15 June 2004 External T.I. 2004-0072821E5 - Exam Fees Paid For A License To Practice Medicine

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: A medical doctor who immigrated to Canada is required to pay exam fees to obtain a licence to practice medicine in Canada. Are the exam fees an "eligible capital expenditure" for the business?

Position: Yes.

Reasons: Interpretation Bulletin IT-357R2, Expenses of Training, indicates that certain training costs that provide an enduring benefit to a taxpayer may be considered an eligible capital expenditure. Training costs would be considered to provide an enduring benefit to a taxpayer where they are incurred to obtain a new skill or qualification. This would include, for example, the costs incurred by a general medical practitioner to qualify as a specialist. On a similar basis, where an immigrant who is already a medical doctor incurs exam fees that are necessary to acquire a license to practice medicine in Canada, the exam fees would also qualify as an eligible capital expenditure.

XXXXXXXXXX Randy Hewlett, B. Comm.

2004-007282
June 15, 2004

Dear XXXXXXXXXX:

Re: Exam Fees Paid For A Licence To Practice Medicine

We are writing in response to your request of April 22, 2004, wherein you requested our opinion on the above-noted issue.

You indicated that you are a medical doctor who immigrated to Canada. In order to obtain your licence to practice medicine in Canada, you had to take examinations. You inquired whether the exam fees would be considered an "eligible capital expenditure" for your business.

Our Comments

Written confirmation of the tax implications inherent in particular transactions is given by this Directorate only where the transactions are proposed and are the subject matter of an advance income tax ruling request submitted in the manner set out in Information Circular 70-6R5, Advance Income Tax Rulings, dated May 17, 2002. Where the particular transactions are completed, the inquiry should be addressed to the relevant Tax Services Office. However, we are prepared to offer the following comments.

Interpretation Bulletin IT-143R3, Meaning of Eligible Capital Expenditure, discusses the meaning of the term "eligible capital expenditure". An eligible capital expenditure in respect of a business is generally a capital expenditure (i.e., an expenditure that results in an enduring benefit) that does not come within any of the capital cost allowance classes but rather goes into an eligible capital property pool. A percentage of the balance of the pool at the end of the year may be claimed as a deduction for the year. The term "eligible capital expenditure" is defined in subsection 14(5) of the Income Tax Act.

A number of intangible properties that are generally considered eligible capital expenditures are listed in IT-143R3, most notably goodwill. Interpretation Bulletin

IT-357R2, Expenses of Training, also indicates that certain training costs that provide an enduring benefit to a taxpayer may be considered an eligible capital expenditure. Training costs would be considered to provide an enduring benefit to a taxpayer where they are incurred to obtain a new skill or qualification. This would include, for example, the costs incurred by a general medical practitioner to qualify as a specialist. In our view, where an immigrant who is already a medical doctor incurs exam fees that are necessary to acquire a license to practice medicine in Canada, the exam fees would also qualify as an eligible capital expenditure.

We trust our comments are of assistance.

Yours truly,

Randy Hewlett, B.Comm.

for Director
Business and Partnerships Division
Income Tax Rulings Directorate
Policy and Planning Branch