13 September 2005 External T.I. 2005-0142361E5 - Nursing Home Attendant Care Expense

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: Whether the residents of XXXXXXXXXX may claim the full fees paid to the lodge as medical expenses.

Position: No, however, some residents may be eligible to claim a portion of the fees for remuneration paid for attendant care as medical expenses.

Reasons: It is unlikely the residents received full-time care in a nursing home as required by paragraphs 118.2(2)(b) and (d). However, some residents may be eligible to claim remuneration paid for attendant care pursuant to paragraph 118.2(2)(b.1)

Robert Ferrari
XXXXXXXXXX 2005-014236
(613) 957-2138
September 13, 2005

Dear XXXXXXXXXX:

Re: Medical Expense Tax Credit

This is in reply to your letter of July 11, 2005 requesting our views on whether the residents of the XXXXXXXXXX are eligible to claim the full amount of the fees they pay to the lodge as a medical expense.

The XXXXXXXXXX website indicates the residence is specifically designed for active seniors over 55 years of age and that applicants must be in reasonably good health. The lodge is described as having XXXXXXXXXX units with self-contained private baths, balconies and large wardrobe closets. The monthly charges includes "XXXXXXXXXX".

Our Comments

Under paragraph 118.2(2)(b) of the Income Tax Act (the "Act"), qualifying medical expenses include amounts paid for the "full-time care in a nursing home," where the patient has a severe and prolonged mental or physical impairment that has been certified in prescribed form by a medical doctor. Under paragraph 118.2(2)(d) of the Act, qualifying medical expenses include amounts paid for the "full-time care in a nursing home" of an individual who has been certified by a qualified medical practitioner to be a person who, by reason of lack of normal mental capacity is, and in the foreseeable future will continue to be, dependent on others for his or her personal needs and care.

The term "nursing home" is not defined in the Act and, therefore, in determining if a particular facility qualifies as a nursing home, we rely on the ordinary meaning of the term. We are of the view the facility must have the equivalent features and characteristics of a nursing home in order to qualify as a nursing home. Paragraph 23 of Interpretation Bulletin IT-519R2 (Consolidated) indicates the meaning of the phrase "full-time care in a nursing home" is not intended to place a requirement of a minimum time spent caring for the patient, but rather it implies the constant care and attendance required by an individual by reason of the injury, illness or affliction of the individual. To provide such care, it is our view that there must be appropriately qualified medical personnel in attendance in sufficient numbers on a 24-hour basis.

The XXXXXXXXXX is specifically designed for active seniors over 55 years of age who are in reasonably good health and provides only limited nursing services to serve the needs of a large number of residents. In our view, the residents of XXXXXXXXXX have not received full-time care in a nursing home as contemplated by paragraphs 118.2(2)(b) or 118.2(2)(d) of the Act.

Subject to certain conditions, paragraph 118.2(2)(b.1) of the Act allows an individual to include, as a qualifying medical expense, remuneration paid for attendant care in Canada of a patient who has a severe and prolonged mental or physical impairment. Form T2201, Disability Tax Credit Certificate, certified by a qualified person must be submitted and approved by the Canada Revenue Agency. The claim for these expenses cannot be more than $10,000 ($20,000 if the patient died in the year).

To qualify under paragraph 118.2(2)(b.1) of the Act, a claim must be accompanied by proof of payment, generally by means of a receipt, and must pertain to actual remuneration paid for attendant care. The retirement home, as the service provider, must determine the total amount paid for attendant care and allocate such amounts to the residents on a reasonable basis and we would expect that the amount would usually be allocated equally among all the residents in the home. Generally, attendant care would be limited to the salaries and wages paid to employees of a retirement home who provide meal services, maid services for the residents' personal living spaces, laundry services for the residents' personal items and health services.

Yours truly,

Phil Jolie
Director
Business and Partnerships Division
Income Tax Rulings Directorate
Policy and Planning Branch