16 August 1994 Internal T.I. 9413957 - MEDICAL EXPENSE CREDIT AND OTHER PRESONAL CREDITS

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.

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.

Principal Issues:

Whether or not medical expenses paid by grandmother in respect of grandson are deductible pursuant to 118.2(2) by the grandmother. Does grandson meet the definition of "dependant" pursuant to 118(6)?

Position TAKEN:

Question of Fact. If grandson meets the definition of "dependant" pursuant to 118(6), it is possible that she may be eligible.

Reasons FOR POSITION TAKEN:

Previous correspondence, definition of "dependant", IT-513 and 519

		August 16, 1994

	OTTAWA TAXATION CENTRE	HEAD OFFICE
	Enquiries/Adjustments	Rulings Directorate
D. Zion
(613) 957-8953
	Attention: Major R. Eccleston
		941395

Medical Expense Credit

This is in reply to your undated memorandum in which you requested our opinion as to whether a grandmother, in the circumstances described below, would be entitled to a claim for medical expenses incurred for her grandson. You are particularly concerned with the meaning of the phrase "dependent upon the individual for support" contained in paragraph 118(6) of the Income Tax Act (S.C. 1970-71-72, c.63 as amended, consolidated to June 1993 (the Act)).

The facts of the situation, as understood from your memorandum and the correspondence attached, are as follows:

1. XXXXXXXXXX

You have advised us that these fees do qualify as a medical expense and we will not review this issue.

2. The grandson is in full time attendance at the institution. The institution provides education, psychological counselling, meals and accommodation. Clothing and other personal effects are not provided. We have not been advised what type of visitation arrangements are in place, whether or not the grandson is able to go home occasionally for visits or who he goes home to visit.

3. The grandson's mother (XXXXXXXXXX) is of limited financial means and is not in a position to pay these fees herself. We have not been advised of what type of support she does provide her son.

4. The accountant has advanced the argument that the grandson is wholly dependent for support on the grandmother. Accordingly, it is his opinion that he qualifies as her dependant pursuant to subsection 118(6) of the Act and she may claim him as a dependant for the purposes of paragraph 118(1)(d) and the medical expenses paid on his behalf pursuant to 118.2(2) of the Act. Furthermore, it is his belief that the grandmother must include the family allowance payments in respect of the grandson for the years in question.

5. The mother has claimed the family allowance payments as income and claimed her son as a dependant for the same period. We are unable to determine from the limited information provided whether the son has been claimed pursuant to paragraphs 118(1)(b) or 118(1)(d) of the Act.

6. The grandson had no income during the years under review.

Our Comments

In our view there are two possible options available to the grandmother subject to her meeting the applicable provisions. One option would be to determine whether or not the grandmother is eligible to claim, as medical expenses, amounts paid to the XXXXXXXXXX on behalf of her grandson pursuant to paragraph 118.2(2)(e) of the Act. It is not necessary for the grandmother to be eligible to claim the grandson pursuant to paragraph 118(1)(d) of the Act to qualify her to make a claim for the medical tax credit. A claim for the medical expense tax credit is limited to the expenses, which otherwise meet the requirements of the subsection, and are incurred in respect of an individual, the individual's spouse or a dependant of the individual within the meaning of subsection 118(6) of the Act.

For the grandson to be considered the grandmother's dependant pursuant to subsection 118(6) of the Act, he must be "dependent upon the individual for support"; not "wholly dependent upon the individual for support". Thus, it is possible that more than one person can claim a portion of an allowable credit in those cases where the person in respect of whom the credit arose was in fact dependent upon more than one person for support. However, it would be a question of fact in each case to determine whether or not the actions or contributions of a particular individual are of such a nature and degree that they could be said to constitute "support" of another person and that a relationship of factual dependency could be said to exist, i.e., reliance on that support. While this involves a finding of fact, the evidence should indicate that the support was not given solely in the form of a gift or gifts from the grandmother but that the grandson was dependent upon the grandmother for the support given. In our view, from the information provided, a good argument can be made that the grandson is dependent on his grandmother for support and would thus meet the definition of dependant pursuant to subsection 118(6) of the Act for the purpose of a medical expense claim by the grandmother under subsection 118.2(2)(e) of the Act.

Alternatively, the accountant has put forth the argument that the grandson is "wholly dependent" on the grandmother for support. As discussed above, the omission of the term "wholly" in the definition of "dependant" pursuant to subsection 118(6) of the Act indicates that a given "dependant" can be in more than one relationship of dependency at one time. In order to make a claim pursuant to paragraph 118(1)(d) of the Act, the grandson must meet the definition of "dependant" as found in subsection 118(6) of the Act. In addition paragraph 118(4)(d) of the Act, which was applicable for the years in question, provides that no amount may be claimed in respect of a dependant under paragraph 118(1)(d) of the Act unless an amount is included in income under subsection 56(5) of the Act in respect of that dependant. In this instance it is possible, upon a review of the circumstances that you determine that both the mother and grandmother are indeed supporting the grandson and the grandson is dependent upon both for support. In a situation where more than one individual has the right to a tax credit for the same dependant, it is not necessary to determine who has priority to the tax credit, but rather that these individuals agree to the manner in which they will apportion the available credits and family allowance payments. Paragraph 118(4)(e) discusses the Department's position if the individuals cannot agree as to what portion of the amount each can deduct. We would draw your attention to the comments contained in Interpretation Bulletin IT-513 at paragraph 34 with respect to this type of situation.

In summary, we are of the view that once it is determined that the grandson is indeed a dependant of the grandmother pursuant to subsection 118(6) of the Act there will be two possible avenues available, depending on the facts of the situation and the intent of the individuals involved.

We trust that our comments have been of assistance and will enable you to resolve this matter.

J.A. Szeszycki
for Section Chief
Personal and General Section
Business and General Division
Rulings Directorate
Policy and Legislation Branch

??