25 September 2012 External T.I. 2012-0463201E5 - medical expenses - sex reassignment surgery

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 cost of sexual reassignment surgery (and other related surgeries and travel costs) would qualify as a medical expense for purposes of the medical expense tax credit.

Position: Question of fact but likely yes.

Reasons: The requirements of paragraphs 118.2(2)(a), (g) and (h) would have to be met.

XXXXXXXXXX
2012-046320

September 25, 2012

Dear XXXXXXXXXX:

RE: Medical expenses

We are replying to your letter of September 16, 2012, concerning medical expenses.

In your letter, you indicate that you are undergoing treatment for Gender Dysphoria under the care of a psychiatrist and other physicians. You are asking whether the cost of sexual reassignment surgery, Chondrolaryngoplasty (Adam’s apple reduction), facial feminization surgery, and recovery clinic at a private clinic as well as related travel expenses would qualify as medical expenses for purposes of the medical expense tax credit. You are also asking whether the cost of laser hair removal would qualify as a medical expense.

Our Comments

Medical expenses

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), 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.

Pursuant to paragraph 118.2(2)(a) of the Act, an amount paid by an individual to a medical practitioner, a dentist or a nurse (a "medical practitioner") or to a public or private licensed hospital for medical services is a qualifying medical expense for the METC. A medical practitioner must be authorized to practice their particular profession according to the laws of the jurisdiction in which the service is rendered, whereas a licensed private hospital means licensed by the jurisdiction in which the hospital operates. A "medical service" means a service relating to the diagnosis, treatment or prevention of a disease or disorder performed by a medical practitioner acting within the scope of his or her professional training.

An amount qualifying under paragraph 118.2(2)(a) of the Act may be denied pursuant to subsection 118.2(2.1) of the Act if the service was provided purely for cosmetic purposes. In particular, this latter provision excludes from eligible medical expenses, an amount paid for medical or dental services, including any related expenses, which are provided purely for cosmetic purposes unless they are necessary for medical or reconstructive purposes.

It is a question of fact whether or not a medical or dental service is provided purely for cosmetic purposes and whether or not it is necessary for medical or reconstructive purposes. Therefore, the determination in a particular situation would be based on a consideration of all the relevant facts and supporting documentation including the opinion of a qualified medical practitioner. If there is doubt as to the eligibility of a particular expenditure or the opinion is unclear, further information or clarification may be requested in order to make a determination.

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 substantially equivalent medical services are not available in that locality,

(iii) the route travelled by the patient is, having regard to the circumstances, a reasonably direct route, and

(iv) 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, meals and parking) 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.

While it is a question of fact whether the above requirements are met, 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.

For meals and vehicle expenses, you can choose to use the detailed method or the simplified method for calculating meal and vehicle expenses. If you use the detailed method, you have to keep all receipts and records for your 12-month period. For accommodation expenses, you must provide receipts and you must be able to demonstrate that the amount paid for accommodation is necessary as a result of the distance travelled and your medical condition. You can claim the amount for accommodation as shown on your receipts. More information on this topic can be found on the Canada Revenue Agency's web site at: www.cra-arc.gc.ca.

It is our view, based on the information provided, that the cost of the Sexual Reassignment surgery, Chondrolaryngoplasty, facial feminization surgery, recovery clinic and laser hair removal would likely qualify as medical expenses for purposes of the METC if the requirements of paragraph 118.2(2)(a) are met. In addition, it is also our view that travel costs would also likely qualify as medical expenses for purposes of the METC as long as the requirements set out above for paragraphs 118.2(2)(g) and (h) are met.

We trust 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