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: The spouse of an individual ("Partner B") is physically unable to carry or conceive a child. So that they may have a child, a medical practitioner has prescribed a number of medical procedures in respect of a surrogate mother. The surrogate mother is not a dependant of Partner B for the purposes of subsection 118(6) of the Act. Can Partner B treat the medical expenses as being eligible for the medical expense tax credit by virtue of paragraph 118.2(2)(o) of the Act?
Position: No
Reasons: Paragraph 118.2(2)(o) of the Income Tax Act (the "Act") refers to laboratory, radiological or other diagnostic procedures or services ... for the patient (i.e., a dependant) as prescribed by a medical practitioner."
XXXXXXXXXX 2000-005480
M. Eisner, CA
Attention: XXXXXXXXXX
January 17, 2001
Dear Sir or Madam:
Re: Medical Expense Tax Credit
This is in reply to your letter of October 31, 2000, concerning the above-noted subject.
In the situation outlined in your letter, the spouse ("Partner A") of an individual ("Partner B") is physically unable to carry or conceive a child. So that they may have a child, the following services have been prescribed by a medical practitioner and are not reimbursed by a health care plan:
- The purchase of a donated egg;
- In-vitro fertilization procedures for a surrogate mother (the "Individual"), who is unrelated to Partners A and B;
- Medical expenses for the Individual once the in-vitro fertilization procedures have begun;
- Cycle monitoring fees, surrogate agency fees and surrogate mother's fee; and
- Medical procedures and supplies required for the Individual or fetus to ensure the safe and healthy conception, carrying and delivery of a baby.
The nearest medical clinic (the clinic has a staff of medical practitioners) that will perform the procedures is greater than 80 kilometres away from the locality where Partner A and Partner B live and is the closest location from which the medical services can be obtained. Partner A and Partner B will travel to the clinic using the most direct route.
You have asked whether the costs of the above medical services and travel qualify for the medical expense tax credit under paragraph 118.2(2)(o) of the Income Tax Act (the "Act") as well as paragraphs 118.2(2)(g) and (h) of the Act.
Written confirmation of the tax implications inherent in particular transactions is given by this Directorate only where the transactions are proposed and are the subject matter of an advance income tax ruling request. However, we are prepared to provide some following comments.
As indicated in paragraph 13 of Interpretation Bulletin IT-519R2, "Medical Expense and Disability Tax Credits and Attendant Care Deduction," the word "patient" is used in the law to refer to the individual or to the individual's spouse or dependant, as the case may be, on whose behalf the individual's qualifying medical expenses are paid. The following comments are based on the presumption that the Individual is not a dependant of Partner A or Partner B.
Paragraph 118.2(2)(o) of the Act refers to "laboratory, radiological or other diagnostic procedures or services ... for the patient as prescribed by a medical practitioner". Since the Individual is not a dependant of Partner A or Partner B, it is our view that the payments that may be made in respect of such procedures do not qualify for the medical expense tax credit under that provision.
The Agency's general position on travel expenses (paragraphs 118.2(2)(g) and (h) of the Act) is set out in paragraphs 32 to 35 of IT-519R2. A requirement in subparagraph 118.2(2)(g)(v) of the Act, which also is relevant to paragraph 118.2(2)(h) of the Act, is that "the patient travels to that place to obtain medical services for himself or herself and it is reasonable, having regard to the circumstances, for the patient to travel to that place to obtain those services". On the basis of the available information, it is our view that the expenses incurred do not qualify for the same reasons outlined in the preceding paragraph.
We trust that our comments are of assistance to you.
Yours truly,
John Oulton, CA
for Director
Business and Partnerships Division
Income Tax Rulings Directorate
Policy and Legislation Branch
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