23 April 2012 External T.I. 2012-0444341E5 - medical expenses - residential treatment center

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 amounts paid to a residential treatment center would
be considered to be a medical expense?

Position: Question of fact. General comments provided.

Reasons: The law.

XXXXXXXXXX 

							2012-044434

April 23, 2012

Dear XXXXXXXXXX :

We are writing in response to your email of April 16, 2012, inquiring about medical
expenses.

In particular, you indicate that your XXXXXXXXXX-year old daughter has Attention
Deficit Hyperactivity Disorder (“ADHD”). You are enquiring about whether the cost of
attending a residential treatment center in another city would qualify as an eligible
medical expense for purposes of the medical expense tax credit ("METC"). It appears that
the residential treatment center in question provides medical care and counseling for
participants.

Written confirmation of the tax consequences that apply to a particular fact situation is
given by this Directorate only in the context of an advanced income tax ruling request
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 publications can be accessed on the CRA Web site at www.cra-arc.gc.ca.
However, we are prepared to provide the following general comments, which may be of
assistance.

Our Comments

Medical Services:

Medical expenses which are eligible for the METC are limited to those described in
subsection 118.2(2) of the Act. If a particular expenditure is not described as an eligible
medical expense in subsection 118.2(2) of the Act, or if the conditions under which the
expenditure would qualify are not met, the expenditure does not qualify for purposes of
the METC, even though the expenditure may have been incurred for medical reasons.

School, Institution or Other Place:

There are two requirements that must be met in order for fees paid to a school, institution
or other place to qualify as a medical expense under paragraph 118.2(2)(e) of the Act in
respect of an individual who receives care and training at that place:

a) the individual must be suffering from a physical or mental handicap, the severity of
which is such that the person requires the equipment, facilities or personnel specially
provided by the school, institution or other place; and,
b) an appropriately qualified person must certify that the above conditions are met with
respect to the individual receiving the care at that place.

This certification is usually carried out by a medical practitioner, but is not restricted to
such professionals. Generally, a written certificate provided by an appropriately qualified
person at the institution should include a description of the equipment, facilities or trained
professionals required to adequately provide care, or care and training, for the individual.
In addition, the Canada Revenue Agency must be satisfied that the equipment, facilities
or personnel provided by a particular place meet this description.

Paragraph 29 of the current version of Interpretation Bulletin IT-519, Medical Expense
and Disability Tax Credits and Attendant Care Expenses Deduction, indicates that, for
purposes of paragraph 118.2(2)(e), "other place" may include an out-patient clinic. An
"appropriately qualified person" includes a medical practitioner as well as any other
person who has been given the required certification powers under the law in that
jurisdiction. A patient suffering from a behavioral problem arising out of a mental or
physical handicap who attends a school, institution or other place that specializes in the
care and training of persons who have the same type of handicap is considered to qualify
under paragraph 118.2(2)(e), and the expenses paid for the patient are qualifying medical
expenses.

While the medical care at a residential treatment center need not be full time, it must be
stressed that the equipment, facilities or personnel specially provided by the "other place"
must be specifically tailored for the care of persons suffering from the physical or mental
handicap in question and that the other conditions set out above must be met, for the fees
to qualify as medical expenses under paragraph 118.2(2)(e) of the Act.

Dependant:

In general, an individual may claim the METC in respect of eligible medical expenses
incurred in respect of the individual, the individual's spouse, the individual's common-law
partner, a child of the individual who is under 18 years of age, or a dependant of the
individual (referred to below as the "patient"). For the purposes of the METC, a
"dependant" of an individual for a taxation year means a person who at any time in the
year is dependent on the individual for support and is (a) the child (who is 18 years of age
or older) or grandchild of the individual or of the individual's spouse or common-law
partner or (b) the parent, grandparent, brother, sister, uncle, aunt, niece or nephew, if
resident in Canada at any time in the year, of the individual or of the individual's spouse
or common-law partner. The individual may only claim the eligible medical expenses in
respect of the dependant that exceed the lesser of 3 per cent of the dependant's income for
the year and an indexed dollar threshold.

Travel Expenses:

Under paragraph 118.2(2)(g) of the Act, an individual may claim as an eligible medical
expense an amount paid to a person engaged in the business of providing transportation
services, to the extent that the payment is made for the transportation of

(i) the patient, and
(ii) one individual who accompanied the patient, where the patient was, and has been
certified by a medical practitioner to be, incapable of travelling without the assistance of
an attendant from the locality where the patient dwells to a place, not less than 40
kilometres from that locality, where medical services are normally provided, or from that
place to that locality, if
(iii) substantially equivalent medical services are not available in that locality,
(iv) the route travelled by the patient is, having regard to the circumstances, a reasonably
direct route, and
(v) the patient travels to that place to obtain medical services for himself or herself and it
is reasonable, having regard to the circumstances, for the patient to travel to that place to
obtain those services.

In addition, under paragraph 118.2(2)(h) of the Act, an individual may claim an amount
paid for reasonable travel expenses (for example, accommodation and meals) incurred in
respect of the patient and, where the patient was, and has been certified by a medical
practitioner to be, incapable of travelling without the assistance of an attendant, in respect
of one individual who accompanied the patient, to obtain medical services in a place that
is not less than 80 kilometres from the locality where the patient dwells if the
circumstances described in subparagraphs (g)(iii), (iv) and (v) above apply.

We trust that these comments will be of assistance.

Yours truly,

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