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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. |
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 ... |
(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 ... |
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 ... |
(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.
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"B. Paris" |
Paris, J.
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CITATION: |
2004TCC812 |
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COURT FILE NO.: |
2004-1996(IT)I |
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STYLE OF CAUSE: |
Michael Melnychuk and H.M.Q. |
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PLACE OF HEARING: |
Edmonton, Alberta |
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DATE OF HEARING: |
November 17, 2004 |
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REASONS FOR JUDGMENT BY: |
The Honourable Justice B. Paris |
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DATE OF JUDGMENT: |
December 30, 2004 |
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APPEARANCES: |
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Agent for the Appellant: |
Stella Melnychuk |
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Counsel for the Respondent: |
Leslie Akst |
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COUNSEL OF RECORD: |
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For the Appellant: |
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Name: |
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Firm: |
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For the Respondent: |
Morris Rosenberg Deputy Attorney General of Canada Ottawa, Canada |