13 June 2012 External T.I. 2012-0448781E5 - METC - Walk-in bathtub and high toilet

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 costs incurred to install a walk-in bathtub and a high toilet qualify as a medical expense for purposes of the METC.

Position: General information provided.

Reasons: The requester did not provide sufficient information.

XXXXXXXXXX
				2012-044878

June 13, 2012

Dear XXXXXXXXXX:

Re: Medical Expense Tax Credit

We are writing in reply to your letter dated May 17, 2012, wherein you enquire whether the cost of installing a walk-in bathtub and a high toilet would qualify as an eligible medical expense for the purposes of the medical expense tax credit (“METC”) in respect of an individual who has back problems and had a knee replacement.

Our Comments

Medical expenses which are eligible for the METC are limited to those described in subsection 118.2(2) of the Income Tax Act (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.

Paragraph 118.2(2)(l.2) of the Act provides for reasonable expenses relating to renovations or alterations to a dwelling of the patient who lacks normal physical development or has a severe and prolonged mobility impairment, to enable the patient to gain access to, or to be mobile or functional within, the dwelling.

Paragraph 118.2(2)(l.2) provides that such costs are eligible as medical expenses for purposes of the METC provided the expenses:

(i) are not of a type that would typically be expected to increase the value of the dwelling, and
(ii) are of a type that would not normally be incurred by persons who have normal physical development or who do not have a severe and prolonged mobility impairment.

The provisions in subparagraphs 118.2(2)(l.2)(i) and 118.2(2)(l.2)(ii) were added as part of a legislative amendment that was announced in the 2005 Federal Budget Supplementary Information. The latter clarified the METC measures regarding the eligibility of home renovation expenses as follows:

“...recent court decisions have interpreted these measures to apply more broadly, most notably, to include, in some cases, the cost of hardwood floors or installing a hot tub. Such an expansion goes far beyond the policy intent of the METC because it subsidizes renovation expenses that increase the value of the home, and extends tax recognition to expenses with a substantial element of personal consumption and personal choice.”

The above-mentioned Budget information also clarified the type of renovations and alterations contemplated under paragraph 118.2(2)(l.2) of the Act to include such items as the cost of installing entrance and exit ramps, widening doorways, lowering shelves, modifying kitchen cabinets and moving electrical outlets.

The extent to which the costs are reasonable and have been incurred to permit an individual to be more functional within a dwelling involves a question of fact. Since you have not provided us with sufficient information, we are unable to determine whether the amounts paid to install a walk-in bathtub and a high toilet would qualify as an eligible medical expense for the purposes of the METC.

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