12 February 2019 External T.I. 2018-0778121E5 - Summer camp fees - adults with disabilities

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 fees paid for recreational activities, namely for a particular residential summer camp in respect of an adult with an intellectual disability would qualify as eligible medical expenses for the purpose of the medical expense tax credit.

Position: Generally no.

Reasons: There is no provision in the Act that allows for fees paid for recreational activities, or assistance with such activities, as an eligible medical expense.

XXXXXXXXXX							2018-077812
								Randa El-Kadi
February 12, 2019

Re: Fees paid for summer camp and spring recreation day programs

Dear XXXXXXXXXX:

We are replying to your emails of August 30, 2018, and September 12, 2018, concerning fees paid for a spring recreation day program (XXXXXXXXXX) and a particular overnight summer camp, XXXXXXXXXX (the Camp), in respect of your adult brother (the Patient) who qualifies for the disability tax credit (DTC). Specifically, you have asked whether all or part of the fees paid for the Camp (for two months in the summer) and for the spring recreation day program would qualify as attendant care expenses for the purpose of the medical expense tax credit (METC).

You have indicated that the Camp is specialized for persons with disabilities and that the staff-to-camper ratio is 1:2. Also, in a letter you sent us, dated November 17, 2018, it was indicated that the Camp was a necessary “therapy” for the Patient and akin to a treatment facility; the Patient was said to lack the mental functions necessary for everyday life due to a developmental intellectual disability, and required “continuous cognitive stimulation” to prevent a decline in functioning.

Based on the information on the Camp’s website, the Camp’s mission appears for the most part to help children and teens who have learning and certain other mental disabilities, spend a summer filled with fun, and to foster friendships. The Camp has a fixed site that provides accommodation facilities to campers in the form of cabins, as well as other amenities such as food services and planned recreational activities, including off-site excursions. It also offers a variety of educational activities and optional academic tutoring. Staff include recreation specialists, athletic instructors, and professionals trained to work with children and youth.

Our comments

This technical interpretation provides general comments about the provisions of the Income Tax Act (the Act) and related legislation (where referenced). It does not confirm the income tax treatment of a particular situation involving a specific taxpayer but is intended to assist you in making that determination. The income tax treatment of particular transactions proposed by a specific taxpayer will only be confirmed by this Directorate in the context of an advance income tax ruling request submitted in the manner set out in Information Circular IC 70-6R8, Advance Income Tax Rulings and Technical Interpretations.

Medical expenses 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), 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.

In our view, there is no provision in the Act that would allow fees paid for recreational activities to qualify as eligible medical expenses for the purposes of the METC, even if recommended by a psychologist or another medical practitioner.

For your information, we have taken similar positions in technical interpretations 2011-042323 (regarding yoga fees recommended by a medical doctor), 2010-0355211E5 (regarding fees for skating lessons prescribed as a form of therapy), and French document 2007-0240721I7 (regarding therapeutic equestrian sessions).

Attendant care

Paragraph 118.2(2)(b) of the Act allows as an eligible medical expense, remuneration paid for one full-time attendant on a patient who qualifies for the DTC, when certain conditions are met. Also, paragraph 118.2(2)(b.1) of the Act allows a limited claim for amounts paid as remuneration for attendant care for a person who qualifies for the DTC.

The Canada Revenue Agency interprets “attendant care” to mean care provided by an attendant who performs those personal tasks which a patient is unable to do for him or herself. Examples of such tasks can be found in paragraph 1.32 of Income Tax Folio S1-F1-C1, Medical Expense Tax Credit (the Folio), available on the Government of Canada website.

In the present case, based on the information provided, it is our view that the recreational activities that the Patient may have engaged in at the Camp or in the spring recreation day program would not be the type of personal tasks for which the individual would be considered to require attendant care, as contemplated under the scheme of the Act. There is also no indication on the receipts submitted for the Patient that the individual required attendant care for, or assistance with, non-recreational personal tasks.

Care or care and training at a school, institution or another place

Paragraph 118.2(2)(e) of the Act allows as an eligible medical expense, amounts paid for the care or the care and training of a patient at a school, institution or another place, when specific requirements are met. One of these requirements is that an appropriately qualified person must certify that the patient, by reason of a physical or mental handicap, requires the equipment, facilities or personnel specially provided by that school, institution or other place (a “place”) for the care or the care and training of persons suffering from the handicap suffered by the patient. In essence, paragraph 118.2(2)(e) of the Act contemplates institutional care. (footnote 1)

The question of whether all the requirements in paragraph 118.2(2)(e) are met is a question of mixed fact and law. Based on the jurisprudence, the purpose of a place must be considered in determining whether it falls under the ambit of paragraph 118.2(2)(e). (footnote 2) Also, the fact that some of the services offered at a place are beneficial to individuals with special needs would be, in itself, insufficient to bring such a place within the ambit of that provision. (footnote 3) More information on paragraph 118.2(2)(e) can be found in paragraphs 1.56 to 1.63 of the Folio.

In the present case, although the Camp offers academic tutoring, it cannot be said to be a school within the ordinary meaning of that term. Moreover, based on the information on the Camp’s website, the Camp positions itself as a summer camp/summer program, for individuals with certain types of mental impairments. As a seasonal recreational venue, the Camp, in our view, cannot be said to be a place that provides care or care and training in an institutional setting, as contemplated under paragraph 118.2(2)(e) of the Act. Also, in our view, any medical services that the Camp may provide to campers would be incidental to it being a residential recreational venue.

Although we realize that the Camp has a small staff to camper ratio, there is no provision in the Act that allows for the incremental cost of summer camps that cater to individuals with disabilities. This being said, the cost of day camp and overnight camp may qualify as a child care expense under section 63 of the Act (see Income Tax Folio S1-F3-C1, Child Care Expense Deduction).

Therapy

Paragraph 118.2(2)(l.9) of the Act allows certain expenses paid as remuneration for therapy provided to a patient because of the patient’s severe and prolonged impairment, where the patient qualifies for the DTC. There are several other conditions that must be met, one of which is that the therapy must be prescribed by, and administered under the general supervision of a medical doctor, a nurse practitioner or an occupational therapist - in the case of a physical impairment - or a medical doctor, a nurse practitioner or a psychologist - in the case of a mental impairment. Paragraphs 1.115 and 1.116 of the Folio provide additional comments regarding the requirements under paragraph 118.2(2)(l.9).

In the present case, there is no indication on the Camp’s website that it provides therapy to campers, or therapy that is administered under the general supervision of a medical doctor, a nurse practitioner or a psychologist. There is also no breakdown on the receipts submitted for the Patient to suggest that he received therapy as described above.

While we regret that we could not give you a more favourable response, we hope that the foregoing comments have been of assistance.

Yours truly,

Lita Krantz, CPA, CA
Manager
Tax Credits and Ministerial Issues
Business and Employment Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch

FOOTNOTES

Note to reader: Because of our system requirements, the footnotes contained in the original document are shown below instead:

1 See paragraph [18] in Lister v The Queen, 2006 FCA 331.

2 See Lister v Canada , 2006 FCA 331 and The Queen v Scott, 2008 FCA 286.

3 See paragraph [18] in The Queen v Scott, 2008 FCA 286 and paragraph 1.59 of Income Tax Folio S1-F1-C1, Medical Expense Tax Credit.