28 September 2018 Internal T.I. 2018-0753261I7 - DTC and caregivers

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: (i) Whether teachers and daycare providers would be considered primary caregivers for purposes of paragraph 118.3(1.1)(c)? and

(ii) Would time spent educating teachers and daycare providers be considered time spent administering therapy?

Position: (i) Generally, no.

(ii) No.

Reasons: (i) A teacher or daycare provider would not likely be considered a child's primary caregiver as required by paragraph 118.3(1.1).

(ii) Time spent educating individuals, such as teachers and daycare providers would not be considered as time spent receiving therapy, and would therefore be excluded.

								September 28, 2018

Brenda Watkins						HEADQUARTERS
Director							Income Tax Rulings
Benefit Partnerships and Services Division	  Directorate
Benefit Programs Directorate			Eric Wirag, CMA, CPA

								2018-075326

Life-sustaining therapy

As a follow up to our previous file 2017-072435, you have asked for our additional comments regarding time spent administering therapy as described in paragraph 118.3(1)(a.1) of the Income Tax Act (the “Act”) for purposes of the disability tax credit (DTC). More specifically, you have asked:

(i) Whether teachers and daycare providers would be considered primary caregivers for purposes of paragraph 118.3(1.1)(c)? and

(ii) Would time spent by a child’s parents educating other caregivers, such as teachers and daycare providers, be considered time spent administering therapy for purposes of paragraph 118.3(1)(a.1)? You have provided examples such as time spent explaining the child’s medical conditions and requirements to teachers or daycare providers, or preparing written instructions for their reference.

Our Comments

For purposes of the DTC, life-sustaining therapy is described in paragraph 118.3(1)(a.1) as therapy that:

• is essential to sustain a vital function of the individual;
• is required to be administered at least three times each week for a total duration averaging not less than 14 hours a week; and
• cannot reasonably be expected to be of significant benefit to persons who are not so impaired.

Subsection 118.3(1.1) provides rules to be used in determining whether therapy is required to be administered at least three times each week for a total duration averaging not less than an average of 14 hours a week. Specifically:

a) only time spent on activities requiring the individual to take time away from normal everyday activities in order to receive the therapy is to be considered;

b) where the therapy requires a regular dosage of medication that is required to be adjusted on a daily basis, the time spent on the therapy includes time spent on activities that are directly related to determining the dosage of the medication (subject to (d) below);

c) where the individual is a child who is unable to perform the activities related to the administration of the therapy as a result of the child’s age, the therapy time includes the time, if any, spent by the child’s primary caregivers performing or supervising those activities for the child; and

d) therapy time does not include time spent on activities related to dietary or exercise restrictions or regimes (even if those restrictions or regimes are a factor in determining the daily dosage of medication), travel time, medical appointments, shopping for medication or recuperation after therapy.

(i) Primary Caregivers:

It is a question of fact whether any specific individual would be considered a primary caregiver for a child, as required by paragraph 118.3(1.1)(c) of the Act. In our view, the primary caregiver(s) would be the individual(s) that are the main or principal caregiver(s) for the child. In most cases, this would be the child’s parents. Generally, teachers or daycare providers would not be considered to be primary caregivers.

(ii) Education:

It is a question of fact whether the determination of a specific activity can be included in the time spent administering therapy as described in paragraph 118.1(1)(a.1) and subsection 118.3(1.1) of the Act. The determination of the activities that are considered to be therapy would be dependent on the effects of the impairment on the individual, and what is essential to sustain a vital function of the individual. What would be considered essential to one person’s impairment may not be considered essential to another.

It is our view that time spent by a child’s parents educating other caregivers, such as teachers or daycare providers, would not meet the requirements of paragraph 118.1(1)(a.1) and subsection 118.3(1.1). Therefore, this time would not be included when determining whether therapy is required to be administered at least three times each week for a total duration averaging not less than an average of 14 hours a week.

As stated in paragraph 118.3(1.1)(a), only time spent on activities that require the individual to take time away from normal everyday activities in order to receive the therapy would be included. It is our view that time spent educating individuals such as teachers and daycare providers would not be considered as time spent receiving therapy, or in the case of time included for primary caregivers, time spent performing or supervising the administration of therapy, and therefore would be excluded.

In addition, paragraph 118.3(1.1)(b) states that in the case of therapy that requires a regular dosage of medication that is required to be adjusted on a daily basis, the time spent on administering therapy includes time spent on activities that are directly related to the determination of the dosage of the medication. This requires a direct link between the activity and the determination of the dosage of the medication. In our view, educating other caregivers, including teachers or daycare providers, is not directly related to the determination of the dosage.

Unless exempted, a copy of this memorandum will be severed using the Access to Information Act criteria and placed in the Canada Revenue Agency’s electronic library. After a 90-day waiting period, a severed copy will also be distributed to the commercial tax publishers for inclusion in their databases. You may request an extension of this 90-day period. The severing process removes all content that is not subject to disclosure, including information that could reveal the identity of the taxpayer. The taxpayer may ask for a version that has been severed using the Privacy Act criteria, which does not remove taxpayer identity. You can request this by e-mailing us at: ITRACCESSG@cra-arc.gc.ca. A copy will be sent to you for delivery to the taxpayer.

Yours truly,

Pamela Burnley, CPA, CA
Manager,
Business and Employment Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch