7 April 1998 External T.I. 9732935 - SCHOOL FEES AS CHILD CARE OR MEDICAL EXPENSES

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.

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.

Principal Issues:

Whether part of the tuition fees paid to a school that offers remedial education to children with special needs can qualify as child care or medical expenses.

Position:

The tuition fees may qualify as a medical expense if the conditions set out in 118.2(2)(e) ITA are met. On the other hand, if they do not qualify as medical expenses, the portion of the fees that do not relate to tuition, i.e. that relates to child care services, including board and lodging, will qualify up to the maximum amount specified in subsection 63(3) ITA.

Reasons:

See definitions of "medical expenses" and "child care expenses"

973293
XXXXXXXXXX N. Mondou
(613) 957-8961
Attention: XXXXXXXXXX

April 7, 1998

Dear Sirs:

Re: Qualification of tuition fees as child care or medical expenses

We are replying to your letter of July 22, 1997 to the Halifax Tax Services Office. In this letter, you requested our views as to whether Sections 63 and 118.2 of the Income Tax Act ( the “Act”) would apply to allow a medical expense credit or a child care expense for fees paid to a boarding school that offers remedial education to children with special needs (i.e. children diagnosed with learning disabilities). More particularly, you indicated that the school provides education for students attending grades 5 through to and including grade 10.

Medical expense

Whether fees paid to a particular school qualify as a medical expense depends on whether the school and the individual attending the school meet the requirements of paragraph 118.2(2)(e) of the Act. In that respect, two basic requirements must be met:

1 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.

2 An appropriately qualified person must certify that the above conditions are met with respect to the individual receiving the care at that place. This certification is usually carried out by a medical practitioner, but is not restricted to such professionals. Generally, the certificate should include a description of the equipment, facilities or trained professionals required to adequately provide care, or care and training, for the individual. In addition, the Department must be satisfied that the equipment, facilities or personnel provided by a particular place meets this description.

This certification should be made before, or at the time of, the individual's placement in the school. However, where the only students eligible to attend the school are individuals with a particular handicap, a certificate made after the individual's placement in that school may not be viewed as questionable, since it will be likely that the individual will have been placed in that school because of his or her handicap.

We recognize that, generally, learning disabilities and some behavioural problems are properly characterized as a form of mental handicap. However, a distinction must be made between a child with learning difficulties who can clearly benefit from more individualized attention and customized programming available in a particular school, and a child who specifically requires such facilities and personnel. In that respect, we rely on the assessment provided by appropriately qualified persons in determining whether a learning disability (mental handicap) exists and whether the disability is of such degree as to require treatment that the regular school system cannot provide.

The information submitted in your letter does not identify any particular equipment or specially-trained personnel which is provided by your institution for the care and training of individuals with a particular disability. Also, we have no information as to the type of handicap the individuals attending the school suffer from. We therefore cannot express any opinion as to whether the fees paid to this school qualify as medical expense. Since these are questions of fact, individuals who wish to claim the school fees as medical expenses should describe their particular circumstances to their tax service office to determine whether these fees qualify.

Child care expense

Fees paid to a boarding school cannot qualify as child care expenses if they otherwise qualify as medical expenses. The definition of "child care expense" in subsection 63(3) ITA specifically excludes any expenses that qualify as medical expenses under subsection 118.2(2) ITA. Therefore, our comments below will apply only in situations where part of the fees paid to the school cannot be claimed as a medical expense.

“Child care expense” means an expense incurred in a taxation year for the purpose of providing in Canada, for an eligible child of a taxpayer, child care services including baby sitting services, day nursery services or services provided at a boarding school or camp. Some specific requirements apply with respect to the taxpayer claiming the expense.

To be an "eligible child”, the child must meet certain conditions which include that he or she must, at any time during the year:

1 be under 16 years of age, or

2 dependent on the taxpayer or on the taxpayer's spouse and have a mental or physical infirmity.

As mentioned in paragraphs 2 and 3 of Interpretation Bulletin IT-495R2 (“Child Care Expenses”), child care expenses include payments to a boarding school for child care services. Although board and lodging expenses are generally excluded from the definition of “child care expenses”, they are allowed to the extent they are included in the total charges for attendance at the boarding school and those total charges do not exceed a maximum amount of:

3 $150 for each week attended for a child that is under 7 years of age at the end of the year, or is a person in respect of whom a credit for mental or physical impairment can be claimed,or

4 $90 for each week attended for any other child.

We trust that these comments are of assistance.

Yours truly,

P. Spice
for Director
Business and Publications Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
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