10 February 2005 External T.I. 2004-0106591E5 - Medical expenses

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: The eligibility of certain items as qualifying medical expenses if prescribed by a medical practitioner.

Position: General comments provided.

Reasons: The determination is one of fact.

Bob Naufal, CMA
XXXXXXXXXX (613) 952-1506
2004-010659
February 10, 2005

Dear XXXXXXXXXX:

Re: Medical expenses - drugs and medicaments

We are writing in response to your emails of December 8, 2004 and December 23, 2004 wherein you asked for our comments on the eligibility of certain items as qualifying medical expenses for purposes of the medical expense tax credit. Specifically, you have asked if an amount paid for the following items would qualify as a medical expense, if a medical practitioner prescribed them:

Contact Lens Care Products
Contact Lens Evaluations
Contact Lens Instructions
Diagnostic Aids
Diet Products
Milk Intolerance Agents
Lozenges
Mouthwashes
Non-medicated shampoos
Hair Growth stimulants
Salt Substitutes
Skin cleansers, including soap
Sugar substitutes
Infant foods (baby formula)
Skin protective and emollients
Surgical supplies
Toothpaste
Medicinal soaps
Cosmetic items
Homeopathic medicine

In your emails, you have indicated that these items have a Drug Identification Number.

Our comments

Written confirmation of the tax implications inherent in particular transactions are given by this Directorate only where the transactions are proposed and are the subject matter of an advance ruling request submitted in the manner set out in Information Circular 70-6R5, dated May 17, 2002. While we are unable to provide you with definitive comments with respect to the items listed above, we are prepared to provide you with the following general comments, which may assist you in making the determination.

Subsection 118.2(2) of the Income Tax Act (Canada) (the "Act") defines the expenses that qualify for the medical expense tax credit. For purposes of addressing your specific questions, we will discuss the relevant provisions that may apply.

Medical practitioners and pharmacists

Certain provisions in subsection 118.2(2) refer to "medical practitioner" or "pharmacist", as the case may be. In general terms, a medical practitioner or pharmacist is a person who is authorized by a province or other jurisdiction to practise as such. In our view, a person is authorized by a province or other jurisdiction to practise as a medical practitioner or pharmacist if there is specific legislation that enables, permits or empowers the person to practise as such. For example, a reference to a "pharmacist" refers to a person who is licensed to practise as a pharmacist under the laws of a province or territory.

Medical and dental services

Pursuant to paragraph 118.2(2)(a) of the Act, 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 this regard, 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. Similarly, a dental service generally relates to the treatment of an individual's teeth.

Drugs, medicaments and other preparation or substances

Subsection 118.2(2) of the Act includes three provisions describing the types of drugs, medicaments and other preparations that may qualify as medical expenses. These are:

(a) drugs, medicaments or other preparations or substances, that are prescribed by a medical practitioner, and purchased from a pharmacist who records the prescription in a prescription record, pursuant to paragraph 118.2(2)(n);

(b) insulin, oxygen and liver extract injectible for pernicious anaemia and vitamin B12 for pernicious anaemia, that are prescribed by a medical practitioner, but which a pharmacy or any other type of store may sell without a written prescription, pursuant to paragraph 118.2(2)(k); and

(c) the incremental cost of gluten-free food products, as compared to the cost of comparable non-gluten-free food products, if the patient has been certified in writing by a medical practitioner to be a person who, because of celiac disease, requires a gluten-free diet, pursuant to paragraph 118.2(2)(r).

Moreover, in order for the amounts described in (a) above to qualify as medical expenses, they must be manufactured, sold or represented for use in:

(i) the diagnosis, treatment or prevention of a disease, disorder or abnormal physical state, or

(ii) the treatment of the symptoms of a disease, disorder or abnormal physical state, or

(iii) restoring, correcting or modifying an organic function

The requirements of paragraph 118.2(2)(n) set out above do not preclude claims in respect of drugs and other substances, including vitamins and minerals, which also happen to be available over the counter without a prescription. In our view the cost of the drug or substances described above would only qualify as a medical expense if they were prescribed by a medical practitioner, meet the criteria described in the previous paragraph, and are dispensed by a licensed pharmacist who records the prescription in a prescription record in accordance with the relevant provincial legislation governing such professions. Moreover, it is our view that cash register receipts normally issued for over the counter drug purchases would not adequately support medical expense claims under subsection 118.2(2)(n) of the Act.

Prescribed medical devices and equipment

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, included in the list of qualifying medical devices or equipment described in section 5700 of the Income Tax Regulations (the "Regulations"), and meet such conditions as are applicable to its use or as to the reason for its acquisition. In this regard, Appendix A of Interpretation Bulletin, IT-519R2, Medical Expense and Disability Tax Credits and Attendant Care Expense Deduction, available on our Web site at

www.cra-arc.gc.ca contains the list of prescribed medical devices and equipment that qualify for this purpose.

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

While we are unable to provide more definitive comments with respect to the items described in your letter, we trust our comments will be of some assistance.

Yours truly,

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