14 November 2007 External T.I. 2007-0255831E5 - Medical expenses,travel & lodging,heart transplant

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: Patient & spouse travelled 400 km for heart transplant; rented basic studio condo near hospital for 3 mths. Asked whether vehicle, food & lodging expenses qualify as a medical expenses and whether flat per km and per meal rates can be used without receipts.

Position: Yes and yes.

Reasons: Post-operative treatment at that hospital was required every few days/every week; frequent travel was unadvisable given health risks.

								2007-025583
XXXXXXXXXX 							Amanda Riddell, LL.B
(613) 957-2128
November 14, 2007

Dear XXXXXXXXXX:

RE: Medical Expenses - Travel and Lodging Expenses

This is in reply to your letter of October 8, 2007 regarding the medical expense tax credit.

You advised us that in 2007 you and your spouse travelled from your home in XXXXXXXXXX to XXXXXXXXXX, for the purpose of receiving a heart transplant at XXXXXXXXXX Hospital. You have requested our views on whether your lodging expenses in XXXXXXXXXX qualify as a medical expense. An accompanying letter from XXXXXXXXXX Hospital indicated that you rented a basic apartment type studio condominium near the hospital for three months and that it was necessary for you to stay close to the hospital for that period to facilitate the frequent post-operative testing, monitoring and physiotherapy. The XXXXXXXXXX letter also stated that it would be impractical and unadvisable given your post-surgery condition and susceptibility to infections to engage in frequent travel between XXXXXXXXXX and XXXXXXXXXX.

You also asked whether you and your spouse are entitled to use flat per kilometre and per meal rates to calculate your vehicle and food expenses.

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 our 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-line at www.cra.gc.ca.

Our Comments:

The CRA's general views regarding the medical expense tax credit are contained in our Interpretation Bulletin IT-519R2, Medical Expense and Disability Tax Credits and Attendant Care Expense Deduction (copy attached). Section 118.2 of the Income Tax Act (the "Act") provides rules for determining the amount that may be claimed, as a tax credit, in respect of medical expenses. Subsection 118.2(2) of the Act contains a list of expenditures that qualify as medical expenses.

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. Other reasonable travel expenses (including vehicle, food and lodging 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. Transportation and travel expenses for an accompanying individual may qualify under paragraphs 118.2(2)(g) and (h) of the Act, but only if the patient has been certified by a medical practitioner as being incapable of travelling alone.

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

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

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

iii) 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.

Reasonable travel, board and lodging expenses (other than expenses described in paragraphs 118.2(2)(g) and (h)) paid for the patient in respect of the transplant also qualify under paragraph 118.2(2)(l.1) as do any such expenses in respect of the transplant that are paid for one other person who accompanies the patient.

Expenses meeting the criteria under paragraphs 118.2(2)(g), (h) and (l.1) are generally allowed to the extent that they are reasonable and there is no reason to preclude their deduction (for example, if an insurance company were to reimburse the expenses). Either you or your spouse may claim the medical expenses, or you may allocate the expenses between you.

To calculate meal and vehicle expenses, either the detailed or simplified method can be used. The simplified method, which is described in paragraph 34 of IT-519R2, employs flat per meal and per kilometre rates. The flat rates are available on the CRA website at www.cra-arc.gc.ca/travelcosts (printed copy attached). The rates for 2007 will be available in 2008. Accommodation expenses must be substantiated by receipts and the individual claiming the medical expense tax credit must be able to demonstrate that the amounts qualify as medical expenses. For example, the individual may have to show that an amount paid for lodging is necessary as a result of the distance travelled or the condition of the patient for travel.

Based on the limited information provided to us, it appears that your travel and lodging expenses qualify as medical expenses. 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

Encl.