11 September 2014 External T.I. 2014-0530721E5 - Medical Expenses - out of country

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 expenses incurred for surgery and travel outside of the country qualify as medical expenses for purposes of the medical expense tax credit?

Position: Question of fact.

Reasons: Wording of 118.2(2)(a), 118.2(2)(g), 118.2(2)(h) and 118.2(2)(o). Yes, as long as the requirements of those provisions are met.

XXXXXXXXXX
2014-053072
S. Ratnasingham

September 11, 2014

Dear XXXXXXXXXX:

Re: Medical Expense Tax Credit – Expenses Incurred Outside Canada

This is in response to your letter of March 31, 2014, asking whether expenses you incurred outside Canada are eligible medical expenses for purposes of the medical expense tax credit ("METC") under section 118.2 of the Income Tax Act (the "Act").

In your letter, you indicate that you travelled to XXXXXXXXXX for medical assessments as your local hospital was unable to give you a definitive diagnosis to rule out XXXXXXXXXX. You also mention that your brother travelled with you as you were advised not to travel alone. You incurred expenses for both the travel and medical services received at the clinic.

Our comments

This technical interpretation provides general comments about the provisions of 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 70-6R6, Advance Income Tax Rulings.

Medical expenses outside Canada

Medical expenses which are eligible for the METC are limited to those described in subsection 118.2(2) of the Act. If a particular expenditure is not described as an eligible medical expense in subsection 118.2(2), 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.

The Canada Revenue Agency's (CRA) general views regarding the METC can be found in the Income Tax Folio S1-F1-C1, "Medical Expense Tax Credit" (Folio) at www.cra-arc.gc.ca. Generally, eligible medical expenses are not restricted to those paid in Canada or for medical services provided in Canada unless specifically stated in the Act.

Under paragraph 118.2(2)(a) of the Act, eligible medical expenses include payments for medical services made to a medical practitioner, a dentist, nurse, or a public or private licensed hospital when the payments are made in respect of medical or dental services provided to the individual, the individual's spouse or common-law partner, or certain dependents. Medical services are diagnostic, therapeutic or rehabilitative services that are performed by a medical practitioner acting within the scope of his or her professional training. The term "medical practitioner" includes individuals such as a medical doctor, pharmacist or nurse who is authorized to practice in the stated profession according to the laws of the jurisdiction in which the service is rendered. A "licensed private hospital" means licensed under the laws of the jurisdiction in which the hospital operates. These definitions apply to services rendered and facilities located both within and outside Canada.

Additionally, according to paragraph 118.2(2)(o) of the Act, eligible 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.

Travel expenses

Certain transportation and travel expenses may be claimed when a patient must travel to obtain medical services. To qualify for the METC, the claims for travel expenses must meet the requirements of either paragraphs 118.2(2)(g) or 118.2(2)(h) of the Act.

Specifically, an amount paid to a person engaged in the business of providing transportation services to transport a patient at least 40 kilometres from the locality where the patient lives to a place where medical services are normally provided may qualify as a medical expense. If the patient travels to obtain medical services in a place that is at least 80 kilometres from the locality where the patient lives, other reasonable travel expenses (for example, accommodation, meals and parking) may also qualify as a medical expense. An individual is entitled to claim the transportation and other travel expenses only if the following additional requirements are met:

(i) substantially equivalent medical services are not available in the patient's locality;
(ii) the patient takes a reasonably direct travel route, having regard to the circumstances; and
(iii) the patient travels to that place to obtain medical services for himself or herself and it is reasonable, having regard to the circumstances, for the patient to travel to that place to obtain those services.

If transportation or other reasonable travel expenses incurred in respect of a patient's travel to obtain medical services can be claimed under paragraph 118.2(2)(g) or paragraph 118.2(2)(h), the same kind of expenses paid for transportation and travel for one individual who accompanies the patient may also be claimed as an eligible medical expense. For the expenses paid for the accompanying individual to be eligible, a medical practitioner must have certified in writing that the patient is incapable of travelling without the assistance of an attendant.

For meals and vehicle expenses, either the detailed method or the simplified method can be used. Information on these methods is available on the CRA website under the heading, "Meal and vehicle rates used to calculate travel expenses for 2013 and previous years." More information on transportation and travel expenses can be found in the Folio.

For all medical expenses, an individual can only claim the part of the expense for which he or she has not been and will not be reimbursed unless the amounts are included, and not otherwise deducted, from the individual's income.

We trust our comments will be of assistance.

Yours truly,

Pamela Burnley, CPA, CA
Tax Credits and Ministerial Issues
Business and Employment Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch