23 February 1995 External T.I. 9427255 - MEDICAL EXPENSE CREDIT

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 monthly "insurance like" fee paid by seniors for certain services offered by a corporation would qualify as medical expenses for the purposes of paragraph 118.2(2) of the Income Tax Act and Regulation 5700 of the Income Tax Regulations.

Position TAKEN:

While the cost of some of the services under the program might qualify as eligible medical expenses for the purpose of the medical expense tax credit if actually provided to an individual and specifically paid for, we are of the view that no portion of a monthly program fee such as the one described above would so qualify.

Reasons FOR POSITION TAKEN:

In our opinion, the amount paid is not directly attributable to any particular eligible medical service provided to an individual but rather, is paid for the availability of such service whether or not the service is actually used by the individual.

		942725
XXXXXXXXXX	D. Zion

Attention: XXXXXXXXXX

February 23, 1995

Dear Sirs:

Re: Medical Expense Credit

This is in reply to your letter of November 2, 1994 wherein you request whether or not, in our view, the amount paid by an individual for a package of services offered by your client would qualify as a medical expense of the individual for the purposes of the Income Tax Act (the "Act"). We regret the delay in responding.

As the situation outlined in your correspondence involves completed transactions and the main issue is dependent on the facts of a specific case, we are not in a position to give you a definitive response. We are prepared however, to provide the following general comments.

As we understand the situation, a corporation provides a package of services (the "program") to residents of seniors' lodges and seniors' apartments in the XXXXXXXXXX area. These services are contracted to each resident, based upon a monthly fee for such service. Whether or not these services are utilized by the participant has no bearing on the amount of the fee paid by the participant in a particular month. Some of the services provided or arranged for by the corporation include an on-site registered nurse, licensed practical nurse, personal attendants, biweekly basic homemaking services, various health care clinics, as well as recreational therapy, occupational therapy and physiotherapy services as required.

Our Comments

In determining whether a particular payment fulfils the requirements of the Act as a qualifying medical expense, it is primarily the individual in respect of whom the payment is made who must satisfy the requirements of the Act. To qualify as a medical expense for the purposes of the medical expense tax credit, the payment in question must be an amount paid for eligible medical expenses by an individual in respect of the individual or the individual's spouse or dependant as defined in the Act. The expenditures that are eligible for the credit are described in subsection 118.2(2) of the Act and section 5700 of the Income Tax Regulations.

While the cost of some of the services under the program might qualify as eligible medical expenses for the purpose of the medical expense tax credit if actually provided to an individual and specifically paid for, we are of the view that no portion of a monthly program fee such as the one described above would so qualify. In our opinion, the amount paid is not directly attributable to any particular eligible medical service provided to an individual but rather, is paid for the availability of such service whether or not the service is actually used by the individual.

We trust that our comments have been of assistance.

Yours truly,

P.D. Fuoco
for Director
Business and General Division
Rulings Directorate
Policy and Legislation Branch