20 August 2009 External T.I. 2009-0314691E5 - Transplant Patient Expense Reimbursement Program

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: Are accommodation expense reimbursements made to certain organ transplant patients taxable for income tax purposes where the payment is to reduce the financial hardship associated with the requirement to relocate within a prescribed distance of a transplant hospital in order to be placed on a transplant waiting list or to receive a transplant?

Position: No.

Reasons: Payments are not income from a source for the purpose of paragraph 3(a) of the Income Tax Act. It is also our view that the payments would not be taxable under any other provision of the Act.

									2009-031469
XXXXXXXXXX 								Renee Sigouin
(613) 957-2128
August 20, 2009

Dear XXXXXXXXXX :

Re: Transplant Patient Expense Reimbursement Program

We are writing in response to your correspondence dated March 19, 2009 wherein you requested our comments regarding the taxation of payments received by eligible patients under the Ministry of Health and Long-Term Care ("MOHLTC") Transplant Patient Expense Reimbursement ("TPER") Program. We apologize for the delay in responding to your request.

You have advised that in order to be placed on a waiting list to access transplant and/or post-transplant care, heart, heart-lung and lung transplant patients (the "Patients") must indicate an ability to relocate within 2.5 hours driving distance of a transplant hospital (or other pre-determined travel threshold in accordance with hospital policy). This requirement is due primarily to the short viability time associated with the recovery and transplantation of hearts, heart-lungs and lungs. In order to reduce the financial hardship associated with these relocation requirements and to facilitate Patients' access to transplant services, the TPER Program has been established.

The TPER Program will reimburse eligible Patients for reasonable out-of-pocket accommodation expenses up to a maximum of $650 per month and up to a maximum of $7,800 over a twelve month period. Amounts received under the TPER program will only be paid in respect of actual accommodation expenses incurred by eligible Patients.

You have also advised that the TPER program may be extended to provide for the advance payment of accommodation expenses to eligible Patients (the "Advance Payments") who are on government social assistance and may not otherwise have the financial ability to relocate as required. In this instance, Patients would need to substantiate that accommodation costs were actually paid for after the corresponding advance payment was provided.

The MOHLTC will fund the TPER Program and be responsible for the TPER policy and eligibility requirements. The TPER Program will be administered by The Trillium Gift of Life Network ("Trillium"), which is established under the Trillium Gift of Life Network Act, R.S.O. 1990, as a corporation without share capital. Trillium will have the responsibility of verifying patient eligibility for reimbursement with the relevant transplant hospitals.

Written confirmation of the tax implications inherent in particular transactions is given by this Directorate only where the transactions are proposed and are the subject matter of a request for an advance income tax ruling submitted in the manner set out 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-arc.gc.ca. Where the particular transactions are complete, the inquiry should be addressed to the relevant tax services office, a list of which is available on the "Contact Us" page of the CRA website. We are prepared to provide the following comments in respect of the issues that you raised. Please note, however, that these comments are of a general nature only and are not binding on the CRA.

Within the scope of the information provided and described in the foregoing, it is our view that the TPER payments, including the Advance Payments, are not taxable for income tax purposes as they are not income from a source for purposes of paragraph 3(a) of the Income Tax Act (the "Act"). It is also our view that the TPER payments would not be taxable under any other provision of the Act.

We trust that these comments will be of assistance.

Yours truly,

Rob Ferrari
for Director
Business and Partnerships Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch