14 May 2002 Internal T.I. 2002-0124487 - MEDICAL TAX CREDIT - CHILD

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CCRA.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ADRC.

Principal Issues: The issue is whether the fees paid to XXXXXXXXXX qualify as medical expenses under paragraph 118.2(2)(e) of the Act.

Position: No to both XXXXXXXXXX

Reasons: 1) XXXXXXXXXX - at the time the patient attended XXXXXXXXXX the psychological evaluation diagnoses the patient as having a mild form of ADHD. There is no evidence that the patient is suffering from a mental handicap. Also, not clear that school provides the specialized equipment, facilities or personnel for the care, or care and training, of individuals with the particular condition suffered by the Patient.

2) XXXXXXXXXX - not clear that school provides the specialized equipment, facilities or personnel for the care, or care and training, of individuals with the particular condition suffered by the Patient.

							May 14, 2002

	XXXXXXXXXX  Tax Service Office	HEADQUARTERS
	XXXXXXXXXX 					Shaun Harkin, CMA
	Verification and Enforcement		957-9229

		2002-012448

Technical Interpretation Request: Medical Expense Tax Credit

This is in reply to your memorandum of February 18, 2002, in which you request our views as to whether the amounts paid XXXXXXXXXX for the care and education of his daughter (hereinafter referred to as the "Patient") qualify as medical expenses under paragraph 118.2(2)(e) of the Income Tax Act (the "Act").

We have reviewed the following documentation submitted in support of the taxpayer's claim for medical expenses:

XXXXXXXXXX.

Our Comments

As indicated in paragraph 29 of Interpretation Bulletin IT-519R2 (Consolidated), the expenses in respect of a patient (for example, a dependant) suffering from a behavioral problem arising out of a mental or physical impairment or suffering from a learning disability, including dyslexia, who attends a school that specializes in the care and training of persons who have the same problem qualify as medical expenses for purposes of paragraph 118.2(2)(e) of the Act.

As regards the certificate required under paragraph 118.2(2)(e) of the Act, while there is no prescribed form or specific wording required in a certificate, it should demonstrate that, as a result of a particular mental or physical handicap, the individual named in the certificate requires the equipment, facilities or personnel specially provided by a particular place to deal with that particular handicap. A statement that an individual may benefit from the special equipment, facilities or personnel provided by a particular place would not meet this requirement, since the individual must require such equipment, facilities or personnel because of a physical or mental handicap. Generally, the certificate should include a description of the equipment, facilities or trained professionals required to adequately provide care, or care and training, for the individual. In addition, the CCRA must be satisfied that the equipment, facilities or personnel provided by a particular place meets this description.

XXXXXXXXXX

XXXXXXXXXX evaluation indicates that the Patient suffers mild ADHD. Although ADHD is recognized as a mental handicap for medical expense purposes it is our understanding that there are varying degrees of this learning and behavioral disorder and that it is the more severe forms of the disorder that require the special facilities and personnel of an institution that deals specifically with such individuals. In the Tax Court of Canada case, P Collins v The Queen, a patient with severe ADHD qualified for medical expenses under paragraph 118.2(2)(e) of the Act; however, the judge commented that, "Each case will still have to be heard on its merits as ADHD symptoms fall within a continuum and may not always constitute a mental handicap".

The doctor's certificate in this case (item number 1 above) refers to mild ADHD and provides various recommendations including one-on-one tutoring; however, it is unclear from the statements as to whether the disorder within the Patient is sufficiently severe in degree so as to distinguish the various recommendations from that which would be beneficial to many children within the public school system that are experiencing difficulty in learning and achieving desirable grades. XXXXXXXXXX states, "..(the Patient) would benefit from at least twice weekly individual tutoring sessions..", but does not indicate the Patient requires the equipment, facilities or personnel specially provided by a particular place to deal with a particular handicap. In our view, XXXXXXXXXX evaluation does not clearly demonstrate that the Patient's ADHD constitutes a mental handicap and the evaluation does not demonstrate that, as a result of a particular mental handicap, the Patient requires the equipment, facilities or personnel specially provided by XXXXXXXXXX. In this regard, the certificate does not provide adequate information that would support the contention that the fees paid qualify as medical expenses.

With respect to item number 3 above, when the care, or care and training, at a particular place is not restricted to individuals with a mental or physical handicap, a certificate which is obtained, and is based on an evaluation performed, after the individual begins to receive care at that place is somewhat questionable, in that it is not clear that the individual was placed there because he or she requires the equipment, facilities, or personnel provided by the place by reason of a physical or mental handicap.

The issue as to when the certificate required under paragraph 118.2(2)(e) of the Act must be issued was considered in Kushnir et al. v. M.N.R. (86 DTC 1381). In that case, the Court rejected documents which were prepared after the children were admitted to the school, on the basis that the wording of paragraph 118.2(2)(e) of the Act, and in particular, the use of the past tense with reference to the need for certification, requires that the certification be made prior to, or at the time of, the individual's placement in a particular school, institution or other place. Therefore, we would not consider item number 3 proof that the Patient was placed at XXXXXXXXXX because the Patient requires the equipment, facilities, or personnel provided by XXXXXXXXXX by reason of a physical or mental handicap.

Based upon a review of item number 5 above, we could not conclude that XXXXXXXXXX provides the specialized equipment, facilities or personnel for the care, or care and training, of individuals with the particular condition suffered by the Patient. It appears the Patient followed the same curriculum, laid down by the Quebec Ministere de l'Education, as all other XXXXXXXXXX students. Although the Patient received special attention, it is not clear that the type of special attention provided could be distinguished from that which would be beneficial to many children within XXXXXXXXXX that are experiencing difficulty in learning and achieving desirable grades. In our view, small class size and individualized tutoring are not determinative factors in deciding whether a school is a facility for the purposes of paragraph 118.2(2)(e) of the Act.

XXXXXXXXXX

As stated above, the evaluation report prepared by XXXXXXXXXX does not provide adequate information that would support the contention that the fees paid to XXXXXXXXXX qualify as medical expenses. However, with respect to item number 4 above, XXXXXXXXXX, a provincially licensed Educational Counselor trained in the diagnoses of learning disabilities, at or around the time the Patient began attending XXXXXXXXXX, diagnosed the Patient as having ADHD and dyslexia. In our view, unless the facts surrounding a particular situation cast doubt upon the statements made by the appropriately qualified person, it would be difficult to challenge a certificate. Therefore, in light of items number 3 and 4, we would recommend accepting the fact that the Patient was suffering from a behavioral problem arising out of a mental impairment or was suffering from a learning disability (i.e. dyslexia) at the time the Patient attended XXXXXXXXXX.

Therefore, in order for the amounts paid by XXXXXXXXXX to XXXXXXXXXX for the care and education of the Patient to qualify as medical expenses under paragraph 118.2(2)(e) of the Act the CCRA must be satisfied that XXXXXXXXXX provides the specialized equipment, facilities or personnel for the care, or care and training, of individuals with the particular condition suffered by the Patient.

XXXXXXXXXX The philosophy does not indicate it provides the specialized equipment, facilities or personnel for the care, or care and training, of individuals suffering from a mental impairment (i.e. ADHD) or suffering from a learning disability, including dyslexia. It is not clear that the type of programs provided by XXXXXXXXXX could be distinguished from that which would be beneficial to many children that are experiencing difficulty in learning and achieving desirable grades. It continues to be CCRA's view that small class size, individual tutoring and individualized learning programs are not determinative factors in deciding whether a school is a facility for the purposes of paragraph 118.2(2)(e) of the Act. Therefore, based on the information provided we could not conclude that the amounts paid by XXXXXXXXXX to XXXXXXXXXX for the care and education of the Patient qualify as medical expenses under paragraph 118.2(2)(e) of the Act.

We trust the above comments are of assistance.

Steve Tevlin
for Director
Partnerships Section
Business and Partnerships Division
Income Tax Rulings Directorate
Policy and Legislation Branch