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 the retirement home expenses qualify as medical expenses in subsection 118.2(2).
Position: General comments only.
Reasons: Question of fact.
XXXXXXXXXX J. Gibbons
1999-000669
Attention: XXXXXXXXXX
December 22, 1999
Dear XXXXXXXXXX:
Your letter dated October 5, 1999, addressed to Mr. Peter Adams, was forwarded to us for reply by our Peterborough office. In your letter, you expressed concerns regarding the Agency's treatment of amounts paid to retirement residences.
As requested, we have considered the situation outlined in your letter and have provided some comments below. However, we cannot confirm the tax implications of particular transactions unless the transactions are proposed and are the subject matter of an advance ruling request submitted in the manner set out in Information Circular 70-6R3. Thus, our comments are of a general nature only.
The Income Tax Act contains specific provisions which allow "nursing home" expenses to be claimed as medical expenses for purposes of the medical expense tax credit, but there is no specific provision for retirement homes. Paragraph 118.2(2)(b) provides a claim for amounts paid for "full-time care in a nursing home" where the patient has a severe and prolonged mental or physical impairment that has been certified in prescribed form by a medical doctor. Paragraph 118.2(2)(d) provides a claim for fees paid for the "full-time care in a nursing home" for an individual who has been certified by a qualified medical practitioner to be a person who, by reason of lack of normal mental capacity is, and in the foreseeable future will continue to be, dependent on others for his or her personal needs and care.
The Agency's view of the meaning of the phrase "full-time care in a nursing home" is described in paragraph 24 of IT-519R2, "Medical Expense and Disability Tax Credits and Attendant Care Expense Deduction," a copy of which is enclosed. This paragraph states that the use of the expression "full-time care in a nursing home" is not intended to place a requirement of a minimum time spent caring for the patient, but rather it implies the constant care and attendance required by an individual by reason of the injury, illness or affliction of the individual. To provide such care, it is our view that there must be appropriately qualified medical personnel in attendance in sufficient numbers on a 24-hour basis.
Although a particular place does not necessarily need to be licensed as a nursing home in order to be considered as such, it must have sufficient staff to operate as a nursing home. In other words, the facility must have the equivalent features and characteristics of a nursing home in order to qualify as a nursing home. Hence, it must provide sufficient calibre and number of qualified medical personnel to provide nursing care to its residents on a 24-hour basis. In the case of a facility which provides multiple levels of care, the portion of the facility which provides regular nursing care of the type provided by a nursing home will qualify as a nursing home and the portion of the facility which does provide the necessary care will not. It is also the Agency's position that the requirement for full-time care means that only payments made for medical and/or nursing services will qualify under these provisions.
In order for nursing home expenses to be claimed on behalf of an individual under paragraph 118.2(2)(b), the individual must be eligible for the disability tax credit under subsection 118.3(1) of the Act. This provision provides, among other things, that the individual must have a severe and prolonged mental or physical impairment, the effects of which are such that the individual's ability to perform a basic activity of daily living is markedly restricted. The term "markedly restricted" is defined in subsection 118.4(1) of the Act. Paragraph 118.4(1)(b) provides that an individual's ability to perform a basic activity of daily living is markedly restricted only where all or substantially all of the time, even with therapy and the use of appropriate devices and medication, the individual is blind or is unable (or requires an inordinate amount of time) to perform a basic activity of daily living. Paragraph 118.4(1)(c) defines a basic activity of daily living in relation to an individual as:
(i) perceiving, thinking and remembering,
(ii) feeding and dressing oneself,
(iii) speaking so as to be understood, in a quiet setting, by another person familiar with the individual,
(iv) hearing so as to understand, in a quiet setting, another person familiar with the individual,
(v) eliminating (bowel or bladder functions), or
(vi) walking.
An individual's condition must be certified by a medical doctor or an optometrist, in the case of a blind individual, using Form T2201, Disability Tax Credit Certificate. These topics are discussed in more detail in paragraphs 2 - 10 of IT-519R2. In regard to the case of Robert C. Johnston v. The Queen, 98 DTC 6169, which you refer to in your letter, the Agency is of the view that the decision in this case was highly dependent on the specific facts of the case.
In order to make a claim under paragraph 118.2(2)(d), the patient must have a lack of normal mental capacity which makes him or her dependent on others for personal needs and care, now and in the foreseeable future. A medical practitioner may certify the patient's mental capacity in either a letter or by completing Form T2201.
We trust that these comments will be of assistance.
Yours truly,
John Oulton
for Director
Business and Publications Division
Income Tax Rulings and
Interpretations Directorate
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