A Lesson in Parliament’s Power Over Eligible Tax DeductionsMarch 22, 2023
written on behalf of Feigenbaum Law
As the economy shifts, it is natural for people to look for creative ways to save money. A common strategy which can help maximize savings can be done through taxes. With tax season upon us, it is important to work with a trusted tax professional to ensure that any money-saving strategies remain within the bounds of the law. In the recent decision of Keehn v. The King, the Tax Court of Canada illustrated that not all tax deduction claims will be accepted.
Taxpayer appeals reassessment of income tax return
In Keehn v. The King, the appellant taxpayer (“LK”) appealed a reassessment of his 2018 income tax return. The Minister of National Revenue had denied LK’s claim of $853 in hospital parking fees which he had listed as medical expenses. Medical expenses can be claimed under section 118.2 of the Income Tax Act, however, individuals may only claim reasonable travel expenses if they meet certain conditions. These conditions include the requirement that the services occur at a location at least 80 kilometres from where the patient lives.
LK stated in his appeal that his wife had to travel to the hospital thrice weekly to receive medical treatment. Most of the time, she would drive from the parties’ home to the hospital, park her vehicle while attending treatment, and subsequently drive home again.
Taxpayer claims hospital parking fees
LK and his wife lived only 22 kilometres away from the hospital where his wife received treatment. LK stated that the Income Tax Act, which does not explicitly include or exclude parking as a travel expense, discriminates against “reasonable travel expenses” and people who have to travel less than 80 kilometres for medical treatment.
LK told the Court that if his wife did not receive the dialysis treatment, she would have died. Thus, he equated the parking expenses to medical treatment expenses since she had to park her car to enter the hospital.
Argument based on claims of discrimination
The Court focused on LK’s argument regarding discrimination and turned to the Canadian Charter of Rights and Freedoms, also known as the Constitution Act.
Section 15.1 of that Constitution Act states that every individual is equal under the law and is entitled to equal protection and benefit from it without discrimination. However, the grounds of discrimination are also listed, with those being “race, national or ethnic origin, colour, religion, sex, age or mental or physical disability.”
Court disagrees with discrimination claims
The Court held that the Constitution Act did not apply in this case. While the Income Tax Act does determine who is eligible to claim travel expenses, this type of discrimination is not based on the differences between individuals themselves, but rather, their location of residence. Referring to the case of Ali v. R, the Court highlighted that:
“On the other hand, a legislative choice not to accord a particular benefit absent demonstration of discriminatory purpose, policy or effect does not offend this principle and does not give rise to a s. 15(1) review. This Court has repeatedly held that the legislature is under no obligation to create a particular benefit.”
The Court noted that it is the role of Parliament to determine which medical expenses are eligible to be submitted as tax expenses. When making these decisions, Parliament is free to make such distinctions as they deem appropriate, as long as the eligibility requirements do not discriminate against people based on the prescribed grounds found in the Constitution Act.
Ultimately, the Court declined LK’s appeal.
Feigenbaum Consulting Creates Comprehensive Tax Strategies to Help Maximize Savings While Complying with the Law
At Feigenbaum Consulting, our team provides excellent cross-border advice to clients seeking legal and tax-related solutions to address both personal and corporate matters. Improper tax planning can have significant consequences, which is why it is vital to work with an experienced advisor regarding potential tax claims and deductions. Located in Thornhill, our firm proudly advises clients throughout Canada and the United States of America. To speak with a member of our team, contact our office at 905-695-1269 (toll-free at 877-275-4792), or reach out to us online.