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: Do fees paid to a medical practitioner to obtain Special Authority status for a prescription medication qualify as a medical expense under 118.2(2)?
Position: Yes
Reasons: The completion of the form(s) for Special Authority by a medical practitioner would normally be ancillary to the medical service provided by the practitioner. Accordingly, amounts paid to the practitioner for the completion of the form(s) for Special Authority would qualify as a medical expense for the METC.
XXXXXXXXXX
2013-049973
E. Wirag, CMA
(613) 957-2090
November 28, 2013
Dear XXXXXXXXXX,
We are replying to your letter dated July 3, 2013 in which you asked whether a fee paid to a medical practitioner to complete the form(s) to apply to the British Columbia PharmaCare (PharmaCare) to have full benefit status apply to a particular medication for a particular individual (Special Authority) qualifies as a medical expense for the medical expense tax credit ("METC").
Our understanding from your letter is that XXXXXXXXXX (the "HWT") is a health and welfare trust that provides private health service plan benefits to eligible employees. You state that as of XXXXXXXXXX, expenses incurred by eligible employees in respect of prescription medication, are only reimbursed by the HWT when those medications meet the eligibility requirements for reimbursement under PharmaCare. We understand that the HWT reimburses the eligible employee for the residual amount of eligible expenses which are not fully reimbursed by PharmaCare.
You state that for a prescription medication to be eligible for reimbursement under PharmaCare, it must be listed on the PharmaCare Formulary (the "Formulary"). If a specific medication is not listed on the Formulary, a medical practitioner may apply for Special Authority. If the Special Authority is granted, the eligible employee would then be eligible to claim the expense for reimbursement from PharmaCare. You state that medical practitioners are now charging a fee to complete the form(s) for the Special Authority.
This technical interpretation provides general comments about the provisions of the Income Tax Act (the "Act") and related legislation (where referenced). It does not confirm the income tax treatment of a particular situation involving a specific taxpayer but is intended to assist you in making that determination. The income tax treatment of particular transactions proposed by a specific taxpayer will only be confirmed by this Directorate in the context of an advance income tax ruling request submitted in the manner set out in Information Circular IC 70-6R5, Advance Income Tax Rulings.
The Canada Revenue Agency's general views regarding the METC can be found in the Income Tax Folio S1-F1-C1 Medical Expense Tax Credit at http://www.cra-arc.gc.ca/tx/tchncl/ncmtx/fls/s1/f1/s1-f1-c1-eng.html.
Interpretation Bulletin IT-339R2, Meaning of Private Health Services Plan, sets out the requirements that must be met in order for a plan to be considered a private health services plan (PHSP). Paragraph 4 of that bulletin states that a medical expense covered under a PHSP must be in respect of an amount that normally would otherwise have qualified as a medical expense for the METC.
Subsection 118.2(2) of the Act defines the expenses that qualify for the METC. Paragraph 118.2(3)(b) of the Act does not permit an individual to include as an eligible medical expense, any expense to the extent that the individual or certain other persons are entitled to be reimbursed for the expense. There is an exception to this rule to the extent that the amount of the reimbursement is required to be included in computing income and is not deductible in computing taxable income.
Pursuant to paragraph 118.2(2)(a) of Act, an amount paid to a medical practitioner, dentist or nurse, or a public or licensed private hospital is considered to qualify as a medical expense of an individual only if it is paid in respect of a medical or dental service. A medical service is a service relating to the diagnosis, treatment or prevention of disease performed by a medical practitioner acting within the scope of his or her professional training. It is our view that the completion of the form(s) for Special Authority by a medical practitioner would normally be ancillary to the medical service provided by the practitioner. Accordingly, amounts paid to the practitioner for the completion of the form(s) for Special Authority would qualify as a medical expense for the METC.
We trust our comments will be of assistance.
Yours truly,
Sharmini Ratnasingham
For Director
Business and Employment Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch
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