14 October 2003 External T.I. 2003-0042615 - MEDICAL EXPENSE

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: Do the costs relating to umbilical cord blood extraction and storage qualify as medical expenses?

Position: No.

Reasons: Umbilical cord blood extraction and storage is not made in respect of diagnostic, therapeutic or rehabilitative services relating to an existing medical condition.

Bob Naufal, CMA
XXXXXXXXXX (613) 957-2744
2003-004261
October 14, 2003

Dear XXXXXXXXXX:

Re: Medical expenses

We are writing in response to your letter dated October 3, 2003, wherein you asked us whether amounts paid for umbilical cord blood collection and storage qualify for the medical expense tax credit.

Our Comments

Section 118.2 of the Income Tax Act provides rules for determining the amount that may be claimed, as a tax credit, in respect of medical expenses. The credit applies to qualifying medical expenses, in excess of defined limits, incurred in any 12-month period ending in the taxation year.

Qualifying medical expenses include an amount paid to a medical practitioner, dentist or nurse or a public or licensed private hospital in respect of a medical or dental service. Qualifying medical expenses also include amounts paid for laboratory, radiological or other diagnostic procedures or services, with necessary interpretations, for maintaining health, preventing disease or assisting in the diagnosis or treatment of an injury, illness, or disability as prescribed by a medical practitioner.

It is generally a question of fact whether a payment is made in respect of medical services. It is our view that to be regarded as such, the payment must be in respect of services for an existing medical condition or illness. Moreover, the procedures or services described above must assist the medical practitioner in making a diagnosis and formulating a course of treatment for a medical condition or illness.

It is our understanding that umbilical cord blood extraction is a procedure performed as part of the childbirth process, whereby after the baby is born, blood is extracted from the placenta, and subsequently stored for possible future use in treating illness. Accordingly, since this procedure is not used in the treatment of an existing medical condition or illness, it is our view that the amount paid for such service would not qualify as a medical expense.

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 CCRA. Our practice is to make this disclaimer in all instances in which we provide an opinion.

We trust our comments will be of some assistance.

Yours truly,

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

- 2 -