23 February 2021 External T.I. 2020-0861611E5 - Medical expenses

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 high-fidelity ear plugs are eligible medical expenses for purposes of the METC.

Position: No

Reasons: Legislation

XXXXXXXXXX
                                                      2020-086161
C. Brennan CPA, CA

February 23, 2021

Dear XXXXXXXXXX:

Re: Medical expenses

This is in reply to your letter dated August 17, 2020, regarding whether certain expenditures qualify as a medical expense for purposes of the medical expense tax credit (“METC”), under section 118.2 of the Income Tax Act (the “Act”).

More specifically, you are enquiring whether the cost of high-fidelity earplugs would qualify as a medical expense for purposes of the METC for individuals that experience sensory processing issues pertaining to auditory stimuli.

This technical interpretation provides general comments about the provisions of 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 70-6R10, Advance Income Tax Rulings and Technical Interpretations.

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.

Paragraph 118.2(2)(i) of the Act allows the purchase of an “aid to hearing” to qualify as a eligible medical expenses for purposes of the METC. The phrase “aid to hearing” is not defined in the Act. However, it is our view that an “aid to hearing” would generally be used for the purpose of assisting individuals with hearing impairments to hear sound. It is our understanding that the purpose of the high-fidelity earplugs is to assist you with your sensory processing issues by reducing auditory stimuli to prevent panic attacks, dissociation and other debilitating symptoms. Based on this purpose, it does not appear that high-fidelity earplugs would be considered an “aid to hearing”, and as such would not be an eligible medical expense for the purposes of paragraph 118.2(2)(i) of the Act.

Under paragraph 118.2(2)(m) of the Act, a payment in respect of a device or equipment may qualify as a medical expense if certain conditions are met. Generally, to qualify, the device or equipment must be prescribed by a medical practitioner, must be included in the list of qualifying devices or equipment described in section 5700 of the Income Tax Regulations (the “Regulations”) and must meet such conditions as are prescribed by the Regulations as to its use or the reason for its acquisition. High-fidelity earplugs are not included in the list of qualifying devices or equipment described in section 5700 of the Regulations.

High-fidelity earplugs are not described in subsection 118.2(2) of the Act nor do they satisfy the additional requirements in section 5700 of the Regulations, therefore they would not be an eligible expense for purposes of the METC.

We trust our comments will be of assistance to you.

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