7 May 2007 External T.I. 2007-0226531E5 - Medical Expense - Dependant

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 costs associated with a parent's hospitalization would qualify as a medical expense for purposes of a child's medical expense tax credit.

Position: Depending on the facts and circumstances, the costs associated with a parent's hospitalization may qualify as a medical expense for purposes of a child's medical expense tax credit, subject to the constraints imposed in subsection 118.2(1).

Reasons: The medical expense tax credit for a dependent parent of the individual is determined by the formula, in subsection 118.2(1). This formula and the related legislation preclude certain costs, and further restrict a claim for a medical expense tax credit according to the formula articulated in this provision.

									2007-022653
XXXXXXXXXX 								J. Eckler
(416) 952-8930
May 7, 2007	

Dear XXXXXXXXXX:

Re: Medical Expenses - Dependant

We are writing in reply to your correspondence of March 7, 2007, regarding medical expenses.

In your correspondence, you ask whether the costs associated with your mother's hospitalization, which were not reimbursed to you or your siblings, would qualify as a medical expense for purposes of the medical expense tax credit. You indicate that your mother was visiting Canada when she was hospitalized. It is not clear whether your mother was a resident of Canada in the year the medical expenses were incurred.

The situation outlined in your letter appears to relate to a factual one, involving a specific taxpayer. It is not this Directorate's practice to comment on proposed transactions involving specific taxpayers other than in the form of an advanced income tax ruling. For more information about how to obtain a ruling, please refer to Information Circular 70-6R5, "Advanced Income Tax Rulings, dated May 17, 2002. This Information Circular and other CRA publications can be accessed on the internet at http://www.cra-arc.gc.ca. Since your situation involves a completed transaction, you should submit all relevant facts and documentation to the appropriate Tax Services Office ("TSO") for their views. A list of TSOs is available on the "Contact Us" page of the CRA website. Although we cannot comment on your specific situation, we are prepared to provide the following general comments, which may be of assistance.

Our Comments

The CRA's general views regarding the medical expense tax credit are contained in Interpretation Bulletin IT-519R2(Consolidated), Medical Expense and Disability Tax Credits and Attendant Care Expense Deduction. This is available on our Web site at www.cra-arc.gc.ca.

Section 118.2 of the Income Tax Act (the "Act") provides the rules for determining the amount that may be claimed, as a tax credit, in respect of medical expenses. The credit applies to qualifying medical expenses, in excess of defined limits, incurred in any 12-month period ending in the taxation year. Generally, an individual can claim medical expenses in respect of himself or herself and other specified persons, including a dependent parent of the individual. The medical expense tax credit for a dependent parent of the individual is determined by the formula, as set out in subsection 118.2(1) of the Act. This provision refers to subsection 118(6) for a definition of the word "dependant", which includes a dependent parent if the parent is resident in Canada at any time in the year.

For the 2006 taxation year, an individual is able to claim qualifying medical expenses paid on behalf of a dependent parent, within certain limits determined by the formula, in subsection 118.2(1). Paragraph 66 of IT-519R2 explains that certain reimbursements of medical expenses do not constitute qualifying medical expenses. The formula calculates a net amount determined as the qualifying medical expenses paid on behalf of a dependent parent that exceed the lesser of 3% of the dependent parent's net income for the taxation year and $1,926, up to a maximum of $10,000. You may wish to refer to the Guide entitled "Medical and Disability - Related Information" for additional information on this subject.

Your letter states that you and your siblings paid for some of your mother's hospitalization costs. Pursuant to the formula in subsection 118.2(1), for the purposes of calculating an individual's qualifying medical expenses in respect of a dependant, these medical expenses do not include amounts claimed by any other taxpayer for any taxation year, under this provision. It is possible for someone to be dependent on more than one person. Since the wording of subsection 118.2(1) of the Act refers to an "individual's medical expenses in respect of the dependant", it is also possible that more than one individual may have paid or incurred medical expenses in respect of a dependent individual. Accordingly, in certain circumstances, it is possible that more than one person may claim a portion of an allowable credit in those cases where the person in respect of whom the credit arose was in fact dependent upon more than one person for support.

With respect to whether you can claim the cost of your mother's medical expenses in excess of the amounts for which you were reimbursed, we do not have sufficient information to make this determination. If you want confirmation in this regard, you may refer the question, with copies of all relevant documents, to the Client Services Division of your local Tax Services Office.

We trust that these comments will be of assistance.

Yours truly

G. Moore
for Director
Business and Partnerships Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch