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: Does a fee paid to a private health clinic as a "membership" or "access" fee qualify as a medical expense for purposes of the medical expense tax credit and the definition of "private health services plan"?
Reasons: The fee is paid for access to medical services rather than for medical services themselves. The fee is not being paid with respect to any existing medical condition or concern. The fee does not relate to any medical service actually provided by the clinic, as the individual must pay for such services on top of the membership fee paid.
XXXXXXXXXX Eliza Erskine
April 20, 2006
Re: Qualifying Medical Expenses - Membership Fee for Private Health Clinic
We are writing in reply to your letter of January 13, 2006, regarding the above-noted subject matter. You requested our comments on whether a membership fee paid to a private health clinic to allow an individual access to the clinic's services would be a qualifying medical expense for purposes of the medical expense tax credit and private health services plan provisions of the Income Tax Act (the "Act"). We also acknowledge our telephone conversation with you of March 9, 2006 (Maley/XXXXXXXXXX).
Written confirmation of the tax consequences relating to a particular transaction or series of 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, Advance Income Tax Rulings. However, we are prepared to provide 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. Paragraph 118.2(2)(a) of the Act provides that medical expenses include amounts paid to a medical practitioner, dentist or nurse or a public or licensed private hospital, in respect of medical or dental services. It is a question of fact whether a particular service qualifies as a "medical service" for purposes of this provision, however, we are of the view that, in any event, the service must relate to an existing medical condition or illness. The membership fee described in your letter and accompanying background information does not appear to relate to an existing medical condition or illness, rather, it allows an individual access to private medical services as and when required. Accordingly, in general terms, the membership fee does not qualify as a medical expense under paragraph 118.2(2)(a) of the Act.
We have also considered whether the membership fee can be said to relate to medical services actually rendered to the individual. However, while some or all of the services provided by the clinic might qualify as medical services, we understand from you that any medical services actually provided by the clinic are billed to the individual over and above the membership fee (unless the service is covered by provincial health insurance). Thus, the membership fee cannot be attributed to any particular medical service provided to an individual and would not qualify as a medical expense under subsection 118.2(2) of the Act or for purposes of the definition of "private health services plan".
The foregoing comments represent our general views with respect to the subject matter. As indicated in paragraph 22 of Information Circular 70-6R5, these comments do not constitute an income tax ruling and accordingly are not binding on the Canada Revenue Agency.
We trust that our comments are of assistance to you.
Partnerships and Health Section
Business and Partnerships Division
Income Tax Rulings Directorate
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