26 May 2016 Alberta CPA Roundtable Q. 16, 2016-0645021C6 - Medical expense tax credit

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: Are amounts paid for modifications to a Segway, bicycle or tricycle eligible medical expenses?

Position: It depends on the facts.

Reasons: To the extent that the amounts paid for these modifications are for devices that are exclusively designed to allow a person with a mobility impairment to operate a Segway, tricycle or bicycle they would be eligible under paragraph 5700(n) of the Act, providing the requirements under 118.2(2)(m) have also been satisfied.

2016 CPA Alberta/CRA Red Deer Roundtable

Question 16.

In Technical Interpretation 2015-0596311I7, CRA concluded that a Segway is not sufficiently similar to a standing wheelchair to be considered a “wheelchair” within the ordinary meaning of the term and therefore the cost will not be an eligible expense under paragraph 118.2(2)(i) of the Income Tax Act (“Act”). CRA also noted that a Segway is not a device that is “exclusively designed” for individuals with mobility impairments and therefore does not qualify under section 5700 of the Income Tax Regulations (“Regulations”).

Consider that while a vehicle like a Segway is not “exclusively designed” for individuals with mobility impairments, it may be modified for such individuals in order to allow them to operate it. With the above in mind, can the CRA comment on the following:

(b) Would the CRA consider modifications made to a Segway in order to allow an individual with a mobility impairment to operate it safely to be an eligible medical expense under Regulation 5700(n) or any other relevant provision of the Act or Regulations?

(c) Consider a bicycle or trike, where modifications are made to allow an individual lacking ordinary development of their limbs, or paraplegic or quadriplegic, to use the vehicle. Would CRA agree that the cost of these modifications would fall within Regulation 5700(n)? We note that the term “vehicle” does not refer specifically to motorized vehicles. If purchased with the intention to modify, would CRA consider any portion of the initial cost to be an eligible medical expense?

Answer 16. (b)

Medical expenses that are eligible for the medical expense tax credit are limited to those described in subsection 118.2(2) of the Act. Income Tax Folio, S1-F1-C1, Medical Expense Tax Credit (Folio S1-F1-C1), describes these expenses and the conditions that must be met for any particular expense to qualify.

Paragraph 1.118 of Folio S1-F1-C1 states that under paragraph 118.2(2)(m), eligible medical expenses include amounts paid for devices or equipment for use by the patient, where the device or equipment:

• is specified by section 5700 of the Regulations;
• is prescribed by a medical practitioner;
• is not described in any other paragraphs of subsection 118.2(2); and
• meets such conditions described in section 5700 of the Regulations, as are applicable to its use or the reason for its acquisition.

Under paragraph 5700(n) of the Regulations, a device designed exclusively to enable an individual with a mobility impairment to operate a vehicle is a qualifying device for the purposes of paragraph 118.2(2)(m) of the Act. The word “exclusively” is used in this paragraph to strictly limit the devices that are deductible.

Thus, an amount paid for devices that are designed exclusively to enable an individual with a mobility impairment to operate a vehicle (including a Segway), for example, levers, knobs and handles that allow the individual to control steering, speed, braking and signalling, would be an eligible medical expense under paragraph 5700(n) of the Regulations, providing that the requirements under paragraph 118.2(2)(m) of the Act are also satisfied.

Answer 16. (c)

In our view, a bicycle or tricycle is a vehicle for the purpose of paragraph 5700(n) of the Regulations. Therefore, to the extent that devices are designed exclusively to enable a person with a mobility impairment to operate either a bicycle or tricycle, the amount paid for these modifications could also be eligible medical expenses under paragraph 5700(n) of the Regulations.

There are no provisions in the Act that would allow the amount paid to purchase either a bicycle or tricycle, where the intention is to modify after purchase, as an eligible medical expense.

Paragraph 118.2(2)(i) of the Act allows an amount paid for a wheelchair as an eligible medical expense. While this provision would not encompass a standard bicycle or tricycle in the definition of wheelchair, we have previously opined that a wheelchair could include a tricycle wheelchair or geriatric chair with wheels.

Nancy Shea-Farrow
2016-064502
May 26, 2016