9 July 2004 External T.I. 2004-0069111E5 - Medical Expenses - Asthma

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 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: 1) renovations to a home and 2) a central vacuum cleaner qualify as medical expenses.

Position: 1) Central vacuum cleaner - No; 2) Hardwood Flooring - question of fact

Reasons: 1) Legislation. 2) Jurisprudence (see Appeals Branch response to adverse decision in Seely v The Queen)

XXXXXXXXXX
2004-006911
Shaun Harkin, CMA
July 9, 2004

Dear XXXXXXXXXX:

Re: Technical Interpretation Request: Medical Expense

This is in reply to your letter of October 27, 2003 wherein you requested our comments on whether the cost of a central vacuum cleaner and the cost of hardwood flooring would qualify for the medical expense tax credit.

Your letter, and the letter from XXXXXXXXXX, explain that your child suffers from asthma and environmental allergies. The central vacuum and hardwood flooring, which replaced carpet, were purchased in order to maintain as hypoallergenic environment as possible to minimize the causes of asthma and allergic reactions.

Written confirmation of the tax consequences inherent in a particular transaction or series of transactions is' given by this Directorate only where the transaction(s) are proposed and are the subject matter of an advance ruling request submitted in the manner set out in Information Circular 70-6R5. However, we are prepared to provide the following comments.

Our Comments

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. Subsection 118.2(2) of the Act contains a list of expenditures that qualify as medical expenses. The relevant paragraphs of section 118.2 are discussed below.

Under paragraph 118.2(2)(m) of the Act, a payment in respect of prescribed medical devices and equipment may qualify as a medical expense if certain conditions are met. Generally, to qualify, the device or equipment must be prescribed by a medical practitioner and included in the list of qualifying medical devices or equipment described in section 5700 of the Income Tax Regulations (the "Regulations"). As a central vacuum is not listed in section 5700 of the Regulations as a medical device or equipment, the cost of purchasing such a unit does not qualify as a medical expense under paragraph 118.2(2)(m) of the Act.

In respect of the hardwood floors, paragraph 118.2(2)(l.2) of the Act is applicable. This provision includes as qualifying medical expenses, amounts expended:

... for reasonable expenses relating to renovations or alterations to a dwelling of the patient who lacks normal physical development or has a severe and prolonged mobility impairment, to enable the patient to gain access to, or to be mobile or functional within, the dwelling ...

Therefore, there are four criteria to be met in order for medical expenses to qualify under paragraph 118.2(2)(l.2) of the Act. First, the expense must be reasonable. Second, the expense must be for renovations or alterations to a dwelling. Third, the individual for whom the renovations are made must be someone who either (a) lacks normal physical development; or (b) has a severe and prolonged mobility impairment. Finally, the expense must have been incurred to either enable the patient to gain access to, or be mobile or functional within the dwelling.

Recent decisions of the Tax Court of Canada (see Motkoski v The Queen, 2003 TCC 40; Seely v The Queen, 2003 TCC 342) have accepted that renovations made to a home to accommodate a person suffering from asthma and environmental allergies could satisfy the four criteria outlined above. However, it is our understanding that there are varying degrees of asthma and environmental allergies and that it is only the more severe forms of the disorders that could qualify. The claim would have to be supported by a recommendation from a medical practitioner that the renovation costs were incurred to enable a person suffering from a severe and prolonged mobility impairment to be more mobile or functional within the dwelling. Whether a particular expense is reasonable is a question of fact that must be determined on a case-by-case basis.

If you require further assistance in determining whether the renovations would qualify as medical expenses, you may wish to call or visit the XXXXXXXXXX Tax Services office. We trust you will find the above to be of assistance.

Yours truly,

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

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