Date: 20020823
Docket: 2002-710-IT-I
BETWEEN:
RHONDA RAY,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Reasons for Judgment
O'Connor, J.T.C.C.
[1] The issue in this appeal is whether in the 1999 taxation year the Appellant is entitled to deduct certain expenses as medical expenses as defined in subsection 118.2(2) of the Income Tax Act ("Act") and Regulation 5700 of the Income Tax Regulations ("Regulations") in calculating her medical tax credits in the computation of her non-refundable tax credits for that year.
[2] The relevant facts are adequately described in the Reply to the Notice of Appeal as follows:
6. In computing taxes payable for the 1999 taxation year, in a return of income that was electronically filed by the Appellant, the Appellant claimed a non- refundable medical expense credit in respect of total of medical expenses in the amount of $7,087.00.
7. In assessing the Appellant for the 1999 taxation year, Notice of Assessment thereof dated April 17, 2000, the Minister of National Revenue (the "Minister") allowed a non-refundable medical expense credit in respect of total medical expenses in the amount of $7,087.00 as claimed by the Appellant.
8. In reassessing the Appellant for the 1999 taxation year, Notice of Reassessment thereof dated April 6, 2001, the Minister disallowed medical expenses in the amount of $6,555.00 (the "disallowed expenses").
9. In so reassessing the Appellant, to disallow medical expenses, the Minister made the following assumptions of fact:
(a) those facts hereinbefore admitted;
(b) the disallowed expenses are amounts paid by the Appellant for the purchase of vitamins, herbs, organic and natural foods, and bottled water;
(c) the disallowed expenses are not amounts paid by the Appellant for drugs or medications for use by the Appellant as prescribed by a medical practitioner and recorded by a pharmacist;
(d) the disallowed expenses are not medical expenses described in subsection 118.2(2) of the Act;
(e) the disallowed expenses are personal expenses of the Appellant;
(f) the Appellant is not entitled to deduct non-refundable medical expense credit in respect of the disallowed expenses in the 1999 taxation year.
[3] The Appellant presented as Exhibit A-1, letters and medical certificates of Dr. Bryn Waern, Dr. M. Zazula, M.D., and Mary O'Reilly, N.D..
Dr. Bryn Waern stated in his letter dated February 13, 2002:
This will verify that Ms. Ray was a patient of mine from May '96 to Sept. '97. She was being treated for Chronic Fatigue Syndrome/Fibromyalgia environmental sensitivities.
All of these conditions are long-term and do not resolve, but require special diet, supplements, physiotherapy and other types of body work, and stress reduction techniques.
Dr. M. Zazula, M.D. stated in his/her letter of February 7, 2002:
Rhonda Ray is a patient under my care for treatment of medical conditions including multiple allergy problems. Ms. Ray must follow a prescribed regimen of consuming natural foods and use products that eliminate and are free of chemicals, preservatives, and other substances that would contribute to an aggravation of her condition. Failure to do so would increase her level of illness and physical disability, thereby compromising her well-being.
Mary O'Reilly, N.D. stated in her letter of February 14, 2002:
Rhonda Ray is a patient who suffers from Myalgic Encephalomyelitis/Chronic Fatigue and Immune Dysfunction Syndrome, Multiple Chemical Sensitivity, and Fibromyalgia. These are chronic illnesses requiring a persistent, multi-faceted treatment protocol of nutritional supplementation, a diet comprised of chemical-free organic foods and purified water, natural remedies and personal care products, physical therapy for pain relief and increased mobility, as well as lifestyle changes.
These modalities are prescribed as essential components of a successful treatment plan, without which the prognosis for Ms. Ray's health and ability to function as a productive member of society would be severely adversely affected.
[4] Also the Appellant presented an extract from an address by Dr. George Grant, M.Sc. C. Chem. M. Ed.D. prepared as a submission to the House of Commons. The principal portions of that address read as follows:
Mr. Speaker, Multiple Chemical Sensitivity, Chronic Fatigue Syndrome, and Fibromyalgia affect between 6-15% of the Canadian population. Of those affected, approximately 1-2% are so severely debilitated they require hospitalization. This is a large number of Canadians, Mr. Speaker, and this issue demands our attention.
I would like to explain to the Members of the House a bit more about these illnesses and their affect on Canadians.
Multiple Chemical Sensitivity or Environmental Illness is a chronic condition where symptoms recur in response to low levels of exposure to multiple unrelated chemicals and improve or resolve when these chemicals are removed. It is a multiple-organ disorder. Multiple Chemical Sensitivity is closely related to Chronic Fatigue Syndrome and Fibromyalgia and symptoms overlap in these three conditions.
In 1994, the US Center for Disease Control concluded that chronic fatigue syndrome is "a clinically defined condition characterized by persistent fatigue and a variety of multi-system symptoms". The core symptoms include excessive fatigue, general muscular and joint pain, mental fogginess, and often gastrointestinal problems. Other symptoms include fatigue following stressful activities, headaches, sore throat, sleep disturbance, low grade fever and depressed mood. The symptoms fluctuate in severity and persist for a prolonged period. The exact cause of chronic fatigue syndrome is not yet known. Current etiological theories proposed are: neuro-endocrine dysfunction, viruses, environmental toxins, genetic predisposition, head injury and stress. The disease is more prevalent in women than men.
Fibromyalgia Syndrome is a painful muscle disorder in which the thin film or tissue (myofacsia) holding muscle together becomes tightened or thickened, causing pain. It is also known as Fibrositis. This disorder shares many of the same symptoms as chronic fatigue syndrome. It is much more common in women than in men.
Mr. Speaker, the sad truth is that these illnesses destroy not only the health of those they afflict, but also the lives of Canadians. Imagine your child being rendered bed-ridden by allergic reactions to the new carpeting in his or her school, or imagine your spouse becoming disabled after his her office was renovated. These are the realities of people afflicted with Multiple Chemical Sensitivity.
Now, imagine that your niece or nephew catches the flu and never recovers. Think about that niece or nephew unable to prepare meals or clean house or care for her children - let alone work to support his or her family. Imagine this condition carrying on for five years or more. These are the realities of people affected by chronic fatigue syndrome.
[5] Dr. George Grant also gave testimony supporting the foregoing medical opinions, which were not disputed by the Respondent. Also it is clear from his testimony and that of the Appellant that the Appellant who, at the hearing appeared in very good health both physically and mentally, that if the products she was taking i.e. the organic foods, special water etc. were not taken on a regular basis as described she would be flat on her back. In other words, these items that she is taking keep her healthy. Without them she would be very unhealthy.
ANALYSIS
[6]
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.
[7] The agent for the Appellant also referred to paragraph 118.2(2)(k) which reads as follows:
for an oxygen tent or other equipment necessary to administer oxygen or for insulin, oxygen, liver extract injectible for pernicious anaemia or vitamin B12 for pernicious anaemia, for use by the patient as prescribed by a medical practitioner;
[8] The agent argued that these products are similar to those taken by the Appellant.
[9] Reference should also be made to Interpretation Bulletin IT-519R2 where
paragraph 61 provides as follows:
...
61. For purposes of calculating the medical expense tax credit, there are two categories of drugs, medicaments or other preparations or substances (other than those included in the account of a medical practitioner (see ¶ 4 above) or hospital) the
cost of which may qualify as medical expenses:
(a) the substances, mentioned in paragraph 118.2(2)(k) (insulin, oxygen and, for pernicious anaemia, liver extract and vitamin B12) which, for purposes of this paragraph, a medical practitioner must have prescribed, but which a pharmacy or any other type of store may sell without a written prescription; and
(b) the drugs (and other items), referred to in paragraph 118.2(2)(n), which a medical practitioner or dentist must have prescribed, and which must be purchased from a pharmacist who has recorded the prescription in a prescription record.
[10] The purpose of referring to all of the provisions bearing on this matter is to point out that a broad and liberal latitude is accorded by the Act, Regulations and Bulletins. Further, these provisions appear to encourage for an interpretation favourable to the person taking the medication.
[11] There are several similar cases where certain items have been disallowed because they, although prescribed by a doctor, were nevertheless not recorded by a pharmacist. There are also a number of cases where this Court used the latitude provided for by paragraph 118.2(2)(n) to interpret it in a manner which would allow the deduction, despite the absence of the conventional situation of a pharmacist filling out a prescription.
[12] In this connection I refer to the case of Frank v. R., [2001] 3 C.T.C. 2596. In that case Teskey T.C.J. had a similar problem. He stated at paragraph 7 and following:
7. The evidence of the Appellant is unchallenged. The Appellant suffers from HIV. Who annually, pays - in round figures - $700 for vitamins and supplements, which she says she requires because of her medical problems, since people that have this disease lose the ability or the body loses the ability to manufacturer these required vitamin. In order to maintain life, various vitamins and supplements are required.
8. The provision of the Income Tax Act (the "Act") that deals with this is found in Section 118.2(2)(n). The words that have to be looked at are the last six words of that section. They are: "as recorded by a pharmacist".
9. For clarity, this whole subsection reads,
"for drugs, medicaments or other preparations or substances (other than those described in paragraph k) manufactured sold or represented for use in the diagnosis for treatment or prevention of a disease, disorder, abnormal physical state of 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."
10. There has been one case referred to me and that is of my colleague, Rip, and he did deal with vitamin and mineral supplements. In that case reading his reasons, I cannot find that the vitamins and supplements therein were prescribed by a medical practitioner or dentist. He comes to the conclusion that vitamins and supplements do not fit the statute. I am well aware that a decision of a colleague deserves the highest respect and should be followed. However, in this case we have the vitamins and supplements prescribed by a physician and I have the evidence before me that they are required to sustain the life of the Appellant.
11. The Respondent takes the position that what the words, "as recorded by a pharmacist", means that it has to be a prescription drug that is a drug that requires a prescription before it can be sold. The Appellant argues that if that is what Parliament meant the subsection would simply read, "for drugs prescribed by a medical practitioner or a dentist as found on the list of prescribed drugs." The section doesn't say that. It goes quite further, and is much broader than that.
12. The question to me is can I ignore, "as recorded by a pharmacist".
[13] The Frank case has spurred on further decisions, which try to explain why and to what extent the Courts can interpret the provision in a manner which allows the deduction of the items at issue. Specifically, Judge Miller in Pagnotta v. R., [2001] 4 C.T.C. 2613 states at paragraph 30 of that judgment:
I am not however prepared to ignore the requirement of a pharmacist. The Appellant relied heavily on the recent decision of Judge Teskey in the Frank case, where he asked the same question. He did not ignore the words either, but instead, having found substances had been prescribed by a medical practitioner, found that "recorded" could be the pharmacist's purchase or sales slip.
[14] Deputy Judge Rowe in Dunn v. R., [2002] 2 C.T.C. 2007 followed Judge Miller's decision in Pagnotta by stating that the requirement of "recorded by a pharmacist" cannot be read disjunctively.
[15] The cases concerning 118.2(2) all agree with Judge Teskey's decision in Frank that the "recorded by a pharmacist" requirement encompasses much more than the conventional situation where a prescription drug is filled out by a pharmacist. However, I am unaware of any case that clearly indicates what the expression "recorded by a pharmacist" means.
[16] In the case at hand, the facts and evidence sufficiently establish that the items in issue, organic foods and bottled water, are "medications" falling under 118.2(2) because without them, the Appellant would be robbed of being a functioning and productive member of society. To quote Judge Teskey, the items are "required to sustain the life of the Appellant".
[17] In any event, the medications in the case at hand, prescribed by a doctor and purchased outside of a pharmacy, cannot possibly be recorded by a pharmacist. This impossibility leads me to conclude that requirement is not necessary for items that have been prescribed by doctors and which truly cure the patient and render him or her capable of living a normal life again.
[18] Going back to Judge Teskey's question in Frank, "Can I ignore 'as recorded by a pharmacist'", I would answer that question with a "yes". I qualify that "yes" with that this can only occur in very special circumstances. With reference to Judge Miller's and Deputy Judge Rowe's decisions stating that the pharmacist requirement cannot be ignored, to again use the words of Judge Teskey:
I am well aware that a decision of a colleague deserves the highest respect and should be followed. However, in this case we have the vitamins and supplements prescribed by a physician and I have the evidence before me that they are required to sustain the life of the Appellant.
[19] To hold otherwise would, in my opinion, produce an extremely narrow and absurd interpretation of the section. Because the ambiguous phrase "recorded by a pharmacist" was not ignored, Judge Teskey, in Frank, at paragraph 11 interpreted "recorded by a pharmacist" as including sales slips. Judge Miller, in Pagnotta, at paragraph 30 decided that items acquired from a pharmacy can fall within the meaning of paragraph 118.2(2)(n) but those same items from a different store cannot. Deputy Judge Rowe, in Dunn, at paragraph 13 stated that a record made by a licensed pharmacist of medications prescribed to the patient by a medical practitioner - even though not prepared, dispensed or supplied within that licensed pharmacy - would seem to satisfy the requirements of the provision.
[20] With respect, the ambiguity in the provision has resulted in judicial acrobatics with the purpose of fitting a taxpayer's situation within the provision. It is my opinion that common sense should prevail. If the medications are prescribed by a doctor and they make the difference between life and death or functioning or not functioning, they should fall under paragraph 118.2(2)(n).
[21] Judge Miller at paragraph 30 in Pagnotta and Deputy Judge Rowe at paragraph 13 in Dunn, could not ignore the requirement "recorded by a pharmacist" because to do so would render that portion of the legislation meaningless. It is my opinion that the term was worded so broadly that in cases where common sense dictates that the medications should be deductible, the phrase can be set aside.
[22] My answer to the question, "Can I ignore 'recorded by a pharmacist'" was "yes" but I qualified that "yes". Specifically, my qualification mirrors that of
Judge Miller in Pagnotta, at paragraph 30:
I wish to be clear that this is not intended to be an open invitation to taxpayers whose lifestyle includes a regimen of vitamins to rely on paragraph 118.2(2)(n) for obtaining a credit on the basis that such costs constitute medical expenses. This is limited to the rare situation of a taxpayer suffering sever medical problems, attempting to relieve those problems through a variety of treatments recommended by a number of medical practitioners.
[23] As I mentioned previously, I believe these provisions should be interpreted liberally and in favour of the taxpayer. For the above reasons the appeal is allowed.
[24] There shall be no costs.
Signed at Ottawa, Canada, this 20th day of September, 2002.
|
"T. O'Connor" |
J.T.C.C.COURT FILE NO.: 2002-710(IT)I
STYLE OF CAUSE: Rhonda Ray v. The Queen
PLACE OF HEARING: Toronto, Ontario
DATE OF HEARING: August 14, 2002
REASONS FOR JUDGMENT BY: The Honourable Judge Terrence O'Connor
DATE OF JUDGMENT: September 20, 2002
APPEARANCES:
Agent for the Appellant: Sandor Feld
Counsel for the Respondent: Joel Oliphant
COUNSEL OF RECORD:
For the Appellant:
Name:
Firm:
For the Respondent: Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Canada
2002-710(IT)I
BETWEEN:
RHONDA RAY,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Appeal heard on August 14, 2002, in Toronto, Ontario,
by the Honourable Judge Terrence O'Connor
Appearances
Agent for the Appellant: Sandor Feld
Counsel for the Respondent: Joel Oliphant
JUDGMENT
The appeal from the reassessment made under the Income Tax Act for the 1999 taxation year is allowed, and the matter is referred back to the Minister of National Revenue for reconsideration and reassessment in accordance with the attached Reasons for Judgment.
There shall be no costs awarded.
Signed at Ottawa, Canada, this 20th day of September, 2002.
|
"T. O'Connor" |
J.T.C.C.