my husband did a lot of our errands and stuff obviously because I couldn’t any more.

Q. And I understand in 1993 you lived in Thornhill, Ontario.

A. 15 years.

Q. You had a mileage under 1992 of 10,000 kilometres.

A. Right.

Q. And then you have mileage of 33,287 for 1993.

A. Yes.

Q. Okay. Did you have access to planes in 1993? You know, in 1992 you took the trip to Boston by plane.

A. Well, that was because they had a cancellation and I had 24 hours to make it there or I couldn’t get the appointment and I’d have to wait for six months, so we went. In ’93, no, I didn’t because I couldn’t have afforded to have done it and there would have been no way once we got there —

Q. Did you think of using any other modes of transportation to get to the States?

A. You know what, there really wasn’t anything else that we could have done. I mean, there was flying which is horrendously expensive, and then we had to worry about a car and everything else on that end of it, and besides that, there really wasn’t. Plus the fact, as I explained, with my legs the way they are, I have to be able, okay, to move. Quite often my spine goes berserk. So with my husband with the car we can stop, I can get out, you know what I mean, I can move, he can whatever, and away we go. Look, it doesn’t pertain to this case. My husband happens to also be an insulin diabetic, so that we were kind of used to taking certain precautions when we were travelling as well because of him, you know, because he has to stop and, you know, with eating and with his injections, so it kind of became part of ours lives. It was not something new to us.

MS. REMY: I have no further questions, Your Honour.

Miss Leff summarised her position again, and some additional comments were provided by her daughter.

For the Respondent, Counsel put forward:

The Minister’s position is that the Appellant is entitled to deemed payments to a person engaged in providing transportation services and that’s found under 188(2)(4), but the Minister’s position is that this is inapplicable because the transportation services are readily available in the area where the Appellant lives.

In the alternative, the submission would be that the expenses are not reasonable in the circumstances. We have to inquire as to whether or not the 15,000 and change in expenses claimed are reasonable. And it is true that the Appellant incurred some expenses, we’re not denying that, but we’re saying that in the alternative they are not reasonable considering the kilometres travelled and that the New Yorker was also used by the husband Mark Leff and another daughter.

The Appellant gave evidence that she travelled to Cleveland a couple of times a year, apparently six. We’re not aware of the distance between — I don’t know and neither did the Appellant know what the exact distance was. The evidence was that she attended Lewiston to pick up her Beta Seron and that would be 12 times a year, and Lewiston is on the boarder of Niagara Falls, so that’s about 100 kilometres. So if we do a rough calculation, the Appellant would have travelled 200 kilometres, that would be return, and times 12, and that’s about 2,400 kilometres a year to and from Lewiston.

The Respondent’s position is that the Appellant is claiming for uses other than trying to obtain medical services, and this is evidenced by the auto insurance policy, and unfortunately, a log wasn’t kept to sort of discern the difference between usage of the husband and the daughter and for groceries and whatnot. There’s a lot of mixed use which makes it very difficult to ascertain the exact amount used for medical services.

The section does provide for reasonable travel expenses in the circumstances, and leasing a car for the entire year does not relate to 18 trips made to the States, and repairing doesn’t relate to using the car for trips to the States. Insurance payment for an entire year do not relate to 18 trips made to the States. And having the car available all the time does not relate to 18 uses to the States.

The Appellant is claiming the expenses of owning the car on a full-time basis, and these are not expenses that relate to travelling to obtain medical services, and the Respondent submits that the appeal on that account should be dismissed.

Analysis and Conclusion

It is clear that this is a troublesome, indeed a poignant story told by the Appellant respecting the situation in which she finds herself. Counsel for the Respondent was able to provide little in the way of directly related case law guidance, and I have been no more successful. It seems to me that to qualify for deduction of any of the amounts claimed for 1993, the Appellant must fit within the words of one or both short portions of the Act, as Counsel has indicated:

Paragraph 118.2(2)(h) -

(h) for reasonable travel expenses (other than expenses described in paragraph (g)) incurred in respect of the patient and, where the patient was, and has been certified by a medical practitioner to be, incapable of travelling without the assistance of an attendant, in respect of one individual who accompanied the patient, to obtain medical services in a place that is not less than 80 kilometres from the locality where the patient dwells if the circumstances described in subparagraphs (g)(iii), (iv) and (v) apply;

Subsection 118.2(4) -

(4) Deemed payment of medical expenses. Where, in circumstances in which a person engaged in the business of providing transportation services is not readily available, and individual makes use of a vehicle for a purpose described in paragraph (2)(g), the individual of the individual’s legal representative shall be deemed to have paid to a person engaged in the business of providing transpor- tation services, in respect of the operation of the vehicle, such amount as is reasonable in the circumstances.

I am prepared to conclude that in the circumstances of this case, no one “in the business of providing transportation services” was readily available for the necessary transportation of this individual. It is fine to suggest that there was public transportation, and perhaps other means which on occasions would have been adequate, if not satisfactory. To expect this individual to be put to the extra inconvenience and pain — let alone in my view perhaps additional cost - to get from “A to B” is not an interpretation I easily read into those words. That said, I am prepared to hold that Ms. Leff falls within the terms of subsection 118.2(4) of the Act (above) and that however incurred her travelling expenses should be allowed to that legitimately prescribed by the Act. Taking a basic view of subsection 118.2(4) of the Act, that might be sufficient for her to qualify. But, if there should be any question, we could look at paragraph 118.2(2)(h) of the Act also — which could strengthen her case.

It might appear at first glance that paragraph 118.2(2)(h) of the Act would refer to only an attendant - but I do not think that this is necessarily and exclusively so. I would suggest a reading of that part of the legislation in a manner divisable after the word “patient”, and before the next word “and”. That would seem to cover Ms. Leff during any trips she took, when she was able to do so by herself or at least without an immediate attendant. Further - as appears to be the case late in 1993, and from that time on, she has required an attendant - so the balance of the subsection could be applicable. It might have been more complete if Ms. Leff had provided documentary detail on the certification of a medical practitioner for such an attendant, but I am prepared for this appeal — which comes down to only the year 1993 - to accept her statements referring to her medical condition as satisfactory.

Finally there is another hurdle for Ms. Leff - the word “reasonable” found in paragraph 118.2(2)(h) and subsection 118.2(4) of the Act. Ms. Leff has admitted that 15% of the expenses could have been “personal” — that is not directly related to travel as a result of her medical condition. I am not convinced that this would be a proper distribution of the total expenses — $15,441.00, based on the total usage over 33,287 km. I can appreciate and I sympathise with Ms. Leff when she contends that the availability of the car permits her - at least in a modest way - to have the type of life that others have, even afflicted as she is with this serious disability. However, I am not able to read into the relevant words of the Act, more flexibility or latitude than I have already noted to cover such “personal” uses. Convinced as I am that Ms. Leff has the basis of a legitimate claim, but equally convinced as I am that there is a substantial portion of the claim which represents nonmedical uses; and finally faced with no detailed record or diary which could support her case, I resort to an arbitrary determination of the matter. Ms. Leff should be accorded 50% of the amount she has claimed - ($15,441.00) which would be $7,720.50. I make no attempt to assign this amount to the various categories in the total claim outline in her appeal.

The appeal is allowed, to the extent of claiming a deduction of $7,720.50 for travel expenses for the year 1993. In all other respects, the appeal is dismissed. No costs are to be awarded.

Appeal allowed in part.