31 May 2004 External T.I. 2004-0066611E5 - Medical Travel expenses

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.

Principal Issues: 1. Are expenses incurred by individual for medical treatment at a XXXXXXXXXX clinic valid medical expenses?

Position: 1. Amounts paid for actual health care- while question of fact, appear to be deductible; amounts paid for medical travel are also valid if preconditions are met--once again it is a question of fact.

Reasons: 1. Amounts paid for medical services appear to meet conditions of 118.2(2)(a); amounts paid for medical travel--also appear to meet preconditions of 118.2(2)(g)--however client may be required to validate with certificate from local doctor that alternative treatment was required by the patient and was not available locally.

Lena Holloway, CA
XXXXXXXXXX (613) 957-2104
2004-006661
May 31, 2004

Dear XXXXXXXXXX:

Re: Medical Expense Tax Credit

We are replying to your letter of March 11, 2004, wherein you enquired whether certain expenses you incurred in obtaining medical treatment in the United States would qualify as medical expenses under subsection 118.2(2) of the Income Tax Act (the "Act").

Your letter explained that in XXXXXXXXXX you began to experience, severe, daily chronic headaches. Several tests undertaken by your doctors (i.e. MRI, CT Scan, etc.) did not find the underlying cause of the pain. Subsequent treatments and prescribed medications failed to relieve your symptoms and, by XXXXXXXXXX, your doctors had exhausted all recommendations to local specialists with the exception of a referral to a psychologist for the treatment of potential depression.

In doing your own research, you became aware of the XXXXXXXXXX Clinic located in XXXXXXXXXX. As your local doctors did not recommend any further course of action and were unable to successfully treat your condition, you decided to schedule an appointment with XXXXXXXXXX. Your letter stated that XXXXXXXXXX specializes in the evaluation and treatment of headaches at the XXXXXXXXXX Clinic, and that substantially equivalent treatment was unavailable to you in and around the vicinity of XXXXXXXXXX . Given that you were unable to work for over XXXXXXXXXX months while experiencing these headaches, and that your doctors offered you no alternative course of treatment locally (except for the psychologist), in your opinion it was reasonable "having regard to the circumstances" for you to travel in order to obtain those services. You have asked us to consider the following questions:

i) Would payments made to the XXXXXXXXXX Clinic for their services qualify as medical expenses pursuant to paragraph 118.2(2)(a) of the Act?

ii) Would travel and accommodation expenses (i.e., cab fare, airfare, hotel, car rental, meals) qualify as medical expenses pursuant to paragraph 118.2(2)(a) of the Act?

iii) If the expenses incurred are permissible medical expenses for purposes of the Act:

a) what exchange rate should be used, and

b) is there a per diem meal rate that the Canada Revenue Agency (the "CRA") applies in lieu of actual meal expenses incurred?

Written confirmation of the tax consequences that apply to a particular fact situation is given by this directorate only in the context of an advance ruling request submitted in the manner set out in Information Circular 70-6R5. Where the particular transactions are partially completed or completed, the enquiry should be addressed to the relevant tax services office. Nonetheless, we are prepared to provide the following general comments that we hope will be of assistance.

Payments to Medical Practitioners and Hospitals

Amounts paid by an individual to a medical practitioner or to a public or licensed private hospital (i.e., licensed by the province or state in which the hospital operates) to obtain medical services, qualify as medical expenses eligible for the medical expense tax credit. Qualifying medical expenses also include amounts paid for laboratory, radiological or other diagnostic procedures or services, with necessary interpretations, for maintaining health, preventing disease or assisting in the diagnosis or treatment of an injury, illness, or disability as prescribed by a medical practitioner. Qualifying medical expenses can be in respect of amounts paid to persons or for services received either within, or outside of Canada. While we cannot confirm the tax treatment of your expenses without a complete review of all the facts, from your description of the XXXXXXXXXX Clinic and the services provided, it would appear that such amounts would be qualifying medical expenses.

Transportation and Travel Expenses

An amount paid to a person engaged in the business of providing transportation services to transport an individual not less than 40 kilometres from the locality where the individual resides to a place where medical services are received may qualify as a medical expense. Similarly, other travel expenses (e.g. amounts expended for meals and accommodation for a patient and, where an individual has been certified as being incapable of travelling alone, for an accompanying individual) may qualify as medical expenses if the individual travels not less than 80 kilometres from the locality where the individual dwells to a place where medical services are received.

An individual is entitled to claim transportation and travel expenses only if the following requirements are met:

(i) substantially equivalent medical services were not available in the individual's locality,

(ii) a reasonably direct travelling route was taken by the individual, and

(iii) the individual travelled to the particular place to obtain medical services for him or herself and it is reasonable, having regard to the circumstances, for the individual to have travelled to that place for medical services.

It is our view that the requirement in (iii) may be met even if medical services are available nearer to the individual's locality if, in the circumstances, it is reasonable for the individual to have travelled to the place where the medical services were obtained.

Whether or not the above-noted requirements are met is a question of fact, and although the facts presented in your letter appear to support your claim, we would point out that an opinion from a medical professional that substantially equivalent medical services were not available in your locality may be required to substantiate your claim for transportation and travel expenses. It is important that such a certification from a medical practitioner clearly establishes that the conditions in (i) and (iii) above have been satisfied. In this respect, we would expect the practitioner to identify the specific reasons why substantially equivalent services were not available in the patient's locality and the reason(s) why it was reasonable for the patient to have obtained the services from the attending practitioner. For example, in the circumstances described in your letter, we would expect the certification to state that you required the specific expertise offered by XXXXXXXXXX. In addition, we would expect to see a statement that comparable medical services were not available closer to your locality.

If the individual qualifies to claim travel costs as medical expenses, the CRA will allow, for 2003, meal expenses of $15 per meal to a maximum of $45 a day, as an alternative to providing receipts for the actual cost of meals incurred during medical travel. Where the individual keeps his or her receipts and claims the actual cost of meals, the exchange rate used to convert the costs to Canadian dollars should be the rate that was in effect on the day the expense was paid.

If you require any further assistance, you may contact the Client Services Division of the XXXXXXXXXX Tax Services Office.

Yours truly,

Wayne Antle, CGA
for Director
Business and Partnerships Division
Income Tax Rulings Directorate