Complementary and alternative medicine and the medical expense tax credit: a case for legislative reform.

Since 1942, Canada's Income Tax Act has provided tax relief to taxpayers who spend substantial amounts of their income on out-of-pocket medical expenses. (1) Since 1988, this relief comes in the form of a tax credit, an amount that is directly deductible against income tax payable. (2) Not all medical expenses are eligible. In particular, the statutory scheme excludes some, but not all, medical services and treatments that can be broadly categorized under the term 'complementary and alternative medicine. (3) Specifically, the Income Tax Act provides that only amounts paid for services provided by practitioners who are authorized to practice in the jurisdiction where the service is provided are creditable. Thus, availability of the medical expense tax credit [METC] will depend on whether a taxpayer's province of residence has chosen to regulate a particular area of practice. Consequently, some taxpayers who turn to alternative medicine are denied tax relief for their medical expenses. Also not eligible for the credit are the natural health products that make up the pharmacopoeia of many alternative practitioners. As a result, many Canadians are fully taxable on amounts paid for medical treatment. Frank Tall, a Toronto math professor who suffers from allergies and environmental sensitivities, is one of these. (4) Mr. Tall spends approximately $5000 per year on homeopathic treatments. Since the 2001 tax year, he has attempted to claim the medical expense tax credit, but the Canada Revenue Agency [CRA], which is responsible for administering the Income Tax Act, has denied the claim. Mr. Tall contends that the denial of his claim constitutes a breach of his equality rights under section 15 of the Canadian Charter of Rights and Freedoms. (5) He argues that a statutory scheme that disallows claims for amounts spent on alternative medicine discriminates against members of ethnic and religious minorities who, by reason of their ethnicity and/or religion, feel compelled to seek medical treatment outside the Western allopathic model. (6) A detailed analysis of section 15 jurisprudence is required in order to predict whether such a claim, and in particular Mr. Tall's claim, is likely to succeed. This paper offers such an analysis and concludes that the METC provisions do not offend Charter equality rights. However, regardless of the outcome of the Charter analysis, there is an important policy question about whether or not the medical expense credit should provide relief to Canadians who use alternative medicine, given its increasing importance as a primary health care tool. All Canadian provinces have seen fit to regulate at least one, and in many cases more than one category of alternative medical practitioner, and the trend is toward extending regulation to cover previously unregulated service providers. (7) Some provinces even provide public insurance for certain alternative medical services, and all Workers' Compensation Boards cover them. (8) In addition, employer-paid group health insurance plans, which are not a taxable benefit, often provide coverage for a variety of alternative medical services. (9) Under these circumstances, it is difficult to justify a regime that denies tax relief to Canadians who are not so fortunate as to be covered by an insurance plan. In fact, there are several compelling arguments for expanding the METC to alternative medical treatments and services. The third section of this paper will briefly consider these arguments, as well as those against inclusion. A detailed explanation of the METC provisions will provide the basis for both the Charter and policy analysis. I will therefore begin by examining the statutory scheme that determines which expenses qualify, which do not, and for whom. The Statutory Scheme The medical expense tax credit is found in subsection 118.2 of the Income Tax Act. (10) It is unnecessary to elaborate on the formula used to calculate the credit (found in subsection 118. …

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