13 July 1995 Internal T.I. 9512696 - XXXXXXXXXX AND 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:

Deductibility of fees paid to XXXXXXXXXX more particularly the XXXXXXXXXX as medical expenses

Position TAKEN:

		Question of fact.  However, based on the information provided and departmental position we are in agreement with Head Office that the XXXXXXXXXX would not be considered a nursing home from the purposes of the Act.

Reasons FOR POSITION TAKEN:

	Level of care provided not indicative of level expected of a facility to be considered a nursing home.  Confirmation of departmental position with respect to 	118.2(2)(b), (d), and (e).

			July 13, 1995

	Individual Returns and Payments	HEADQUARTERS
	  Processing Directorate	D. Zion
	Processing Division	(613) 957-8953
	Roland Ouimet
	Director

	Attention: C. Ritchie
			951269

XXXXXXXXXX and Medical Expenses

We are writing in reply to your memorandum of May 5, 1995 concerning the deductibility of the fees paid to XXXXXXXXXX as medical expenses.

More particularly, XXXXXXXXXX

with a list of services that it provides to its residents and have requested confirmation of their understanding of the Department's position regarding the eligibility of the XXXXXXXXXX maintenance fees as medical expenses pursuant to subsection 118.2(2) of the Income Tax Act (the "Act") for the purposes of the medical expense credit under subsection 118.2(1). It is their understanding that in those cases where an individual meets the requirements of paragraph 118.2(2)(b) or 118.2(2)(d) of the Act, those expenses for full-time care in a nursing home would qualify for the medical expense credit. In addition, they have reiterated the view that an establishment may be a nursing home for the purposes of paragraphs 118.2(2)(b) or (d) although not licensed as such, if it has qualified medical personnel in attendance of a calibre, and in sufficient numbers, to provide care to residents on a 24-hour basis.

You are of the view that XXXXXXXXXX and more particularly XXXXXXXXXX does not appear to be a nursing home for the purposes of paragraphs 118.2(2)(b) or (d) of the Act based on the information provided in their letter to XXXXXXXXXX Tax Services. Although you are in agreement that an establishment in certain instances may be a "nursing home" even if not licensed as such, it appears, in your opinion, that XXXXXXXXXX does not have sufficient staff on hand to address the needs of those residents who require full-time care because some residents received care with daily living through "agency personnel". Furthermore, you have questioned whether or not the fact that a nurse or nursing assistant is on call 24 hours a day would be sufficient to qualify XXXXXXXXXX as a nursing home, particularly if residents must hire a full-time attendant to help them with their daily needs.

Based on your arguments as outlined above, you have asked us to confirm your position that it is a question of fact as to whether or not XXXXXXXXXX meets the nursing home requirements of paragraphs 118.2(2)(b) or (d) of the Act or even whether XXXXXXXXXX is an institution that "specially provides" facilities for the care, or care and training, of the handicap suffered by the patient as required by 118.2(2)(e) of the Act. Furthermore, you maintain that no information or documentation has been provided to suggest that XXXXXXXXXX would meet the requirements of these provisions of the Act.

Our Comments

As discussed in previous correspondence, copies of some of which were forwarded with your enquiry, medical expenses for the purpose of the Act include, under paragraph 118.2(2)(b) of the Act, amounts paid for full-time care in a nursing home where the patient has a severe and prolonged mental or physical impairment that has been certified in prescribed form by a medical doctor. Paragraph 118.2(2)(d) of the Act provides similar treatment in respect of fees paid for full-time care in a nursing home for an individual who has been certified by a qualified medical practitioner to be a person who, by reason of lack of normal mental capacity, is and in the foreseeable future will continue to be dependent on others for his or her personal needs and care.

A case by case review of each patient's circumstances is required to determine whether the individual meets the criteria in paragraph 118.2(2)(b) or (d) of the Act. It is our view, with respect to the requirements of paragraph 118.2(2)(b), that if the disabled individual does not require constant attendance, whether active or precautionary, then no amount can be included as a medical expense. In order for a taxpayer to be eligible to claim the disability tax credit in respect of the individual (a basic requirement of paragraph 118.2(2)(b) of the Act) the individual must be markedly restricted in his or her activities of daily living as a result of his or her physical or mental impairment. The 1991 Federal Budget introduced provisions which served to codify what had been previously the Department's administrative criteria i.e., that a disabled individual's ability to perform a basic activity of daily living must be markedly restricted. The 1991 Budget Supplementary Information contained a discussion of the interpretation to be given the terms "markedly restricted" and "activities of daily living" which are of assistance in determining whether or not the level of full-time care provided to disabled residents by XXXXXXXXXX would be sufficient to consider XXXXXXXXXX a "nursing home" and enable the individual to claim the fee as medical expenses pursuant to paragraph 118.2(2)(b). The term "markedly restricted" is interpreted to mean that "despite the use of medication, therapy, or devices, the effect of the impairment is to greatly restrict the performance of activities of daily living" while "activities of daily living" will continue to refer to "basic functions such as seeing, hearing, speaking and walking, but not working or social, recreational and housekeeping activities". This topic is discussed in more detail in paragraphs 2 and 3 of IT-519R.

It is a question of fact as to whether a particular facility is a nursing home providing full-time care as required by both paragraphs 118.2(2)(b) and (d). The terms "care" and "nursing home" are not defined in the Act and as such the ordinary meaning of the terms must be considered in their context in order to interpret these provisions. Care is defined in the unabridged Random House Dictionary of the English language as "protection, charge," and as a verb "to watch over or be responsible for". As this definition is rather broad we think it can reasonably be restricted to that which is offered to persons who are unable to care for themselves. This interpretation would be supported by the ordinary meaning of a nursing home which is defined in Webster's Ninth New Collegiate Dictionary to be "a privately operated establishment where maintenance and personal or nursing care are provided for persons who are unable to care for themselves properly". Stedman's Medical Dictionary (1990 edition) defines the term as "a convalescent home or private facility for the care of individuals who do not require hospitalization and who cannot be cared for at home". We are aware that many extended care facilities have waiting lists and that seniors' residences are used in lieu of the more appropriate extended care facility. It would therefore seem likely that many seniors living in retirement homes or seniors' residences would require some sort of care. It would be a question of fact then as to whether or not these facilities would provide such a level of care to the otherwise qualifying individuals so as to be considered a nursing home. In addition, it is our position that the phrase "full-time" is not intended to place a requirement of a minimum time spent caring for the patient in the nursing home but rather it implies the constant care and attendance required by an individual by reason of the injury, illness or affliction of such individual. It is expected that there be qualified medical personnel in attendance of a calibre and in sufficient numbers to provide care to the resident patients on a 24-hour basis. However, it is in our view possible, that in certain instances specialized care beyond what one would expect from a nursing home might be required for a resident that can not be provided by regular staff which would be provided by an attendant from an outside agency. We addressed this particular issue in our letter of February 28, 1991 (our file #903963) and have attached a copy for your information.

Although the requirements of subparagraph 118.2(2)(e) of the Act appear less restrictive than those of subparagraphs 118.2(2)(b) and (d) in that the care need not be provided in a nursing home on a full-time basis, there are several additional requirements within subparagraph 118.2(2)(e) that do not apply to subparagraphs 118.2(2)(b) and (d) of the Act. Subparagraph 118.2(2)(b) refers to a prolonged and severe impairment and subparagraph 118.2(2)(d) to a lack of normal mental capacity whereas subparagraph 118.2(2)(e) refers to a mental or physical handicap. Our discussion of what constitutes a physical or mental handicap contained in our memorandum of October 11, 1994 (our file #942381), which you enclosed with your enquiry, is applicable and accordingly, we will not provide additional comments. Although the care referred to in subparagraph 118.2(2)(e) need not be given in a nursing home, it must be provided in a place which has equipment, facilities or personnel specially provided for the care of persons suffering from that specific handicap.

The Concise Oxford Dictionary defines "special" as "peculiar, not general or of a particular kind". It would, therefore, seem that the care envisioned by this provision of the Act is a type of care specifically designed for the needs of a person with that handicap whether by means of special equipment, facilities or specially trained personnel. While the care need not be full- time, the equipment, facilities or personnel specially provided by the nursing home must be specifically tailored for the care of persons suffering from the handicap in question in order for the fees to qualify as a medical expense under paragraph 118.2(2)(e) of the Act. Accordingly, although a resident may require care in a retirement home, the deduction may not be available under this provision if the care is not specific for the nature of the handicap in question. For example, supervision would not generally be performed by specially trained personnel. However, a specific handicap such as that caused by Alzheimer's disease, might require specially trained personnel for supervision. Without knowing the specific nature of the handicap, it would be difficult if not impossible to determine whether the facilities and personnel of a place were specially provided for the care of a person suffering from that particular handicap. With respect to seniors' residences and retirement homes, it should again be emphasized that old age is not a handicap by itself but rather the handicap would be some condition which may be associated with old age. No information has been provided by XXXXXXXXXX that would indicate that the XXXXXXXXXX meets the necessary criteria.

We understand from the information provided by XXXXXXXXXX that in return for their fees, the residents receive accommodation, all meals, a full range of recreational activities, building security, personal security (including medication control and minimum physical assistance such as bathing and health promotion programming), as well as other miscellaneous services. Registered nurses and/or registered nursing assistants would be available 24 hours per day, seven days per week. The level of care required by residents varies from minimal to extensive. Finally, some residents receive care with "daily living" through agency personnel. We are unsure from the information provided why certain residents receive "daily living" care from agency personnel or what "daily living" care entails and are thus not convinced that sufficient medical or nursing care is being provided to the residents of the XXXXXXXXXX to consider it a nursing home. Only in the event that the medical condition of the residents meet the requirement of certification by a medical practitioner and the residence itself provided the level of full-time care expected of a nursing home, as discussed above, could any portion of the fees in question be considered medical expenses for the purposes of the Act.

In summary, based on our discussion above and the information provided by XXXXXXXXXX we are of the view that the XXXXXXXXXX should not be considered a nursing home for the purposes of the Act.

We trust our comments will be of assistance.

B.W. Dath
Director
Business and General Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch