20 February 2004 External T.I. 2003-0045561E5 - 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.

Principal Issues: Whether the cost of a weight management program would qualify as a medical expense where the program is run by a corporation.

Position: Where payments are in respect of medical services performed by medical practitioners, as defined in the Act, they would qualify as medical expenses

Reasons: Allowed under 118.2(2)(a)

Lena Holloway, CA
XXXXXXXXXX (613) 957-2104
2003-004556
February 20, 2004

Dear XXXXXXXXXX:

We are writing in response to your request for a technical interpretation dated

October 24, 2003 inquiring whether the cost of a weight management program would qualify as a medical expense for purposes of the medical expense tax credit. In your letter, you present the following situation:

XXXXXXXXXX is a corporation formed under the law of the Province of Ontario. All of the shares of XXXXXXXXXX are owned either directly or indirectly (via holding corporations) by Ontario licensed physicians or their spouses. XXXXXXXXXX is in the business of providing weight management programs that are designed and supervised by endocrinologists specializing in obesity and metabolism. Clients of XXXXXXXXXX meet every two weeks, generally over a six-month period, with a Registered Dietician. In certain cases they will also meet with an occupational therapist or a psychotherapist. In addition, the dietician is available for telephone or e-mail contact between visits. The professionals providing services are duly licensed or registered in the Province of Ontario and are either employees of XXXXXXXXXX or independent contractors hired by XXXXXXXXXX.

In your opinion the fees charged by XXXXXXXXXX for the weight management program described above should qualify as medical expenses given that the services are "diagnostic, therapeutic, or rehabilitative" in nature (as contemplated in paragraph 19 of Interpretation Bulletin IT-519R2) and that those providing the services are "medical practitioners" (as described in paragraph 3 of Interpretation Bulletin IT-519R2).

Our Comments

Written confirmation of the tax consequences that apply to a particular fact situation is given by this directorate only in the context of an advance ruling request submitted in the manner set out in Information Circular 70-6R5. However, we are prepared to provide the following general comments.

Subsection 118.2(2) of the Income Tax Act (the "Act") defines the expenses that qualify for the medical expense tax credit. Pursuant to paragraph (a) of that provision, an amount is considered to qualify as a medical expense of an individual only if it is paid to a medical practitioner, dentist or nurse or a public or licensed private hospital in respect of a medical or dental service.

In general terms, a "medical practitioner" is a person who is authorized by a province or other jurisdiction to act as a medical practitioner. In our view, a person is authorized by a province or other jurisdiction to act as a medical practitioner if there is specific legislation that enables, permits or empowers the person to practice as such. In terms of the medical practitioners mentioned in your letter, paragraph 3 of IT-519R2 explains that medical practitioners authorized to practice in accordance with the above laws can include (depending on the applicable province or jurisdiction, as the case may be) an occupational therapist who is a member of the Canadian Association of Occupational Therapists and a dietician. Endocrinologists and psychotherapists licensed to practise in particular provinces are also medical practitioners.

Accordingly, an amount paid by an individual in respect of a "medical service" provided by any one of the above-noted medical practitioners, if they are licensed to offer such services in Ontario, would qualify as a medical expense eligible for the medical expense tax credit whether the amount is paid directly to the medical practitioner or to a corporation that employs the medical practitioner. A medical service is a service relating to the diagnosis, treatment or prevention of disease performed by a medical practitioner acting within the scope of his or her professional training. In our opinion, the weight management program described in your letter would be considered a medical service where the program is offered to an individual for therapeutic or rehabilitative reasons.

We trust our comments will be of some assistance. Please contact us if you have any questions concerning our response.

Yours truly,

Wayne Antle, CGA
for Director
Business and Partnerships Division
Income Tax Rulings Directorate