13 February 2003 External T.I. 2003-0001495 - MEDICAL EXPENSES COCHLEAR IMPLANT

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: Whether the cost of a maintenance service contract for a cochlear implant qualifies for the medical expense tax credit

Position: Yes.

Reasons: The cost of the service contract for the cochlear implant in the circumstances described may be considered an amount in respect of an aid to hearing and thus would qualify under paragraph 118.2(2)(i).

XXXXXXXXXX 2003-000149
J. Gibbons, CGA
February 13, 2003

Dear XXXXXXXXXX:

We are replying to your letter which was faxed to us on February 4, 2003, in which you asked us whether the cost of a service contract for your son's cochlear implant qualifies for the medical expense tax credit.

You advised us that your son lost his hearing at XXXXXXXXXX old and soon thereafter he received a cochlear implant. Surgery for the implant and subsequent work with audiologists and language therapists were covered through provincial medical insurance. The implanted portion, the ear piece and the processor were covered under a warranty from the manufacturer for the first three years after implantation. This warranty did not cover wear and tear on connecting cables nor loss of a part or damage to a part due to misuse.

The manufacturer has offered you a service contract to continue coverage previously available under the warranty. The service contract will ensure that when repairs are needed, a "loaner" piece will be available immediately and that costs will be kept to a manageable level. The service contract is not an insurance contract and does not cover loss or damage due to misuse, nor does it cover wear and tear on connecting cables.

Our Comments

Our comments are of a general nature only since we cannot confirm the tax implications of particular transactions unless the transactions are proposed and are the subject matter of an advance ruling request submitted in the manner set out in Information Circular 70-6R5.

Medical expenses that qualify for the medical expense tax credit are defined in subsection 118.2(2) of the Income Tax Act. Paragraph 118.2(2)(i) describes an amount paid for or in respect of certain medical devices including "an aid to hearing" for the patient. In our view, the cost of the service contract for a cochlear implant in the circumstances described in your letter would be an amount paid in respect of an aid to hearing and, therefore, would qualify for the medical expense tax credit.

We trust that these comments will be of assistance.

Yours truly,

Daryl Boychuk, LL.B.

for Director
Business and Partnerships Division
Income Tax Rulings Directorate

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