26 June 2000 External T.I. 2000-0029565 - 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: Are expenses incurred for umbilical cord blood extraction, processing and storage eligible medical expenses?

Position: No

Reasons: Paragraph 118.2(2)(a) of the Act does not apply since payments must be in respect of medical services which must involve a medical condition and such a condition does not apply. Paragraph 118.2(2)(o) of the Act does not apply since we are not dealing with a diagnostic procedure.

XXXXXXXXXX 				2000-002956
J. E. Grisé
June 26, 2000

Dear XXXXXXXXXX:

This is in reply to your letter of May 18, 2000, requesting our interpretation on the expenses for umbilical cord blood extraction, processing and storage as an eligible medical expense.

Umbilical cord blood extraction is a recently introduced procedure performed as a part of the childbirth process. After the baby is born, blood is extracted from the placenta, and subsequently stored. Elements from this blood can be used in treating a host of diseases including leukemia, not only in the baby but also in family members or others for whom there is a match.

Paragraph 118.2(2)(a) of the Act provides that medical expenses include amounts paid to a medical practitioner, dentist or nurse or a public or licensed private hospital in respect of "medical or dental services." Although it is a question of fact whether a payment is made in respect of medical services, it is our view that to be regarded as such, the payment must involve an existing medical condition or illness. In our opinion, the expenses described in your letter do not involve an immediate medical condition or illness, rather they are preventive in nature. Accordingly, in general terms, amounts paid for such services would not qualify as medical expenses under this paragraph.

We have also considered the provision of paragraph 118.2(2)(o) of the Act which deals with amounts paid for laboratory, radiological or other diagnostic procedures or services prescribed for a patient by a medical practitioner or dentist. Under this provision, the procedures or services must, together with the necessary interpretations, maintain health, prevent disease or assist in the diagnosis or treatment of any injury, illness or disability. Further, the reference in paragraph 118.2(2)(o) of the Act to "other diagnostic procedures or services" is generally limited to diagnostic services or procedures of the same class as laboratory or radiological services. In other words, the procedures or services must assist a medical practitioner in making a diagnosis and formulating a course of treatment.

As the expenses described in your letter do not address such purposes, they would also not qualify under this paragraph.

Since the expenses described in your letter do not appear to qualify under paragraph 118.2(2)(a) or (o), and since no other paragraph of the provision seems to apply, it is our view that such expenses would not qualify as medical expenses for purposes of the medical expense tax credit.

We hope our comments are helpful.

Yours truly,

John Oulton
for Director
Business and Publications Division
Income Tax Rulings Directorate
Policy and Legislation Branch