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 CCRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ADRC.
Principal Issues: Will the reserve that has to be included in income per ITA 34.2(5) have to be included in "adjusted income" for the purposes of the refundable medical supplement calculation?
Position: yes
Reasons: 34.2(5) states the amount must be included in income (the section 3 income) and there is no noted exception for the 34.2(5) reserve
XXXXXXXXXX 2001-009714
Shaun Harkin, CMA
November 6, 2001
Dear XXXXXXXXXX:
Re: Technical Interpretation Request: Refundable Medical Expense Supplement
This is in reply to your electronic message of August 15, 2001 in which you ask whether the reserve that must be included in income under subsection 34.2(5) of the Income Tax Act (the "Act") must be included in the adjusted income amount for the calculation of the Refundable Medical Expense Supplement in subsection 122.51(2) of the Act.
The term "adjusted income" in variable B in the formula in subsection 122.51(2) of the Act has the meaning assigned by section 122.6 of the Act. The definition of "adjusted income" in section 122.6 of the Act states:
""adjusted income" of an individual for a taxation year means the total of all amounts each of which would be the income for the year of the individual or of the person who was the individual's cohabiting spouse or common-law partner at the end of the year if no amount were included in respect of a gain from a disposition of property to which section 79 applies in computing that income;"
The phrase "income for the year" used in the "adjusted income" definition means income as described under section 3 of the Act. It is our view that the amount to be included in income, pursuant to subsection 34.2(5) of the Act, would be income for the purposes of section 3 of the Act.
Therefore, it is our opinion that the reserve under subsection 34.2(4) of the Act, that is included in income under subsection 34.2(5) of the Act, must be included in the adjusted income amount for the calculation of the Refundable Medical Expense Supplement.
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 disclaimer in all instances in which we provide an opinion.
We trust the above comments are of assistance.
Yours truly,
Steve Tevlin
for Director
Partnerships Section
Business and Partnerships Division
Income Tax Rulings Directorate
Policy and Legislation Branch
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