13 April 2005 External T.I. 2005-0115871E5 - Medical Expenses - Hydrotherapy Unit

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 home hydrotherapy unit qualifies qualify as medical expenses.

Position: No

Reasons: It is not described in subsection 118.2(2) or Regulation 5700.

XXXXXXXXXX 2005-011587
Shaun Harkin, CMA
April 13, 2005

Dear XXXXXXXXXX:

Re: Technical Interpretation Request: Deductibility of a home Hydrotherapy Unit

This is in reply to your letter of February 14, 2005 wherein you ask whether the cost of a home hydrotherapy unit (i.e. a home therapeutic spa) and the material required to reconstruct your dwelling to install it would be eligible for the medical expense tax credit.

Our Comments

Subsection 118.2(2) of the Income Tax Act (the "Act") provides a list of expenditures that qualify as medical expenses. 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. It is our view that a hot tub or a therapeutic spa is not included in the list of qualifying medical devices described in the Regulations, and, accordingly, an amount paid for a hot tub or a therapeutic spa would not qualify as a medical expense.

With respect to the installation of the hydrotherapy unit, the renovations would have to fall within the requirements of paragraph 118.2(2)(l.2) of the Act to be qualified medical expenses. This provision allows 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.

For renovation costs incurred after February 22, 2005, the Federal Budget tabled on February 23, 2005 proposes amendments that further restrict the deductibility of such costs by requiring that the expenses meet the following additional requirements:

(a) be of a type that would not typically be incurred by persons who have normal physical development or who do not have a severe and prolonged mobility impairment; and

(b) not be of a type that would typically be expected to increase the value of the dwelling.

In our view, the costs of renovations to accommodate a hydrotherapy unit would only qualify as medical expenses if they were incurred before February 23, 2005, and if it could clearly be established that the renovations were necessary to enable a person who lacks normal physical development, or has a severe and prolonged mobility impairment, to gain access to, or be mobile or functional within the dwelling.

Written confirmation of the tax consequences inherent in a particular transaction or series of transactions are 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.

We trust our comments will be of some assistance.

Yours truly,

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

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