1 April 2009 External T.I. 2009-0311051E5 - In-vitro fertilization

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 amounts paid to or on behalf of a donor for an IVF process allowable as a medical expense to the individual recipient? (2) Are the medical tests and procedures for the individual and her spouse for an IVF process allowable as a medical expense? (3) Are the travel costs of individual and her spouse allowable as medical expenses?

Position: (1) No (2) Insufficient information. (3) Insufficient information.

Reasons: (1) Amounts paid to or on behalf of the donor are not medical services or procedures provided for the patient (i.e., the individual, spouse or dependant) as required under paragraphs 118.2(a), (n), (o) of the Act. Additionally, the amounts paid for agency fees and donor fees would not appear to be paid for the purpose of obtaining medical services or of a medical nature as required under these provisions. (2) The expenses may qualify under paragraph 118.2(2)(a) of the Act if paid to a medical practitioner or to a public or licensed private hospital to obtain medical services. To the extent that amounts paid do not qualify under paragraph 118.2(2)(a) of the Act, paragraphs 118.2(2)(n) and 118.2(2)(o) of the Act may provide some relief. (3) Travel as medical expenses are limited to eligible travel expenses to obtain medical services pursuant to paragraph 118.2(2)(g) or (h) of the Act.

XXXXXXXXXX 								2009-031105
									Rob Ferrari
April 1, 2009

Re: In-vitro fertilization

Dear XXXXXXXXXX :

We are replying to your correspondence of February 20, 2009, with respect to whether various amounts paid for an in-vitro fertilization ("IVF") process qualified as medical expenses for the medical expense tax credit ("METC"). You indicate that as a result of a medical condition, the IVF process was necessary in order to have children. The process required both you and your husband to incur expenses for various medical tests and procedures, such as the IVF procedure, embryo storage fees, cycle monitoring, ultrasounds, exams and laboratory fees. Both you and your husband also incurred travel expenses (cost of flights, hotels and meals) to undergo the procedures.

In addition to costs for your own treatment, amounts were also paid to or on behalf of an individual to donate the eggs. These costs included agency fees and donor fees, medically related procedures, tests and medicaments for the donor, as well as the travel expenses of the donor.

Our Comments

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. However, we are prepared to provide the following general comments.

Section 118.2 of the Income Tax Act (the "Act") provides rules for determining the amount that may be claimed, as a tax credit, in respect of medical expenses. Subsection 118.2(2) of the Act contains a list of expenditures that qualify as medical expenses. The CRA's views with respect to medical expenses are outlined in Interpretation Bulletin, IT-519R2 (Consolidated), "Medical Expense and Disability Tax Credits and Attendant Care Expense Deduction" ("IT-519R2"). This document is posted on the CRA's website at: http://www.cra-arc.gc.ca/E/pub/tp/it519r2-consolid/README.html.

As stated in paragraph 11 of IT-519R2, in order to qualify for the METC, the medical expenses must have been paid or deemed to have been paid and must not have been reimbursed or be reimbursable by a provincial or private health insurance plan. Paragraph 12 of IT-519R2 indicates that qualifying medical expenses can be in respect of amounts paid to persons or for services received either within, or outside of Canada.

Paragraph 118.2(2)(a) allows an individual to include, as a qualifying medical expense, an amount paid to a medical practitioner, dentist or nurse or a public or licensed private hospital for medical or dental services provided to the patient. The term "medical practitioner" includes a medical doctor, dentist, pharmacist, nurse or optometrist provided that he or she is authorized to practice in the stated profession according to the laws of the jurisdiction in which the service is rendered, whereas "licensed private hospital" means licensed by the jurisdiction in which the hospital operates. The fact that the jurisdiction is outside Canada would not be relevant in applying these terms.

Paragraph 118.2(2)(n) provides that for the purposes of subsection 118.2(1), a medical expense of an individual is an amount paid "for drugs, medicaments or other preparations or substances (other than those described in paragraph (k)) manufactured, sold or represented for use in the diagnosis, treatment or prevention of a disease, disorder, abnormal physical state, or the symptoms thereof or in restoring, correcting or modifying an organic function, purchased for use by the patient as prescribed by a medical practitioner or dentist and as recorded by a pharmacist".

In addition, pursuant to paragraph 118.2(2)(o), qualifying medical expenses 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. Paragraph 59 of IT-519R2 states: "An example of such expenses, which may not be covered by provincial health insurance, are the following expenses involved with artificial insemination:

(a) the in-vitro fertilization procedure;
(b) daily ultrasound and blood tests once the in-vitro procedure has begun;
(c) anaesthetist fees; and
(d) cycle monitoring fees."

Amounts paid to or on behalf of the donor

Paragraph 12 of IT-519R2 states: "an individual's qualifying medical expenses...must have been paid on behalf of the individual, the individual's spouse or a dependant. The word "patient" is used in the law and throughout this bulletin to refer to the individual or to the individual's spouse or dependant, as the case may be, on whose behalf the individual's qualifying medical expenses are paid."

We would not consider the amounts paid to or on behalf of the donor to represent qualifying medical expenses of the patient (you), your spouse or a dependant as required under paragraphs 118.2(2)(a), paragraph 118.2(2)(n) and 118.2(2)(o).

We further note the agency fees and donor fees are not paid for the purpose of obtaining medical services or being of a medical nature as contemplated under paragraph 118.2(2)(a), paragraph 118.2(2)(n) and 118.2(2)(o).

Amounts paid for medical tests and procedures for you and your spouse

The expenses you and your spouse incurred for the medical tests and procedures may qualify as medical expenses under paragraph 118.2(2)(a) if they were paid to obtain medical services by a medical practitioner or to a public or licensed private hospital to obtain medical services. To the extent that amounts paid do not qualify under paragraph 118.2(2)(a), they may qualify under paragraphs 118.2(2)(n) and 118.2(2)(o).

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 under paragraph 118.2(2)(g). Also, 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) qualify for the METC under paragraph 118.2(2)(h) 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.

Your travel may qualify for the purpose of the METC if it meets the above conditions and the travel was made to obtain medical services by a medical practitioner or at a public or licensed private hospital. It was unclear whether your husband's travel was for the purpose of obtaining his own medical services by a medical practitioner or a public or licensed private hospital. However, if he accompanied you as a result of your being certified by a medical practitioner as being incapable of travelling alone, his travel might qualify to the extent as allowed for under paragraphs 118.2(2)(h) as discussed above.

We would note that costs for meals and accommodations while en route to obtain medical services may qualify as medical expenses. However, there is no provision in the Act which would allow for the meal and accommodation expenses incurred during the period of treatment to qualify as medical expenses under subsection 118.2(2).

We trust our comments will be of some assistance.

Yours truly,

G. Moore
for Director
Business and Partnerships Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch