12 March 2002 Internal T.I. 2001-0116207 - NURSING HOME AND DISABILITY RESTRICTION

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

Are residents of group homes under 118.2(2)(b.2) and institutions under 118.2(2)(e) denied the disability tax credit if such residence also qualifies as a nursing home?

Position

Question of fact as to whether an establishment is a nursing home and the reasons the individual is in the particular establishment.

Reasons

118.2(2)(b.2) is a different kind of deduction and 118.2(2)(e) requires a different test than a nursing home under 118.2(2)(d).

		March 12, 2002

	Client Services Directorate	HEADQUARTERS
	Individual Programs Section	C. Tremblay, CMA

	Attention: Gabor Obert
		2001-011620

The restriction of paragraphs 118.3(1)(c) and 118.3(2)(b) of the
Income Tax Act (the "Act") as it applies towards
paragraphs 118.2(2)(b.2) and 118.2(2)(e) of the Act

This is in reply to your memorandum of December 23, 2001, wherein you asked us to confirm whether the restrictions in paragraphs 118.3(1)(c) and 118.3(2)(b) of the Act prevent the claiming of the disability tax credit for self or for a dependant where a claim is made for medical expenses under paragraph 118.2(2)(b.2) or 118.2(2)(e) of the Act.

You note that in the Halifax Round Table questions of February 1994 (document 4M00680), the response to question 4 would appear to indicate that neither paragraph 118.2(2)(b.2) nor 118.2(2)(e) of the Act would be considered as amounts paid for attendant care, so you question whether amounts paid under paragraph 118.2(2)(b.2) or 118.2(2)(e) of the Act could be considered amounts paid for "care in a nursing home" as stated in paragraph 118.3(1)(c) of the Act. Since paragraphs 118.2(2)(b.2) and 118.2(2)(e) of the Act do not explicitly specify nursing home, you ask whether a taxpayer intending to claim either the disability for self or the disability amount for a dependant is required to determine whether the institution qualifies as a nursing home even though the institution would not be representing itself as such.

Our Comments:

As noted in paragraph 7 of IT-519R2, when an individual includes, as a qualifying medical expense, the cost of nursing home care for a patient (as described in paragraphs 118.2(2)(b) and (d)) neither that individual nor any other person may claim the disability tax credit or its transfer.

Group Home Care- Paragraph 118.2(2)(b.2) of the Act

Paragraph 118.2(2)(b.2) of the Act allows an individual to deduct as a medical expense an amount paid on account of remuneration to persons providing care and supervision in a group home maintained and operated exclusively for the benefit of individuals with severe mental or physical impairments who are eligible for the disability tax credit. Accordingly, unlike a nursing home where the lodging (i.e. room and board) expenses are included as medical expenses, not all the costs associated with being a resident in a group home are deductible. Only amounts paid as remuneration for care and supervision are allowed and, in our view, there should be a direct relationship between care provided as care and supervision and the remuneration paid for care and supervision. Although a group home may be similar to a nursing home, it usually does not provide the care required to be classified as a nursing home.

While we accept that a particular place does not necessarily need to be licensed as a nursing home in order to be considered as such, it must have sufficient staff to operate as a nursing home. In other words, it must have the equivalent features and characteristics of a nursing home in order to qualify as a nursing home for the purposes of the medical tax credit. Hence, it must provide sufficient calibre and number of qualified personnel to provide nursing care to its residents on a 24-hour basis. Where the residence qualifies as a nursing home, and the individual claims the medical deduction as such, the resident will be denied the disability tax credit but will be entitled to all meals and other accommodation costs. Otherwise, where the residence does not qualify as a nursing home, a resident of a group home that is maintained exclusively for the benefit of individuals who have a severe and prolonged impairment will not be denied the disability tax credit or its transfer but will only be allowed to deduct as a medical expense the amounts that are directly related and itemized as remuneration to persons providing care or supervision in the group home.

Care in an Institution, School or Other Place - Paragraph 118.2(2)(e) of the Act

The restriction in paragraph 118.3(1)(c) of the Act denies a disability tax credit where the cost of care in a nursing home has been claimed as a medical expense. Under paragraph 118.2(2)(e) of the Act, a person may deduct as a medical expense an amount paid for the care at an institution, provided the patient has been certified by an appropriately qualified person to require the equipment, facilities or personnel specially provided by that institution. However, there may be situations where an individual is resident in an institution or other place, that is not called a nursing home, solely because that person requires nursing home type care, which the institution can provide. It is our view that in such a situation a claim for medical expense tax credit would preclude a claim for the disability tax credit in the same year regardless of the fact that the taxpayer made a claim under paragraph 118.2(2)(e) of the Act. In our view, the proper legislative provision which would allow an individual to claim the medical tax credit in a situation where an individual is a resident in an institution, school or other place solely because he or she requires nursing home care, would either be paragraph 118.2(2)(b) or (d) of the Act. In essence, what is relevant is the reason why an individual is a resident at the particular establishment.

Although the requirements of paragraph 118.2(2)(e) of the Act appear less restrictive than those of paragraphs 118.2(2)(b) and (d) of the Act, in that the care need not be provided in a nursing home on a full-time basis, there are several additional requirements within paragraph 118.2(2)(e) of the Act that do not apply to paragraph 118.2(2)(b) or (d) of the Act. In order for an amount to qualify as a medical expense under paragraph 118.2(2)(e) of the Act, the individual receiving care or care and training at a particular place must be certified by an appropriately qualified person to be in need of the specialized equipment, facilities or personnel provided by that place for care or the care and training of individuals with the physical or mental handicap suffered by that individual. Therefore if an individual suffers from a physical or mental handicap and, as a result, receives care, or the care and training, at a particular place, which has equipment, facilities or specially trained personnel specifically made available for the care of individuals with that particular handicap, the fees paid to such a place would generally qualify as a medical expense. For example, fees paid to an institution which has the staff specially trained to deal with the problems associated with Alzheimer's disease will qualify as a medical expense when paid in respect of an individual suffering from that disease that has been certified by an appropriately qualified person to be a person who requires the equipment, facilities or personnel specially provided by that place. Comments provided in paragraphs 29 and 30 of IT-519R2 further explain the views of the CCRA in respect of care and training in an institution.

In summary, if an individual is claiming medical expenses under either paragraph 118.2(2)(b.2) or 118.2(2)(e) of the Act, the individual is generally making a different type of medical claim than if he or she were seeking a deduction for care in a nursing home under either paragraph 118.2(2)(b) or 118.2(2)(d) of the Act. The difference in paragraphs 118.2(2)(d) and 118.2(2)(e) of the Act, is that the certification under (d) requires that the patient continue in the foreseeable future to be dependant on others for his or her personal needs while the certification under (e) requires that the patient by reason of mental or physical handicap requires specific facilities, equipment or personnel. Thus, it is also our view and that of the Department of Finance that, in situations where the individual has otherwise met the requirements of paragraphs 118.2(2)(b.2) and 118.2(2)(e) of the Act, and has claimed a medical expense under either paragraph 118.2(2)(b.2) or 118.2(2)(e) of the Act, the disability tax credit should not be denied, in and by itself, solely because the residence could qualify as a nursing home.

for Director
Business and Partnerships Division
Income Tax Rulings Directorate
Policy and Legislation Branch

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