20 January 2010 External T.I. 2009-0349551E5 - medical expenses, travel, rent

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 rent for accommodation close to a private school a child is attending qualifies as a medical expense?

Position: No

Reasons: The law.

XXXXXXXXXX 							2009-034955
								Katharine Skulski
January 20, 2010

Dear XXXXXXXXXX :

Re: Rent as a medical expense

This is in response to your letter of November 24, 2009, inquiring about whether the cost of renting accommodation for you near your child's school would qualify as a medical expense for purposes of the medical expense tax credit.

You have custody of a child who has been diagnosed by a medical practitioner as needing special education at a private school which has a program to address his special needs. As the school is a 3-hour drive from your home, you are renting accommodation close to the school. You are asking whether the cost of renting accommodation can be claimed as a medical expense.

The particular situation outlined in your letter appears to relate to a factual one, involving one or more specific taxpayers. As explained in Information Circular 70-6R5, it is not this Directorate's practice to comment on transactions involving specific taxpayers other than in the form of an Advance Income Tax Ruling. An advance income tax ruling is not issued where a transaction has been completed or is significantly advanced. In those instances you should submit all relevant facts and documentation to the appropriate Tax Services Office for their views. However, we are prepared to offer the following general comments which may be of assistance.

Our Comments

The Canada Revenue Agency's (the "CRA") general views regarding the medical expense tax credit are contained in Interpretation Bulletin IT-519R2, Medical Expense and Disability Tax Credits and Attendant Care Expense Deduction.

Tuition and Residential Costs

Where, due to a physical or mental handicap, an individual is certified to require specialized care or care and training at a school or institution, paragraph 118.2(2)(e) of the Income Tax Act (the "Act") considers the costs of such care or such care and training to be medical expenses. Depending on the circumstances, the tuition costs for an individual with a mental or physical handicap who attends a school that specializes in the care and training of persons who have the same type of handicap, may qualify under paragraph 118.2(2)(e) of the Act.

Fees paid to a particular school qualify as a medical expense if certain requirements are met. The student must be suffering from a physical or mental handicap, the severity of which is such that the student "requires" the equipment, facilities or personnel specially provided by the school, and not merely that the student will "benefit from" such equipment, facilities or personnel. An "appropriately qualified person" must certify that the above conditions are met with respect to the individual receiving the care or the care and training at that school. A medical practitioner, as well as any other person who has been given the required certification powers under provincial or federal law, may carry out this certification. The CRA must be satisfied the equipment, facilities or personnel provided by a particular school, meet the requirements outlined by the person who certified the need for those facilities. If all these conditions are met, the amount paid for the individual to attend the school may qualify as a medical expense, notwithstanding that some part of the amount paid could be viewed as tuition fees. Whether an amount qualifies as a medical expense is a question of fact that can only be determined after analyzing all the facts and circumstances.

While there is no prescribed form of certificate required under paragraph 118.2(2)(e), the certificate should provide details on the nature of the individual's handicap and should explain why the equipment, facilities or the trained professionals at the school (or other institution) are required to provide the care and training that the individual needs. Further, the certification must clearly indicate that an "appropriately qualified person", who is fully informed as to the nature of the particular person's handicap, issued it. While a certification should be obtained prior to the individual's enrolment with the school, a certification made after enrolment will be accepted if all the above-noted requirements are satisfied.

Travel Expenses

Travel costs incurred to obtain medical services qualify as medical expenses if they satisfy the requirements in paragraph 118.2(2)(g) for costs related to transportation or paragraph 118.2(2) (h) of the Act for other travel costs. An individual is entitled to claim the transportation and travel expenses described in these paragraphs only if the following conditions are met:

1) substantially equivalent medical services were not available in the locality where the individual resides,
2) a reasonably direct traveling route was taken by the individual, and
3) the individual traveled to the particular place to obtain medical services for himself or herself and it is reasonable, having regard to the circumstances, for the individual to have traveled to that place to obtain these services.

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) of the Act. Similarly, other travel expenses may qualify as medical expenses under paragraph 118.2(2)(h) of the Act if the individual travels not less than 80 kilometres from the locality where the individual dwells to a place where medical services are received.

In addition to the travel costs related to the individual, costs related to another person, who accompanies the individual in the circumstances discussed above, may qualify as medical expenses where the individual was, and has been certified by a medical practitioner to be, incapable of traveling without the assistance of an attendant.

Where an individual's tuition costs qualify as a medical expense, in our view, the travel costs to transport the individual to the school (or other institution) and the travel costs home from the school, would also qualify as medical expenses provided the above conditions are met. However, expenses such as rent, are not traveling expenses and do not qualify as a medical expense.

We trust that these comments will be of assistance.

Yours truly,

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