22 July 2003 External T.I. 2003-0014485 - NURSING HOME AND ATTENDANT CARE

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 Extended Care and Intermediate Care facilities in British Columbia are nursing homes and various other questions pertaining to nursing homes, attendant care and the disability tax credit.

Position: General comments provided.

Reasons: Question of fact.

XXXXXXXXXX 2003-001448
Shaun Harkin, CMA
July 22, 2003

Dear XXXXXXXXXX:

Re: Technical Interpretation Request

This is in reply to your facsimile of April 19, 2003 wherein you ask various questions pertaining to the Extended Care and Intermediate Care facilities in British Columbia and, in particular, whether they are considered to be nursing homes.

We will address your questions in the order they were raised.

Question 1:

What is the status of the Intermediate Care and Extended Care facilities in British Columbia as nursing homes?

Our Response:

The term "nursing home" is not defined in the Income Tax Act (the "Act") and, therefore, in determining if a particular facility qualifies as a nursing home, we rely on the ordinary meaning of the term. Generally, we consider a nursing home to be an establishment that provides maintenance or nursing care for persons (as the aged or chronically ill) who are unable to care for themselves.

We accept that a particular place is not required to be licensed as a nursing home; however, we are of the view that 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. Hence, it must provide sufficient caliber and number of qualified medical personnel to provide nursing care to its residents on a 24-hour basis.

It is our understanding that an Intermediate Care facility does not normally provide nursing care on a 24-hour basis for its residents and generally has only one nurse on hand at a particular time to serve the needs of a large number of residents. Accordingly, an Intermediate Care facility would not normally be considered a nursing home. In the case of a facility that provides multiple levels of care, the portion of the facility that provides nursing care on a 24-hour basis for its residents will qualify as a nursing home and the portion of the facility that does not, will not so qualify.

With respect to Extended Care facilities, we would require information on a particular Extended Care facility to determine whether it qualifies as a nursing home. For example, it would be helpful if we could examine both the terms of the license under which the facility operates and the level of care provided. It is our understanding that institutions in British Columbia offering different levels of care may be licensed under the Continuing Care Act and/or under Part 2 of the Hospital Act. Depending on the terms of its license and the level of care provided, a particular Extended Care facility could be recognized as a licensed private hospital, a nursing home or some other type of institution.

Fees paid to a licensed private hospital for medical services or to a nursing home qualify as medical expenses in computing the medical expense tax credit. However, it is important to note that if a medical expense tax credit is claimed in respect of fees paid for the care of an individual in a nursing home, the disability tax credit cannot be claimed for that year. On the other hand, the disability tax credit can be claimed in conjunction with the medical expense tax credit for fees paid to a licensed private hospital.

Question 2:

Would an individual living in a retirement center be eligible to claim up to $10,000 annually ($20,000 in the year of death) for attendant care (i.e. amounts under paragraph 118.2(2)(b.1) of the Act)?

Our Response:

We are of the view that a resident of a retirement home may make a claim under paragraph 118.2(2)(b.1) provided the resident meets the requirements of subsection 118.3(1) of the Act (disability) and provided the resident can establish that an amount, in addition to the amount paid as rent, is paid as remuneration for attendant care.

To qualify under paragraph 118.2(2)(b.1), a claim must be accompanied by proof of payment, generally by means of a receipt, and must pertain to actual remuneration paid for attendant care. The home, as the service provider, must determine the total amount paid for attendant care and allocate such amounts to the residents on a reasonable basis. In our view, the amounts that may be so allocated would generally be limited to salaries and wages paid to employees engaged in providing attendant care services.

Question 3:

Can an individual claim or transfer the credit for mental and physical impairment (i.e., the "disability tax credit") and also claim amounts for attendant care?

Our Response:

An individual is not entitled to claim the disability tax credit if the individual claims the expense of an attendant except where the expense relates to a part-time attendant. A claim under paragraph 118.2(2)(b.1) for a part-time attendant is subject to a $10,000 maximum annual limit ($20,000 in the year the individual dies).

Question 4:

How much of the disability tax credit can be claimed in the year an individual moves from a retirement home to a nursing home? Is the disability tax credit prorated?

Our Response:

When an individual includes, as a qualifying medical expense, the cost of nursing home care for a patient, neither that individual nor any other person may claim the disability tax credit in respect of the patient. There are no provisions in the Act that allow the disability tax credit to be prorated in the year a disabled person moves into a nursing home.

Other Comments

The role of the Canada Customs and Revenue Agency ("CCRA") is to administer and enforce the Act as passed by Parliament while the Department of Finance has the responsibility for tax policy. You have raised issues in your letter that relate to tax policy, such as, "it seems strange that the Act allows the disability amount for someone who is less dependant in Intermediate Care and disallows it for someone who is totally dependant on care in Extended Care". Unfortunately, we are unable to address these concerns. However, you may wish to express your views to the Department of Finance. It is our understanding that the Department of Finance is continually reviewing the legislation governing the medical expense tax credit and the disability tax credit to ensure that these credits are available in the appropriate circumstances. You may write to the officials in the Tax Policy Branch of the Department of Finance, at L'Esplanade Laurier, 140 O'Connor Street, Ottawa, Ontario, K1A 0G5.

Information pertaining to medical expenses and the disability tax credit can be found in IT-519R2 (Consolidated). We thank you for your suggestion regarding the preparation of decision trees and we will pass along your suggestion to our Publications section.

Caveat

The foregoing comments represent our general views with respect to the subject matter. As indicated in paragraph 22 of Information Circular 70-6R5, 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,

Daryl Boychuk, LL.B
for Director
Business and Partnerships Division
Income Tax Rulings Directorate

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