20 April 1995 Internal T.I. 9509397 - 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.

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:

The taxpayer and his spouse live in a 1 1/2 story residence. The spouse is disabled with the result that the second story is not accessible by her. The bathroom and all bedrooms are located on the second floor. Accordingly, the taxpayer proposes to add a ground level addition to his residence. The addition will include an outside entrance complete with access ramp. However, before constructing the addition, the residence will be moved to a new location because of flooding in the basement. The issue is whether cost of the addition and the cost of moving the residence to a new location are described in paragraph 118.2(2)(l.2).

Position TAKEN:

Amounts that will be paid in respect of the addition qualify while amounts paid for moving the residence are not considered to be described in that paragraph.

Reasons FOR POSITION TAKEN:

The facts indicate that the addition would qualify. It is also noted that the entrance with the access ramp are considered to qualify on the basis that it will enable the spouse to be functional within the dwelling (i.e., the spouse could answer the door) and will enable the spouse to gain access to the dwelling. Comments in file 912285 indicates that a outside ramp qualifies.

The cost of moving the residence is not considered to be disability specific.

                                                      April 20, 1995

      XXXXXXXXXX Tax Services                         HEADQUARTERS
      Client Assistance Division                      Income Tax Rulings and
      Attention: XXXXXXXXXX                             Interpretations Division
M. Eisner
(613) 957-8953

                                                      950939

Medical Expenses - Alterations or Renovations to a Dwelling

This is in reply to your memorandum of March 31, 1995 in which you asked us for our views on a situation which concerns the extent that certain costs will be eligible for the medical expense tax credit. The taxpayer involved is XXXXXXXXXX who provided you with the information set out in your memorandum.

In the situation outlined in your memorandum, the taxpayer's spouse is disabled as a consequence of an ulcerated condition with respect to her legs. A registered nurse provides her with care on a daily basis and she uses an "upright cart" for mobility. The upright cart is similar to a wheelchair but is designed for the user to be more or less in an upright position. The taxpayer claims the disability tax credit under section 118.3 of the Income Tax Act) in respect of his spouse.

The taxpayer and his spouse reside in a 1 1/2 story home. The bedrooms and bathroom are located on the second level. As a result of the spouse's medical condition, the second level is not accessible by her. The taxpayer proposes to construct a ground level addition onto his residence which will include a bedroom, a bathroom and a "sterile" room. The sterile room will provide space for the treatment of the spouse's medical condition. The addition will also have an outside entrance complete with an access ramp.

The taxpayer has an additional problem in that his dwelling is currently located close to a road which has been built up well above the level of the dwelling. As this causes flooding in the basement, the taxpayer proposes to raise and move the existing structure away from the road prior to the construction of the addition.

The taxpayer will incur costs in moving the residence (approximately $20,000) and constructing the addition (approximately $30,000). These costs involve a consideration of paragraph 118.2(2)(l.2) of the Income Tax Act. This provision states in part that a medical expense of an individual is an amount paid

"for reasonable expenses relating to renovations or alterations to a dwelling of the patient who lacks normal physical development or has a severe and prolonged mobility impairment to enable the patient to gain access to, or to be mobile and functional within, the dwelling".

We also note that the "patient" in the above provision includes the individual's spouse.

In the situation under consideration, it is our understanding that the taxpayer's spouse has a severe and prolonged mobility impairment as a consequence of the medical condition described to us. On the basis of this understanding and the other information provided to us, it is our view that amounts paid in respect of the addition would fall within the wording of paragraph 118.2(2)(l.2) of the Act as long as the amounts are reasonable. The result is that the related costs would be eligible for the medical expense tax credit. On the other hand, it appears to us that the change in the location of the residence relates, for the most part, to a problem with the residence itself rather than enabling the spouse to be mobile or functional within it. As a further comment in this regard, it is our view that in order for a payment to be described within the wording of paragraph 118.2(2)(l.2), the related cost must be exclusively disability specific. Accordingly, payments made in respect of these costs would not appear to be eligible for the medical expense tax credit.

We have also been requested to provide our views on the circumstances where the eligible medical costs are paid in instalments over a two year time period (1995 and 1996). In this regard, it is our view that if the costs were to be paid over a two year time period and the taxpayer utilizes eligible medical costs on a calendar year basis (also see the comments in the following paragraph), the eligible costs paid in a year would be taken into account in determining the taxpayer's medical expense credit for that year. However, we also note that if the costs are paid with the proceeds of a loan, costs would be considered to have been paid at the time(s) that the proceeds are so used rather than as the loan is being repaid.

The taxpayer might also be unaware of the provisions of subsection 118.2(1) in relation to the manner in which eligible costs can be utilized in calculating the medical tax credit for a taxation year. In this regard, the credit can be calculated in respect of medical expenses paid in any 12 month period ending in a particular year although no expense can be used more than once in calculating a medical expense credit.

As an additional comment, we are mentioning that the above comments have been made on the basis of the information provided to us. However, as is the case for all taxpayers, it is necessary to review the relevant documentation such as invoices and construction contracts before a final determination can be made as to whether any particular cost falls within the wording of paragraph 118.2(2)(l.2) of the Income Tax Act.

Should you require further assistance, we would be pleased to provide our views.

P.D. Fuoco
Section Chief
Personal and General Section
Business and General Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation