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 travel expenses in specific circumstances qualify for the medical expense tax credit
Position: Question of fact.
XXXXXXXXXX Lena Holloway, CA
December 3, 2003
Re: Medical Expense Tax Credit
We are writing in reply to your letter of July 16, 2003, requesting our views on whether certain travel expenses qualify for the medical expense tax credit.
Your letter explained that in 1997 the spouse of an individual covered by your health care plan was referred by his family doctor to a psychiatrist outside the patient's locale as he was otherwise unresponsive to treatment offered within his locality. The individual submitted a claim under your health plan for the costs of transporting the patient to regular monthly visits to a psychiatrist as well as for travel costs for the patient to and from a hospital close to where this psychiatrist practises.
At the time of the referral, the patient was considered a danger to himself and, as the condition the patient suffers from appears to have a genetic link, he was referred to a psychiatrist who had treated other members of the patient's family. The family doctor who provided the referral has since retired and, therefore, is unable to provide a letter corroborating the patient's history. The patient's current psychiatrist however, has provided a letter stating that the treatment required by the patient is not readily available in the patient's locale and that "there has been a therapeutic alliance established with patient". As your health care plan only covers medical expenses if they otherwise qualify as such under the Income Tax Act (the "Act"), you have asked for our views on whether the transportation and travel costs incurred in such circumstances would qualify as medical expenses under the Act.
In your letter, you also asked the following questions:
1. Is the patient/doctor relationship as it specifically applies to mental health problems relevant in determining the eligibility of travel expenses as qualifying medical expenses?
2. Can your health care services plan provide reimbursement for travel expense claims to patients who are referred out of their locality when similar medical services are available closer to home but the waiting lists are long?
3. Where a health care services plan member obtains a letter from a medical specialist explaining that the requirements for treating travel expenses as medical expenses under the Act are met is such a letter sufficient for purposes of processing the claim or should the plan administrator require additional documentation? In this respect, does the plan administrator have the right to question the credibility of the statements made in writing by the medical professionals?
Your letter outlines an actual fact situation related to transactions and events that have taken place. The review of such situations is generally the responsibility of the local taxation services offices and, as outlined in paragraph 22 of Information Circular 70-6R5, it is not our practice to provide specific opinions on factual situations otherwise than in the context of an advance income tax ruling. Nevertheless, we are prepared to provide general comments, which we hope will be of assistance.
Section 118.2 of the Income Tax Act (the "Act") provides rules for determining the amount that may be claimed, as a tax credit, in respect of medical expenses. An amount paid to a person engaged in the business of providing transportation services to transport an individual not less than 40 kilometres from the locality where the individual resides to a place where medical services are received may qualify as a medical expense. Similarly, other travel expenses may qualify as medical expenses if the individual travels not less than 80 kilometres from the locality where the individual dwells to a place where medical services are received.
As you acknowledged in your letter, an individual is entitled to claim transportation and travel expenses only if the following requirements are met:
(i) substantially equivalent medical services were not available in the individual's locality,
(ii) a reasonably direct travelling route was taken by the individual,
(iii) the individual travelled to the particular place to obtain medical services for himself or herself; and
(iv) it is reasonable, having regard to the circumstances, for the individual to have travelled to that place for medical services.
In determining whether substantially equivalent medical services are available locally and whether it is reasonable, having regard to the circumstances, for the individual to have travelled to a particular place for medical services, we would consider all the factors relevant to that individual case. More specifically:
- The history of the patient/doctor relationship may be relevant in assessing if there are substantially similar services available in the patient's locality. In the circumstances described in your letter, we believe that the patient/doctor relationship is a relevant factor.
- Where, in the opinion of a medical professional, timeliness is important in the treatment of a patient and substantially equivalent medical services are not available in the locality on a timely basis, we are of the view that the requirement in (i) would be met.
- You are entitled to rely on the opinion of a medical practitioner in administering your plan except in those cases where there is an obvious reason to doubt the validity of that opinion. If the opinion is unclear or you are not satisfied that the requirements set out in (i) to (iv) above have been met, you should ask the practitioner for clarification or further information.
- It is important that the certification from the medical practitioner clearly establishes that the conditions in (i) and (iv) above have been satisfied. In this respect, we would expect the practitioner to identify the specific reasons why substantially equivalent services were not available in the patient's locality and the reason(s) why it was reasonable for the patient to have obtained the services from the practitioner. For example, in the circumstances described in your letter, we would expect the certification to state that the patient requires the specific expertise of the psychiatrist and/or the patient did not have access to timely treatment at the time the patient was referred to the psychiatrist. In addition, we would expect to see a statement that comparable medical services were not available closer to the patient's locality.
Please note that proposed legislation exists that would require written certification from a medical professional that substantially equivalent medical services were not available in the locality in support of a claim for transportation and travel expenses. This legislation, when enacted, will be effective for certifications made after December 20, 2002.
We trust that these comments will be of assistance.
Daryl Boychuk, LL.B
Business and Partnerships Division
Income Tax Rulings Directorate
All rights reserved. Permission is granted to electronically copy and to print in hard copy for internal use only. No part of this information may be reproduced, modified, transmitted or redistributed in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, or stored in a retrieval system for any purpose other than noted above (including sales), without prior written permission of Canada Revenue Agency, Ottawa, Ontario K1A 0L5
© Her Majesty the Queen in Right of Canada, 2003
Tous droits réservés. Il est permis de copier sous forme électronique ou d'imprimer pour un usage interne seulement. Toutefois, il est interdit de reproduire, de modifier, de transmettre ou de redistributer de l'information, sous quelque forme ou par quelque moyen que ce soit, de facon électronique, méchanique, photocopies ou autre, ou par stockage dans des systèmes d'extraction ou pour tout usage autre que ceux susmentionnés (incluant pour fin commerciale), sans l'autorisation écrite préalable de l'Agence du revenu du Canada, Ottawa, Ontario K1A 0L5.
© Sa Majesté la Reine du Chef du Canada, 2003