26 March 2013 External T.I. 2012-0465121E5 - Medical Expense-Breast Milk-Supplement

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: Does the cost of Human Donor Breast Milk qualify under the METC?

Position: A question of fact, general comments provided

Reasons: Legislation

XXXXXXXXXX
2012-046512
George A. Robertson, CMA

March 26, 2013

Dear XXXXXXXXXX:

Re: Medical Expense - food, supplements, vitamins, or other similar preparations

This is in response to your September 25, 2012 letter requesting our views on whether the costs of Human Donor Breast Milk for your twin children would be an eligible medical expense for purposes of the medical expense tax credit (METC).

Written confirmations of the tax implications inherent in particular transactions are provided by this Directorate where the transactions are proposed and are the subject matter of an advance income tax ruling submitted in the manner set out in Information Circular 70-6R5, Advance Income Tax Ruling, dated May 17, 2002. This Information Circular and other Canada Revenue Agency (CRA) publications can be accessed at www.cra-arc.gc.ca/formspubs/menu-e.html. Although we cannot comment on your specific situation, we are prepared to provide the following comments in respect of the issues that you raised. Please note, however, that these comments are of a general nature only and are not binding on the CRA.

Medical expenses which are eligible for the METC are limited to those described in subsection 118.2(2) of the Income Tax Act. If a particular expenditure is not described as an eligible medical expense in subsection 118.2(2) of the Act, or if the conditions under which the expenditure would qualify are not met, the expenditure does not qualify for purposes of the METC, even though the expenditure may have been incurred for medical reasons.

Subparagraph 118.2(2)(n)(i) of the Act allows the costs paid for drugs, medicaments or other preparations or substances (hereinafter referred to as drugs):

(A) that are manufactured, sold or represented for use in the diagnosis, treatment or prevention of a disease, disorder or abnormal physical state, or its symptoms, or in restoring, correcting or modifying an organic function;

(B) that can lawfully be acquired for use by the patient only if prescribed by a medical practitioner or dentist; and

(C) the purchase of which is recorded by a pharmacist.

Based on the foregoing, only drugs that can lawfully be purchased only with a prescription and recorded by a pharmacist qualify under this provision.

Subparagraph 118.2(2)(n)(ii) of the Act indicates that drugs that may lawfully be acquired without a prescription may qualify for the METC as prescribed under section 5701 of the Income Tax Regulations which allows the cost of a drug if the drug:

(a) is manufactured, sold or represented for use in the diagnosis, treatment or prevention of a disease, disorder or abnormal physical state, or its symptoms, or in restoring, correcting or modifying an organic function;

(b) is prescribed for a patient by a medical practitioner; and

(c) may, in the jurisdiction in which it is acquired, be lawfully acquired for use by the patient only with the intervention of a medical practitioner.

Thus, a drug that may only be acquired through the intervention of a medical practitioner (a pharmacist, for example) may qualify under section 5701 of the Regulations even if it does not lawfully require a prescription. However, pursuant to this provision, the patient must still obtain a prescription for the particular use of the drug.

It is a question of fact whether a particular drug may lawfully be acquired only by prescription (or only with the intervention of a medical practitioner). Therefore, it would be necessary to examine both federal and provincial/territorial legislation and regulations in order to make the determination for a particular drug. Invoices/receipts that are issued without being recorded by a pharmacist would not generally meet the requirements of any of the above noted provisions, and would not qualify as a medical expense for the METC.

We trust our comments will be of assistance to you.

Yours truly,

Sharmini Ratnasingham
for Director
Business & Employment Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch