30 July 1996 External T.I. 9623375 - MEDICAL EXPENSE TAX 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 fees paid to XXXXXXXXXX in respect of XXXXXXXXXX with learning disabilities qualify for the medical expense tax credit. Follow-up explanation to E9609025.

Position:

No. Does not meet the criteria for the credit set out in paragraph 118.2(2)(e) of the Act.

Reasons:

Unclear as to the requirement of the children to be placed in XXXXXXXXXX for treatment of learning disability.

		962337
XXXXXXXXXX	J.A. Szeszycki

July 30, 1996

Dear XXXXXXXXXX:

Re: Medical Expense Claim

This is in reply to your letter of June 30, 1996, in which you requested clarification as to our previous response to you dated May 28. In that letter, we concluded, based on a review of the information submitted, that you are not entitled to claim the fees paid to the XXXXXXXXXX as a medical expense.

As we indicated in our May 28 letter, the specific medical expense provision of the Income Tax Act that permits the inclusion of fees to a school or institution, such as the XXXXXXXXXX in the computation of the medical expense tax credit contains some specific criteria that must be met before a claim can be accepted. In assessing each claim, we must be satisfied that the requirements imposed by law have been met.

As you know, the provision applies in respect of those individuals who suffer from a physical or mental handicap and who, by reason of that handicap, have been certified by an appropriately qualified person to require the personnel, facilities or equipment specially provided by the school, institution or other place. Whether or not a particular individual has a physical or mental handicap requires a medical judgement which we are not in a position to make.

In administering this provision with respect to circumstances such as those of XXXXXXXXXX our mandate is to be satisfied that a mental handicap indeed exists and that the handicap is such that it requires the special treatment that cannot be accommodated within the regular school system. In that regard, a distinction must be made between a child with learning difficulties who can clearly benefit from more individualized attention and customized programming available in schools such as the XXXXXXXXXX and one who specifically requires such facilities and the personnel offered by the XXXXXXXXXX

Over the years, we have come to recognize that learning disabilities, generally, and some behavioural problems are properly characterized as a form of mental handicap. The bulletin refers to dyslexia as an example of such a learning disability. To expand on this example, it is our understanding of dyslexia that it can present itself in varying degrees, from a very mild form which traditionally can be treated using the resources of the public school system, to the more severe forms which require the specialized treatment outside of the capabilities of the public school system.

We rely on the assessment provided by appropriately qualified persons in determining whether a learning disability (mental handicap) exists and whether the disability is of such degree as to require treatment that the school system cannot provide. In XXXXXXXXXX case, the reports prepared by "appropriately qualified persons" clearly indicate that the boys have learning disabilities of some degree, so that the only remaining criterion to be considered was whether the handicaps were of such degree as to require treatment outside what the public school system could provide. We would re-emphasize here that we are not in a position to judge the degree of a student's learning disability and reliance is therefore placed on the opinions of qualified persons in the field. XXXXXXXXXX, the boys' paediatrician, strongly recommended placement in the XXXXXXXXXX Ordinarily, such a strong recommendation by the family physician backed by psychological assessments may suffice to support a claim under this provision of the Act; however, the existence of opinions from the authorities within the educational system as to the capability of the public school system in treating the disabilities, brings into question whether the boys' circumstances require placement in a special school, even though they clearly benefited from such placement. As a result, under the circumstances, we could not conclude with certainty that the criterion had been met.

Ultimately, our income tax system relies on the self-assessment of taxpayers, based on their understanding of the applicability of the provisions of tax law. We hope that the above explanation will provide you with a further understanding of the tax provision and its administration.

Yours truly,

John F. Oulton
for Director
Business and Publications Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch

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