7 June 2005 External T.I. 2005-0126661E5 - Medical exp. tax credit-learning disability

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: Do various expenses incurred qualify as medical expenses for purposes of the medical expense tax credit in section 118.2 of the Act?

Position: Some appear to qualify, some do not appear to qualify and others require more information, which determinations should be made by the taxpayer's Tax Services Office.

Reasons: General comments provided. Correspondence referred to the TSO.

2005-012666
XXXXXXXXXX Renée Shields
(613) 948-5273
June 7, 2005

Dear XXXXXXXXXX:

Re: Medical Expense Tax Credit

This is in response to your letter of April 21, 2005 inquiring whether various expenses incurred with respect to your son qualify as medical expenses for purposes of the medical expense tax credit.

The Income Tax Rulings Directorate provides binding comments only with respect to proposed transactions and only in the context of an advance income tax ruling. Information about this service is available in Information Circular 70-6R5, "Advanced Income Tax Rulings, dated May 17, 2002. This Information Circular and other Canada Revenue Agency ("CRA") publications can be accessed on the internet at http://www.cra.gc.ca.

We note that your inquiry clearly relates to a specific situation and completed transactions, which means that all relevant facts and documentation should be submitted to the appropriate Tax Services Office ("TSO") for their views. We have taken the liberty of forwarding your correspondence and a copy of our reply to the XXXXXXXXXX TSO for their consideration. They will likely require additional information in order to complete their review. Although we cannot comment on your specific situation, we are prepared to provide the following general comments, which may be of assistance.

The CRA's general views regarding the medical expense tax credit are contained in Interpretation Bulletin IT-519R2, Medical Expense and Disability Tax Credits and Attendant Care Expense Deduction. The expenditures for which you seek approval as medical expenses can be grouped into various categories, which we will discuss below.

Tuition

Where, due to a physical or mental handicap, an individual is certified to require specialized care or care and training at a school or institution, paragraph 118.2(2)(e) of the Income Tax Act (the "Act") considers the costs of such care and/or training to be medical expenses. The CRA recognizes that an individual suffering from a behavioural problem arising out of a mental or physical impairment or suffering from a learning disability who attends a school that specializes in the care and training of persons who have the same type of problem or disability is considered to qualify under paragraph 118.2(2)(e) of the Act.

Generally speaking, whether fees paid to a particular school qualify as a medical expense depends on whether the school and the individual meet the requirements of paragraph 118.2(2)(e) of the Act. In this regard, certain basic requirements must be met:

1) The student must be suffering from a physical or mental handicap, the severity of which is such that the student requires the equipment, facilities or personnel specially provided by the school, and which is not available in the public school system. The severity of the student's disabilities must be such that the student "requires" the specialized equipment, facilities or personnel provided by the school and not merely that the student will "benefit from" such equipment, facilities or personnel.

2) An appropriately qualified person must certify that the above conditions are met with respect to the individual receiving the care at that place. This certification is usually carried out by a medical practitioner, but is not restricted to such professionals. Generally, the certificate should include specific identification of the equipment, facilities or trained professionals required to adequately provide care, or care and training, for the individual.

3) The CRA must be satisfied that the equipment, facilities or personnel provided by a particular place meets the requirements outlined by the medical practitioner.

The recommendations made in your son's psychoeducational assessment indicate that "XXXXXXXXXX". [emphasis added] Given that there is no indication that XXXXXXXXXX actually requires special intervention, only a vague description of the proposed care/training and no indication that XXXXXXXXXX meets these needs, it will be a question of fact whether this comment adequately provides the certification described in (1), above. If so, additional details would be required to ascertain whether XXXXXXXXXX provides the particular educational specialization required. We therefore cannot express any opinion as to whether the fees paid to this school qualify as medical expense.

Payments to medical practitioners

An amount paid to a medical practitioner or to a public or licensed private hospital in respect of medical services qualifies as a medical expense under paragraph 118.2(2)(a) of the Act. Paragraph 3 of IT-519R2 describes what is meant by the term "medical practitioner." Generally speaking, a medical practitioner is someone authorized to practice in a particular medical capacity by the laws of the relevant jurisdiction.

It would appear that the cost of the visual assessment performed by XXXXXXXXXX, an optometrist, fits within this category of medical expenses. Paragraph 20 of IT-519R2 confirms that payments made to partnerships, societies and associations for medical services rendered by their employees or partners are qualifying medical expenses as long as the person who provided the service is a medical practitioner. Accordingly, since it was an audiologist certified by the CASLPO who performed the auditory assessment at the Hearing Health Centre, the cost appears to qualify as a medical expense.

The Hearing Health Centre also offered the interactive metronome program in which you enrolled your son. However, it is not clear what this program entails or if it is provided by a medical practitioner in order to be eligible under paragraph 118.2(2)(a) of the Act as described above. Additional information would be required in this regard. In our view, the comment in the audiologist's report regarding the program falls short of the certification required by paragraph 118.2(2)(e) of the Act for expenses related to care and/or training at a school, institution or other place, as described above.

An additional expense you incurred was the cost of a social skills program offered by the XXXXXXXXXX. Although nothing in your materials indicates that an amount was paid to a medical practitioner for purposes of paragraph 118.2(2)(a) of the Act, this determination would be a question of fact for the TSO to explore. They may also consider whether the facts support viewing the payment as one that fits within the above-described care and training category of expenses in paragraph 118.2(2)(e) of the Act.

Payments to other persons

You have requested confirmation that the costs incurred for a tutor from June to the end of December would qualify as a medical expense. While paragraph 118.2(2)(l.91) of the Act recognizes that such costs may be medical expenses, certain conditions must be met. In particular:

1) The amount must be paid as remuneration for tutoring services;

2) The tutoring services must be rendered to, and be supplementary to the primary education of, the patient who

(A) has a learning disability or a mental impairment, and

(B) has been certified in writing by a medical practitioner to be a person who, because of that disability or impairment, requires those services; and

3) The payment must have been made to a person ordinarily engaged in the business of providing such services to individuals who are not related to the payee.

XXXXXXXXXX psychoeducational assessment report states "XXXXXXXXXX". It is not clear whether this recommendation constitutes certification that XXXXXXXXXX requires tutoring or would merely benefit from tutoring as indeed would many students. In any event, the recommendation appears to apply only to summer tutoring which we feel would be a relevant consideration.

Your letter also indicates that you retained the services of an education consultant to find a school for your son. This individual does not appear to qualify as a medical practitioner. Nor do the fees for her services fit within any of the other categories of recognized medical expenses.

Prescribed medical devices and equipment

Paragraph 118.2(2)(m) of the Act allows for the inclusion of the cost of prescribed medical devices and equipment 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.

You have requested confirmation that an audio books membership qualifies as a medical expense. We note that paragraph 5700(w) of the Regulations includes as a prescribed medical device a "talking textbook prescribed by a medical practitioner for use by an individual with a perceptual disability, in connection with the individual's enrolment at an educational institution in Canada."

The TSO would have to determine whether the expense incurred in fact relates to acquiring textbooks required by your son's school, pursuant to a prescription by a medical practitioner in connection with a perceptual disability. In our view the comment in the optometrist's assessment is not conclusive in this regard.

Your submission also references the acquisition of "Infinite Mind" software. This product does not appear to fit within the description of any items described in section 5700 of the Regulations, and as such, cannot qualify as a prescribed medical device.

Transportation

Travel costs incurred to obtain medical services may be included as medical expenses if they fit within either paragraph 118.2(2)(g) or (h) of the Act. An amount paid to a person engaged in the business of providing transportation services to transport an individual not less than 40 kilometres from the locality where the individual resides to a place where medical services are received may qualify as a medical expense under paragraph 118.2(2)(g) of the Act. Similarly, other travel expenses may qualify as medical expenses under paragraph 118.2(2)(h) of the Act if the individual travels not less than 80 kilometres from the locality where the individual dwells to a place where medical services are received.

An individual is entitled to claim transportation and travel expenses under paragraphs 118.2(2)(g) and (h) only if the following requirements are met:

1) substantially equivalent medical services were not available in the individual's locality,

2) a reasonably direct travelling route was taken by the individual, and

3) the individual travelled to the particular place to obtain medical services for himself or herself and it is reasonable, having regard to the circumstances, for the individual to have travelled to that place for medical services.

Your submission merely indicates that $XXXXXXXXXX was expended as costs for transportation to and from assessment, therapy and tutoring sessions. No further details or substantiation of the travel expenses has been provided, so it is not possible for us to provide you with confirmation. The TSO is better placed to determine whether the amount indicated would be eligible for inclusion as a medical expense.

We trust that these comments will be of assistance.

Yours truly,

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