28 May 2001 External T.I. 2001-0077775 - HEART TRANSPLANT

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 expenses are medical expenses

Position: -question of fact

Reasons: 118.2(l.1) also (g) and (h)

		2001-007777
XXXXXXXXXX 	Denise Dalphy, LL.B.
(613) 957-9231
May 28, 2001

Dear XXXXXXXXXX:

Re: Medical Expenses

We are writing in reply to your letter dated March 26, 2001 wherein you enquired whether certain temporary living expenses are "medical expenses" for the purposes of the Income Tax Act (the "Act").

Our understanding of the facts is as follows:

1. You became ill in XXXXXXXXXX. In XXXXXXXXXX, you were diagnosed with severe idiopathic dilated cardiomyopathy.

2. You followed a course of treatment and, in XXXXXXXXXX, you became much worse and required a pacemaker. This did not help and you began testing to determine if you were eligible for a heart transplant.

3. You were placed on the heart transplant list on XXXXXXXXXX

4. You live in XXXXXXXXXX. The nearest medical facility where the heart transplant can be performed is in XXXXXXXXXX is a minimum of 3.5 to 4 hours by car/emergency vehicle and a minimum of 3 hours by Medi-vac helicopter under ideal conditions.

5. Patients awaiting a heart transplant are required to be able to report to the hospital within two hours of receiving a call that a heart may be available. You must inform the hospital if you intend to be more than one hour away from XXXXXXXXXX. You cannot return to XXXXXXXXXX, and, when possible, your wife visits you in the XXXXXXXXXX area.

6. There is also a requirement to report to the hospital weekly and sometimes daily for check-ups and examinations to ensure that you remain an eligible candidate for the transplant and that no medical conditions exist that would prevent a transplant.

7. You and your wife own a home in XXXXXXXXXX. Your wife works in XXXXXXXXXX. You used to work in XXXXXXXXXX .

8. You have temporarily relocated to the XXXXXXXXXX area, as required by the hospital.

9. Your employer has allowed you to continue in your employment by a tele-work arrangement.

10. Your costs are higher as a result of having to move to the XXXXXXXXXX area. You pay room and board, and you require frequent transportation to and from the hospital and other medical appointments.

Written confirmation of the consequences inherent in particular transactions are given by this directorate only where the transactions are proposed and are the subject matter of an advance ruling request submitted in the manner set out in Information Circular 70-6R4. Where the particular transactions are partially completed or completed, the enquiry should be addressed to the relevant Tax Services Office. Notwithstanding the foregoing, we are providing the following comments.

Paragraph 118.2(2)(l.1) of the Act defines a "medical expense" to include an amount paid:

"on behalf of the patient who requires a bone marrow or organ transplant,

(i) for reasonable expenses (other than expenses described in subparagraph (ii)),
including legal fees and insurance premiums, to locate a compatible donor and to arrange for the transplant, and

(ii) for reasonable travel, board and lodging expenses (other than expenses described in paragraphs (g) and (h)) of the donor (and one other person who accompanies the donor) and the patient (and one other person who accompanies the patient) incurred in respect of the transplant;"

[emphasis added]

Paragraphs 118.2(g) and (h) provide that the following amounts are "medical expenses" if paid:

(g) "to a person engaged in the business of providing transportation services, to the extent that the payment is made for the transportation of

(i) the patient, and

(ii) one individual who accompanied the patient, where the patient was, and has been certified by a medical practitioner to be, incapable of travelling without the assistance of an attendant"

from the locality where the patient dwells to a place, not less than 40 kilometres from that locality, where medical services are normally provided, or from that place to that locality, if

(iii) "substantially equivalent medical services are not available in that locality,

(iv) the route travelled by the patient is, having regard to the circumstances, a reasonably direct route, and

(v) 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;"

(h) "for reasonable travel expenses (other than expenses described in

paragraph (g)) incurred in respect of the patient and, where the patient was, and has been certified by a medical practitioner to be, incapable of travelling without the assistance of an attendant, in respect of one individual who accompanied the patient, to obtain medical services in a place that is not less than 80 kilometres from the locality where the patient dwells if the circumstances described in subparagraphs (g)(iii), (iv) and (v) apply;"

Whether a particular expense satisfies the above provisions will be a question of fact, and your Tax Services Offices can make a determination with respect to each amount expended. In view of the foregoing legislation, all or some of the transportation, traveling and board and lodging expenses of you and your spouse will be medical expenses and therefore will be eligible for medical expense tax credits. For example, with respect to board and lodging costs that you must incur as a result of the requirement that you live near XXXXXXXXXX in order to continue to be eligible to receive a heart transplant, the amounts will be medical expenses to the extent that they are reasonable (and if there is no reason that would preclude their deduction, which would happen, for example, if an insurance company reimburses you for these expenses). For your information, we have enclosed a copy of Interpretation Bulletin IT-519R2, Medical Expense and Disability Tax Credits and Attendant Care Expense Deduction, and a Release to IT-519R2, and we have highlighted some of the sections that may be of particular interest to you.

The foregoing comments represent our general views with respect to the subject matter. As indicated in paragraph 22 of Information Circular 70-6R4, the above comments do not constitute an income tax ruling and accordingly are not binding on the Canada Customs and Revenue Agency. Our practice is to make this specific disclaimer in all instances in which we provide an opinion.

Yours truly,

Steve Tevlin
for Director
Business and Partnerships Division
Income Tax Rulings Directorate

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