19 May 2009 External T.I. 2009-0319341E5 - Stem cell therapy not available in Canada

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: Will the cost of stem cell therapy not available in Canada qualify for the METC.

Position: Question of fact, but likely yes.

Reasons: Amounts paid to a medical practitioner or a licensed private hospital qualify as a medical expense under paragraph 118.2(2)(a) of the Act. Also, transportation expenses to travel not less than 40 km to obtain medical services qualify under paragraph 118.2(2)(g) of the Act and other travel expenses qualify under paragraph 118.2(2)(h) of the Act if the individual travels not less than 80 km to obtain medical services and it is reasonable for the individual to have done so, the route taken was reasonably direct and substantially equivalent medical services were not available in the individual's locality.

XXXXXXXXXX 2009-031934
Rob Ferrari
May 19, 2009

Dear XXXXXXXXXX :

Re: Stem Cell Therapy

We are replying to your letter dated April 21, 2009, concerning the cost of stem cell therapy, which is currently not available in Canada, for a degenerative neuromuscular disease. You will incur costs for travel, hospitalization and the procedure and you ask whether these amounts would qualify for the medical expense tax credit ("METC").

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 an advance income tax ruling request submitted in the manner set out in Information Circular 70-6R5, Advance Income Tax Rulings. Further, since it is a question of fact whether particular expenses qualify for the METC, a review of the receipts and other supporting documentation would be required. Such reviews are normally undertaken by the Canada Revenue Agency (the "CRA") after the initial processing of the particular income tax returns. Nonetheless, we have provided some general comments that may be helpful. If you have any additional questions, you should contact your local tax services office for assistance.

Payments to Medical Practitioners and Hospitals

Amounts paid by an individual to a "medical practitioner" or to a "public or licensed private hospital" to obtain medical services qualify as medical expenses for the METC pursuant to paragraph 118.2(2)(a) of the Act. The term medical practitioner can include individuals such as a medical doctor, dentist, pharmacist, nurse or optometrist provided that he or she is authorized to practice in the stated profession according to the laws of the jurisdiction in which the service is rendered, whereas "licensed private hospital" means licensed by the jurisdiction in which the hospital operates. The fact that the jurisdiction is outside Canada would not be relevant in applying these definitions.

Pursuant to paragraph 118.2(2)(o) of the Act, qualifying medical expenses include amounts paid for laboratory, radiological or other diagnostic procedures or services, with necessary interpretations, for maintaining health, preventing disease or assisting in the diagnosis or treatment of an injury, illness, or disability as prescribed by a medical practitioner. Qualifying medical expenses can be in respect of amounts paid to persons or for services received either within, or outside of Canada.

Transportation and Travel 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. Also, other travel expenses (e.g. amounts expended for meals and accommodation for a patient and, where an individual has been certified as being incapable of travelling alone, for an accompanying individual) qualify for the METC 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 only if 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 him or herself and it is reasonable, having regard to the circumstances, for the individual to have travelled to that place for medical services.

It is our view that the requirement in (iii) may be met even if medical services are available nearer to the individual's locality if, in the circumstances, it is reasonable for the individual to have travelled to the place where the medical services were obtained.

Based on the information you provided, it is our view that the cost of the stem cell therapy, including the cost of travelling to the location where the treatment is received, would likely qualify for the METC. This assumes that the route taken by you to that location was reasonably direct and the payments for stem cell therapy were made to a medical practitioner or to a public or licensed private hospital.

Yours truly,

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