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 a particular drug qualfies as a medicial expense pursuant to 118.2(2)(n) for the purposes of the medical expense credit. Contributions of services do not qualify for the charitable donation deduction.
Position TAKEN:
Whether or not the drug qualifies is a question of fact. Unable to determine from information provided. Changes to existing legislation responsibility of Department of Finance.
Reasons FOR POSITION TAKEN:
Previous correspondence. Departmental position as outlined in IT-519R and IT-110R2.
950947
XXXXXXXXXX D. Zion
July 28, 1995
Dear XXXXXXXXXX:
Re: Medical Expenses and Charitable Donations
We are writing in reply to your letter of March 23, 1995 regarding the above-noted topics. We apologize for the delay in our response.
You have asked for information regarding the deductibility as a medical expense of a medication called Beterson which you are currently taking to alleviate systems of multiple sclerosis. You have not provided us with sufficient information to enable us to provide you with a definitive reply. However, we can provide general comments which should be of assistance to you.
In order for the cost of drugs, medicaments or other preparations or substances to qualify as a medical expense for the purposes of the medical expense tax credit under the Income Tax Act, they must be:
- prescribed by a medical practitioner and recorded as such by a pharmacist, and
- manufactured, sold or represented for use in
a) restoring, correcting or modifying an organic function,
b) diagnosing, treating or preventing a disease, disorder or abnormal physical state, or
c) treating the symptoms of a disease, disorder or abnormal physical state.
Accordingly, as long as, under the circumstances of a particular case, the use of the drug Beterson is prescribed by a medical practitioner and dispensed by a licensed pharmacist who records the prescription and issues a proper receipt, the cost of the drug would qualify for the medical expense tax credit. For your further information in this regard we have enclosed a copy of Interpretation Bulletin IT-519R entitled "Medical Expense and Disability Tax Credits and Attendant Care Expense Deduction".
The Department's position with respect to deductible gifts is set out in Interpretation Bulletin IT-110R2 and the special release to that bulletin dated January 27, 1992 (copies enclosed for your information). In paragraph 3 of IT-110R2 it states that "A gift, for purposes of sections 110.1 and 118.1, is a voluntary transfer of property without valuable consideration." That paragraph goes on to note that contributions of services (i.e., time, skills, effort) which are not property do not qualify. However, with respect to contributions of service, there is nothing to prohibit a charity from paying for services and later accepting the return of all or a portion of the payment as a gift, providing it is returned voluntarily. In these types of arrangements the donor must account for the taxable income that would be realized as either remuneration, in which case the charity may be required to issue a T-4 slip, or as business income.
Consideration of changes to existing legislation is the responsibility of the Department of Finance. You might want to bring your comments and suggestion regarding the contribution of services to charities to their attention. You may do so by writing to that Department at 140 O'Connor Street, Ottawa, Ontario, K1A 0G5.
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
c.c. Edmonton Tax Services
Client Assistance
All rights reserved. Permission is granted to electronically copy and to print in hard copy for internal use only. No part of this information may be reproduced, modified, transmitted or redistributed in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, or stored in a retrieval system for any purpose other than noted above (including sales), without prior written permission of Canada Revenue Agency, Ottawa, Ontario K1A 0L5
© Her Majesty the Queen in Right of Canada, 1995
Tous droits réservés. Il est permis de copier sous forme électronique ou d'imprimer pour un usage interne seulement. Toutefois, il est interdit de reproduire, de modifier, de transmettre ou de redistributer de l'information, sous quelque forme ou par quelque moyen que ce soit, de facon électronique, méchanique, photocopies ou autre, ou par stockage dans des systèmes d'extraction ou pour tout usage autre que ceux susmentionnés (incluant pour fin commerciale), sans l'autorisation écrite préalable de l'Agence du revenu du Canada, Ottawa, Ontario K1A 0L5.
© Sa Majesté la Reine du Chef du Canada, 1995