23 November 2009 External T.I. 2009-0346431E5 - Nursing Home

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 facility qualifies as a nursing home.

Position: Likely yes.

Reasons: The facility appears to provide a sufficient level of care and attendance by qualified medical personnel.

XXXXXXXXXX 								2009-034643

November 23, 2009

Dear XXXXXXXXXX :

Re: Meaning of "Nursing Home"

Our Comments

This is in response to your letter of November 11, 2009 inquiring about whether XXXXXXXXXX qualifies as a "nursing home" for purposes of subsection 118.2(2) of the Income Tax Act (the "Act").

In your letter, you have described XXXXXXXXXX as follows: XXXXXXXXXX is licensed in the Province of XXXXXXXXXX as a long-term care facility. Most residents suffer a level of dementia. The nursing care that XXXXXXXXXX provides is 24 hours per day and is provided by qualified personnel. The care provided is all encompassing and most residents are dependent on the staff to provide assistance with activities of daily living, including eating, mobility, dressing, grooming, bathing, and their personal hygiene. In addition, XXXXXXXXXX is also responsible for administering and monitoring medications, management of petty cash funds, monitoring adherence to specific nutritional needs of the resident, behavior management and intervention and providing psychosocial and physical rehabilitative therapies to its residents.

Our Comments

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. Although we cannot comment on your specific situation, 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.

Qualifying medical expenses that qualify for the medical expense tax credit ("METC") are described in detail in subsection 118.2(2) of the Act. Reference may also be made to Interpretation Bulletin IT-519R2 (Consolidated), "Medical Expense and Disability Tax Credits and Attendant Care Expense Deduction," which contains a description of the most common medical expenses. This bulletin can be accessed on our website.

Since the term "nursing home" is not defined in the Act, we rely on the ordinary meaning of the term in determining if a particular facility qualifies as a nursing home. Generally, we consider a nursing home to be an establishment that provides full-time maintenance or nursing care for persons (e.g., the aged or chronically ill) who are unable to care for themselves. While we accept that a particular place need not be a licensed nursing home, we are of the view that it must have the equivalent features and characteristics of a nursing home. For example, a nursing home is normally a facility of a public character that offers 24-hour nursing care to individuals who are not related to the facility owner/operator.

Based on the information you have provided, it appears that the facility provides a sufficient level of care and attendance by qualified medical personnel in order qualify as a "nursing home" for the purposes of the METC.

Yours truly,

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