31 July 1995 External T.I. 9508995 - ATTENDENT CARE EXPENSE -REIMBURSEMENT OF AIR FARE

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 the reimbursement of an attendant's air fare qualifies for either the medical expense tax credit or as a deduction under section 64 for attendant care

Position TAKEN:

to the extent that the travel relates to employment, business, bursury, training or medical purpose, the attendant's transportation cost will qualify

Reasons FOR POSITION TAKEN:

section 64 & 118.2(2)(g) impose a purpose test on costs relating to the transportation of an attendant

National Transportation
Agency of Canada
Air and Accessible Transportation Branch
Ottawa, Ontario A. Humenuk
K1A 0N9 950899

Attention: Joan Macdonald
Director

July 31, 1995

Dear Ms. MacDonald:

Re: Attendant Care Expenses

We are replying to your letter of March 29, 1995 concerning the deductibility of the cost of air fare for an attendant travelling with an individual who is unable to travel without assistance. We apologize for the delay in responding.

In particular, you ask if a disabled individual would be entitled to deduct the amount paid to an attendant as a reimbursement of air fare costs on line 215 of the individual income tax return as an attendant care expense or alternatively on the schedule of medical expenses, as a medical expense for the purpose of the medical expense tax credit.

It is not clear whether the examples given in your letter refer to actual transactions involving specific taxpayers. The tax consequences relating to a completed transaction of a specific taxpayer are best determined by the Tax Services office located nearest to the taxpayer in question. Furthermore, information relating to a specific taxpayer cannot by released by the Department to any other person unless that taxpayer provides written consent in accordance with subsection 241(5) of the Income Tax Act. Nevertheless, we are prepared to offer you the following general comments concerning the application of the Income Tax Act (the Act) to the situations you describe.

The authority for the deduction for attendant care expenses on line 215 of the individual income tax return is found in section 64 of the Act and the deduction is explained in paragraphs 69 to 72 of the enclosed Interpretation Bulletin IT-519R "Medical Expense and Disability Tax Credits and Attendant Care Expense Deduction". Within the limits set by section 64 of the Act, an individual in respect of whom a disability tax credit may be claimed can deduct the amount paid to a qualifying attendant as or on account of attendant care where such care enables the individual to:

(A)perform the duties of an office or employment,

(B)carry on a business either alone or as a partner actively engaged in the business,

(C)undertake an occupational training course in respect of which the taxpayer received a training allowance under the National Training Act, or

(D)carry on research or any similar work in respect of which the taxpayer received a grant,

provided that the amount is not also claimed as a medical expense.

The purpose of this deduction is to recognize the employment barrier facing an individual with a disability. Expenses eligible for this deduction are amounts paid to the attendant for the cost of providing attendant care in the course of one of the activities listed above. Accordingly, the amount paid to a qualifying attendant as a reimbursement will be eligible for the deduction to the extent that the travel is incurred in the course of one of the activities described above and does not exceed the limits imposed by that provision.

In your example, you refer to the air fares which were purchased by the taxpayer's attendants. Generally speaking, an individual who is unable to travel without assistance only requires the services of one attendant and thus the amount which can be considered eligible for the deduction is limited to the amount paid for a single attendant for any particular trip related to one of the above mentioned activities.

Similarly, in order to claim transportation costs of an attendant as a medical expense, the purpose of the travel must be to obtain medical services. As stated in paragraph 35 of Interpretation Bulletin IT-519R "Medical Expense and Disability Tax Credit" amounts paid for the commercial transportation of an attendant will only be eligible where;

-the individual in need of assistance has been certified by a medical practitioner to be incapable of travelling without the assistance of an attendant,

- the individual travels in a reasonably direct route from home to a place that is not less than 40 kilometres away from the home locality to obtain the medical services,

-substantially equivalent medical services are not available in the locality where the individual lives, and

-having regard to all the relevant circumstances, it is reasonable for the individual to travel to that place to obtain those medical services.

Thus, in the example given where an individual who has been certified by a medical practitioner to be incapable of travelling without an assistant, the air fare paid for an assistant to visit family would not be an eligible medical expense.

However, any remuneration paid to an attendant who is at least 18 years old and is not the spouse of the patient may qualify as a medical expense as explained in paragraphs 26 to 30 of the bulletin. It is a question of fact as to whether the reimbursement forms part of the attendant's taxable remuneration which must be determined with reference to the attendant's contract of employment.

We trust our comments will be of assistance to you.

Yours truly,

P.D. Fuoco
for Director
Business and General Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
Enclosure