7 February 2005 External T.I. 2004-0101491E5 - Medical Expenses-Home Renovations

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: Consider whether the expenses incurred by the taxpayer qualify as a medical expense under 118.2(2) of the Income Tax Act.

Position: Question of Fact. General comments provided.

Reasons: Legislation and Jurisprudence. The claim would have to be supported by a recommendation from a medical practitioner that the renovation costs were incurred to enable a person who lacks normal physical development to be more functional within the dwelling.

2004-010149
XXXXXXXXXX Luisa A. Majerus, CA
(613) 957-2138
February 7, 2005

Dear XXXXXXXXXX:

Re: Medical Expenses - Home Renovations

This is in reply to your facsimile dated November 3, 2004, requesting our views on whether expenses incurred qualify as medical expenses under the Income Tax Act (the "Act"). Specifically, you have made changes to your home to enable your son to function in your home. Your son has asthma and requires the use of medication on a regular basis. Your son's paediatrician has recommended the elimination of pets and dust in your home and the control of other environmental factors including mould.

The specific changes made to your home include:

1) Removal of carpet and installation of laminate or linoleum flooring;

2) Closing of the heat register and installing a baseboard heater; and

3) Usage of high quality furnace filters.

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 offer the following general comments.

Section 118.2 of 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"). Baseboard heaters and furnace filters are not included in the list of qualifying medical devices or equipment described in section 5700 of the Regulations.

Under paragraph 118.2(2)(l.2) of the Act, a reasonable expense relating to renovations or alterations to a dwelling of a patient who lacks normal physical development, to enable the patient to be functional within the dwelling will qualify as a medical expense. There are four criteria to be met in order for medical expenses to qualify under paragraph 118.2(2)(l.2) of the Act:

1. The expense must be reasonable;

2. The expense must be for renovations or alterations to a dwelling;

3. 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; and

4. The expense must have been incurred to either enable the patient to gain access to, or be 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. The removal of carpet and installation of laminate or linoleum flooring in your home could be considered a renovation or alteration to a dwelling. However, based on recent decisions of the Tax Court of Canada that have addressed the third condition, it will have to be shown that a person suffering from asthma and environmental allergies lacks normal physical development. 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 who lacks normal physical development to be more functional within the dwelling. The letter from your son's doctor included with your correspondence does not contain such a recommendation.

We trust this information is helpful.

Yours truly,

John Oulton, CA
For Director
Business and Partnerships Division
Income Tax Rulings Directorate
Policy and Planning Branch