The Paper Chase
Do tax laws discriminate against gay male couples pursuing surrogacy?
Clients of mine who are “intended parents”, people having a child through third party assisted reproduction, often ask me about tax write-offs. After all, paying for medical expenses involved with third party assisted reproductive technologies (ART) is very expensive.
For example, a gay male couple having a child through ART must pay for fertility medications, medical procedures relating to retrieval of the egg from the donor, in-vitro fertilization (IVF) with the donated egg and their own sperm, and the transfer of the embryo into the surrogate. In addition to medical costs, there are legal fees and sometimes agency fees (if an agency was used to help find the third party donor or surrogate). In parts of the world where it is permissible to pay donors and surrogates, there are also costs incurred for travel and payment of the third party (which is prohibited in Canada).
Naturally intended parents wish to reduce their costs as much as possible. One of those ways is to apply for the Medical Expense Tax Credit when filing their taxes. The credit is used to reduce the amount of tax owed to the government. However, not all medical expenses are eligible.
A recent decision from the Tax Court of Canada provided some clarity about what expenses are allowed in the context of surrogacy.
A gay male claimed a medical expense tax credit for expenses totalling $80,808. Nearly 80% of that amount was disallowed because it represented payment to the surrogate mother and medical expenses incurred by the surrogate. Under Canadian tax law the credit only applies for expenses incurred in respect of the patient, and only the taxpayer filing and his/her spouse and dependents are included in the definition of patient.
However, $16,675 for in-vitro procedures was allowed, which is logical because IVF is included in the list of eligible medical expenses.
The man argued that gay male couples are being discriminated against by Canada’s tax laws, and that the tax law infringed upon his right to equality under the Canadian Charter of Rights and Freedoms. He argued that “because gay male couples do not have ovaries to produce eggs and wombs in which to gestate a foetus, they must work with surrogates, which heterosexual and female gay couples do not have to do.” On a practical level he was correct, as having a child through ART is more expensive for gay males than anyone else.
However, the Court concluded that surrogacy fees are not eligible for the medical expense tax credit for anyone, gay or straight. Therefore, it was decided that the law does not infringe upon his Charter rights, and he was not able to deduct medical expenses relating to the surrogate or payment of the surrogate.
About the Author
Lisa Feldstein is the principal lawyer at Lisa Feldstein Law Office. She is a graduate of Osgoode Hall Law School and the University of Guelph. Lisa practices in the area of Family Health Law™, which includes reproductive law, human rights, privacy, mental health and other health law matters. Lisa has presented at the 519 Church Street Community Centre and PFLAG Canada (York Region), and has been interviewed on Proud FM. She has helped many couples build their families through third party reproduction. Lisa has been teaching negotiation at Osgoode Hall Law School since 2010. She was recently awarded a 2014 Canadian Law Blog award for Best Practitioner blog, and a 2015 Precedent Setter Award.