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 any portion of lease payments for a van that is already wheelchair accessible qualifies as an "acquisition" for purposes of paragraph 118.2(2)(l.7) of the Act.
Position: No
Reasons: The leasing of a van is not an "acquisition" and therefore cannot qualify for the medical expense deduction.
XXXXXXXXXX 2000-004869
A. Seidel
Attention: XXXXXXXXXX
October 10, 2000
Dear Sir:
Re: Medical Expenses - Paragraph 118.2(2)(l.7)
This is in reply to your letter dated September 25, 2000 in which you requested our views as to whether the payments in respect of the leasing of a van which is already wheelchair accessible would qualify as a medical expense pursuant to paragraphs 118.2(2)(l.7) or 118.2(2)(m) of the Income Tax Act (the "Act").
The particular circumstances in your letter on which you have asked for our views appears to be a factual situation involving a specific taxpayer. As explained in Information Circular 70-6R3, it is not this Directorate's practice to comment on proposed transactions involving specific taxpayers other than in the form of an advance income tax ruling. Should your situation involve a specific taxpayer and a completed transaction, you should submit all relevant facts and documentation to the appropriate district tax services office for their views. However, we are prepared to offer the following general comments which may be of assistance.
Paragraph 118.2(2)(l.7) of the Act provides that a portion of the amount paid for the acquisition of a van that has been adapted for the transportation of a patient that requires the use of a wheelchair qualifies as a medical expense. The amount that could qualify as a medical expense is the lesser of $5,000 and 20% of the amount paid for the acquisition of the van after deducting any amount which qualifies as a medical expense pursuant to paragraph 118.2(2)(m) of the Act.
Black's Law Dictionary defines an "acquisition" as "the act of becoming the owner of certain property". In the situation where a van is leased under a typical lease, i.e. an up-front payment, periodic payments for a specified period of time and then an option to acquire the van at fair market value after the specified lease period, the ownership of that van does not transfer to the lessee at the time the lease is entered into. Any transfer of ownership would not occur until the lessee chooses to exercise the option to acquire the van at the end of the specified lease period. It is therefore our view that no amount would qualify as a medical expense under paragraph 118.2(2)(l.7) of the Act in this situation.
In order for any of the other costs relating to the leasing of a van to qualify as an eligible medical expense, an amendment to the Act would be necessary. Considering amendments to the Act are the responsibility of the Department of Finance. Should you wish to bring this matter to their attention, you can contact the Personal Income Tax Division at the Department of Finance at the following address:
L'Esplanade Laurier
East Tower, 16th Floor
140 O'Connor Street
Ottawa, Ontario
K1A 0G5
Yours truly,
John Oulton
for Director
Business and Publications Division
Income Tax Rulings Directorate
Policy and Legislation Branch
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