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Decrease Taxes with Natural Health Expenses

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Decrease Taxes with Natural Health Expenses

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Some people are claiming vitamins on their tax forms as medical expenses and succeeding. Here's how.

Let's face it, good health doesn't always come cheap. That's something even government officials can agree upon. But while bureaucrats cry over the beleaguered state of Canada's health care system, average citizens are paying many out-of-the-pocket expenses. Even the most padded wallet feels lighter after a trip to the local health food store.

Ask any representative of Revenue Canada (now titled Canada Customs and Revenue Agency, or CCRA) and they'll quote from what some consider an outdated tax policy that vexes health consumers from coast to coast. Despite great advances within the natural health care movement in this country, it is generally understood that vitamins, minerals and other supplements cannot be claimed on year-end personal income tax forms.

Sandy Simpson of West Vancouver, BC, experienced the above scenario firsthand when she filed her personal income taxes in 1997. Simpson had been seeing a naturopath for some time and had accrued expenses related to those visits. For treatments and supplements purchased, her naturopath's office had issued her itemized receipts.

She included the vitamin portion of her receipts as medical expenses when her accountant suggested it, although she believed the government wouldn't accept it. Six months later, she received a letter from Revenue Canada stating:

"The expenses you claimed do not qualify for the medical expense tax credit. To be eligible for this claim, drugs, in addition to being prescribed by a licensed practitioner, require entry in a prescription registry by a licensed pharmacist. Herbs, minerals, vitamins and naturopathic supplements are not eligible for this claim."
Indeed, various health deductions are permitted under the existing Income Tax Act. "In general terms, health care services have to promote physical and mental health, and the protection against disease," states one document retrieved from the Revenue Canada's official website. If only it were that simple.

In its book Preparing your Income Tax Returns (1999 edition for 1998 returns), the Arthur Andersen Chartered Accountants firm describes the health services and medical supplies currently allowable as medical expenses. Under a list of eligible medical practitioners (as determined by a Revenue Canada review of each province's Health Professions Act), dentists and optometrists mingle with acupuncturists, chiropractors and naturopathic doctors.

By current written standards, health consumers hoping to claim vitamins as medical expenses would have to satisfy several conditions. Firstly, the medical practitioner must be provincially licensed. Secondly, the products must be purchased from a licensed pharmacy.

Since most supplements can be purchased without a prescription at a health food store, they don't qualify. It is not good enough for a doctor to scribble a few suggestions on a piece of paper and hand it to a patient. Nor can patients purchase products from their health professional and later submit a receipt (as in Simpson's case), even though naturopathic medicine is a licensed profession in BC. Simply put: no prescription, no refund.

With the demand for natural health products on the rise, health consumers are questioning where they stand. For some, Revenue Canada's right to make decisions in matters of health is unacceptable.

Invoking Constitutional Rights

Five years ago, Toronto herbalist Kelly Remmer began submitting her receipts for supplements to Revenue Canada along with a letter. Since then, she has applied and successfully received exemptions for the cost of all vitamins, herbs, and other supplements accrued by her, her husband, and their family of four children.

Remmer originally got the idea from an editorial in a now-defunct health magazine which noted that under the constitution of Canada, the federal government has no jurisdiction over matters of health. According to Sections 91 and 92 of the Constitution Act of 1867, issues of health belong exclusively to the provinces.

How then, asks Remmer, can Revenue Canada, a federal agency, dictate what should and what should not be considered appropriate health care measures? The government may use the Canada Health Act of 1984 and the earlier Medical Care Act of 1968 to exercise control over provincial health care, but constitutional rights still apply.

"Most people don't question it," says Remmer. "Revenue Canada will not verify this information, but I know my rights."

Her conviction on this matter spilled over into a letter she penned to that same health magazine in the summer of 1999, which detailed her tax-time experiences. What she did not expect were the phone calls that started shortly after her letter was published and still haven't stopped.

People are wondering. What makes her case unique? Have her claims gone through because they've simply fallen through the cracks? If so, Remmer is not the only one. "Much of my clientele does the same," she wrote in her letter.

In addition to receipts, she always includes with her tax forms a carefully worded note that includes a variation of the following paragraph: "Because I practise preventive health care for myself, I am remitting the enclosed receipts as medical expenses. I am of the opinion that this choice to be responsible for my own health saves health care costs and reduces the burden on the health care system."

By including a letter, consumers assert their belief in a constitutional right to self-determined health care and support the case for claiming vitamins as legitimate medical expenses.Another question arises to which there seems to be no easy answer: amidst the intricate paths of legislation, has Remmer found the root of uncharted health territory?

Other incidents of late have similarly invoked ideas of constitutionality in defending matters of health. Most recently, in November 1999, the charge against BC herbalist Jim Strauss for practising medicine without a license was stayed after it became apparent that his lawyer was going to challenge the case on constitutional grounds.

Federal Versus Provincial

Lawrence Leupol, an educator with the BC-based Detax Group, acknowledges the confusing position of health consumers and their rights. "It's difficult," says Leupol, "because we have a constitution that gave the power over health to provinces. Then we have the federal government collecting tax money and handing it back to the provinces."

"How is the provincial health field supposed to maintain autonomy when it gets its money from Ottawa?" he asks.

Those hoping to claim supplements are essentially on their own because, according to Leupol, the provinces and territories are tied up in legislation. Appealing to the constitution, which originally preempted other binding documentation, might pose a partial solution for consumers. But, as Leupol contends, the issue must be examined both at an individual case level and within the broader context of overlapping layers of health jurisdiction, the constitution and taxation.

Regardless of paperwork, not everyone has been successful in exemptions being accepted by the CCRA. While one claim may be accepted, another is denied. Several accountants consulted agree that the natural health care industry is "a gray area" for many reasons.
Acceptance and classification of "holistic" health professions varies provincially and is constantly evolving. While acupuncture may be a licensed profession and covered by the Medical Services Plan of BC, it isn't necessarily recognized in other provinces.

Federal treatment of natural health products is also under review, with supplements tucked into a new "not food, not drug" category under the Food and Drugs Act and the Office of Natural Health Products expected to open shortly.

The growing body of evidence on the efficacy of vitamin, herbal and other preparations poses a challenge to policy makers. Issues of regulation, monitoring and quality control arise. As well, research on the cost-effective benefits of preventive medicine is accumulating.
In the end, consumers want to know: if prescriptions and most medical supplies can be considered legitimate health expenses, why can't vitamins and herbs?

"The issue of health care is very controversial," one accountant noted. "The Income Tax Act changes very slowly and follows what the rest of Canada is doing." In other words, although minor adjustments are made to the Act every year, it may be some time before Revenue Canada tackles the challenges and demands posed by natural health care consumers.

In the meantime, Revenue Canada may vow to "treat people fairly and apply the law fairly" but their inconsistent application of tax policy has not gone unnoticed. Earlier this year, Kelly Remmer received a phone call from the secretary of Canadian Minister of Justice and Member of Parliament Anne McLellan. The extent of Minister McLellan's interest in this issue remains unconfirmed, as phone calls made to her Edmonton office remained unreturned at time of print.

Nevertheless, any political attention drawn to Canada's outdated tax policy might spur a much-needed debate on behalf of patients and consumers. Only time will tell. Can a workable solution be found that satisfies bureaucrats, maintains freedom of choice, allows for free enterprise and keeps costs reasonable? A tall order, for sure, but one that is written on the prescription pad of every health consumer who practises natural and/or preventive medicine.

This is an issue on which consumers need to lobby their national MPs and their provincial MLAs.

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