19 September 1997 External T.I. 9722075 - CHELATION THERAPY & PER KM RATE FOR MEDICAL TRAVEL

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:

chelation therapy and the cost related to medical travel by automobile that is not supported by receipts

Position:

cost of prescription drugs & fees to physician for chelation therapy qualify as a medical expense. Although 118.2(1) requires receipts to be submitted, $.10 per km can be allowed for 97 as a reasonable approximation of the out-of-pocket costs for medical travel - fuel only

Reasons:

118.2(2)(h) allows "reasonable travel costs" and 118.2(4) modifies 118.2(2)(g) so that a "reasonable amount for the operating costs" of an auto are deemed to qualify under (g) - in the case of occasional medical travel, it is reasonable to restrict the claim to fuel only - in the case of an ongoing situation involving repeated travel, it may be reasonable to add other misc operating costs -however, no amount of CCA or other fixed costs are reasonable

A. Humenuk
XXXXXXXXXX 972207

September 19, 1997

Dear Sir:

Re: Cost of Travel to Obtain Medical Services

We are replying to your letter of August 5, 1997, in which you ask for clarification of the documentation required in order to claim reasonable travel expenses incurred in obtaining medical services.

The Income Tax Act (the "Act") provides a medical expense tax credit in respect of eligible medical expenses which are proven by filing receipts therefor with the taxpayer's income tax return. This requirement applies equally to everyone who makes a claim under section 118.2 of the Act for the medical expense tax credit. However, the Department may waive this requirement when it is satisfied that the expense was incurred and the conditions under which the amount qualifies as a medical expense are otherwise met. The fact that receipts may not be required for other purposes not connected to the Act does not mean that the tax law does not apply equally to all Canadians.

The issue of whether or not the amount of an expenditure in a particular situation is reasonable is a separate issue from the verification of the amount of that expenditure. Although there is a legislative requirement to submit receipts for the total of all medical expenses claimed, the Department recognizes that the receipts may not always be available, particularly where the individual was unaware that this requirement applied in respect of the travel costs to obtain medical services. When travelling expenses are claimed under paragraph 118.2(2)(g) of the Act as modified by subsection 118.2(4) of the Act or under paragraph 118.2(2)(h) of the Act and receipts are not available, the Department is prepared to allow a reasonable estimate of the actual travel costs incurred in relation to the distance travelled to obtain medical services. It is our view that $.10 per kilometre is a reasonable estimate of the fuel consumption cost incurred for such travel in 1997. Other costs, such as meals and lodging, incurred in travelling in the circumstances described in paragraph 118.2(2)(h) of the Act also qualify, provided the amount is reasonable in the circumstances and is proven by receipt.

You state that paragraph 37 of Interpretation Bulletin IT-519R is confusing as regards the type of automobile expenses which qualify as a medical expense. In determining the reasonableness of a particular claim, the additional expenses incurred as a result of the travel to obtain the medical services must be considered. When the travel involves one or two trips only, it is reasonable to restrict the amount of automobile expenses which qualify as a medical expense to the cost of fuel only. If repeated trips are required, other operating costs of the automobile may be allowed as well. However, operating costs do not include interest, capital cost allowance or lease costs. The comment in paragraph 37 of the bulletin was simply intended to clarify that capital cost allowance would not be considered an operating cost, even though a vehicle's depreciation may vary with the amount of distance travelled.

In your letter, you assume that the cost of chelation therapy is an eligible medical expense for the purposes of the Act. It is our understanding that the costs involved in chelation therapy consist of the cost of the drugs used in the therapy as well as the fees paid to the physician for medical services rendered. Provided that any drugs purchased for this purpose are prescribed by a medical practitioner and are recorded in the pharmacist's prescription or pharmaceutical register, both the cost of the drugs and the fees paid to the medical doctor would be eligible medical expenses for the purpose of the medical expense tax credit. If you wish us to consider this matter further, please submit full details of the costs incurred in respect of chelation therapy.

In summary, although the Department may accept a reasonable estimate of the actual costs incurred for medical travel when receipts are not available, the submission of receipts is a requirement under subsection 118.2(1) of the Act.

We hope these comments have clarified the Department's position with respect to the issues raised in your letter.

Yours truly,

C. Chouinard
for Director
Business and Publications Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch