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 a psychologist who tutors a child, is a person "ordinarily engaged in the business" of providing tutoring services to individuals for the purposes of subparagraph 118.2(2)(91) of the Income Tax Act.
Position: Likely not
Reasons: It is a question of fact whether the requirement has been satisfied. However, we are doubtful whether an individual who has a psychology practice would satisfy the test.
October 30, 2000
Vancouver Island Tax Services Office HEADQUARTERS
Sylvia Romig M. Eisner
Special Services/PRP (613) 957-2138
2000-004739
Medical Expense Tax Credit - Tutoring
This is in reply to your memorandum of September 14, 2000, concerning the above-noted subject.
You have asked us about two scenarios which are set out below.
Scenario 1
You have indicated that an enquiry has been received from a medical practitioner (the "Individual"), who is a psychologist. The majority of the Individual's clients are children with a mental impairment and/or a learning disability. The Individual will provide tutoring services to one of the children whom he has certified with respect to the need for the services as a result of a mental impairment or a learning disability. In the alternative, the tutoring services, following certification, may be provided by the Individual in his capacity as an employee of his corporation.
In relation to paragraph 118.2(2)(l.91) of the Income Tax Act (the "Act"), you have asked us for our comments on the payments made to the Individual.
By virtue of paragraph 118.2(2)(l.91) of the Act, remuneration paid for tutoring services with respect to an individual with a learning disability or a mental impairment can qualify as an eligible medical expense. In order for the tutoring to qualify, the need for tutoring services (i.e., services that are supplementary to the primary education of the patient) must be certified in writing by a medical practitioner and the tutor has to be a person "ordinarily engaged in the business" of offering tutoring services to individuals to whom the tutor is not related.
It is our general view that a medical practitioner who is a psychologist could certify children pursuant to the requirement in subparagraph 118.2(2)(l.91) of the Act, provided he or she is authorized to practice pursuant to the requirements of subsection 118.4(2) of the Act.
It is a question of fact whether a tutor is "ordinarily engaged in the business" of providing tutor services. However, in general terms, it is unlikely that an individual who has a full-time psychology practice would satisfy this test.
Scenario 2
You have indicated that educational institutions (e.g., XXXXXXXXXX), may have an employee (a medical practitioner) who certifies children with respect to the need for tutoring as a result of learning disability or a mental impairment. In the alternative, a self-employed medical practitioner, as a result of a contract with such an institution, may certify children who are subsequently tutored by the institution.
With respect to subparagraph 118.2(2)(l.91) of the Act, you have asked us about the certification requirement.
In our view, the children may be "certified" for the purposes of the subparagraph 118.2(2)(l.91) of the Act in either of the above circumstances. However, the medical practitioner must be one who is authorized to practice as such pursuant to the requirements of the subsection 118.4(2) of the Act.
If you require further assistance, we would be pleased to provide our views.
For your information, a copy of this memorandum will be severed using the Access to Information Act criteria and placed in the legislation Access Database (LAD) on the Agency's mainframe computer. A severed copy will also be distributed to the commercial tax publishers for inclusion in their databases. The severing process will remove all material that is not subject to disclosure including information that could disclose the identity of the taxpayer. Should your client request a copy of this memorandum, they can be provided with the LAD version or they may request a copy severed using the Privacy Act criteria which does not remove client identity. Requests for this latter version should be made by you to Jackie Page at (613) 957-0682. The severed copy will be sent to you for delivery to the client.
John Oulton
Manager
Business, Property & Employment Section III
Business and Publications Division
Income Tax Rulings Directorate
Policy and Legislation Branch
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