27 April 1998 External T.I. 9731625 - MEDICAL EXP. - SCHOOL, INSTITUTION, OTHER

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: What are essential requirements to ensure that fees paid to a particular institution qualify as medical expenses under paragraph 118.2(2)(e).

Position: General comments only.

Reasons: N/A

XXXXXXXXXX 				J. Gibbons
					5-973162
Attention: XXXXXXXXXX 

April 27, 1998

Dear XXXXXXXXXX:

We are replying to your letter of November 27, 1997, in which you request our assistance in ensuring that the fees levied by XXXXXXXXXX conform to the Department’s guidelines for medical expenses under paragraph 118.2(2)(e) of the Income Tax Act (the “Act”).

Written confirmation of the tax implications inherent in particular transactions are given by this Directorate only where the transactions are proposed and are the subject matter of an advance ruling request submitted in the manner set out in Information Circular 70-6R3. The following comments are, therefore, of a general nature only.

In order for fees paid to a school, institution or other place to qualify as a medical expense under paragraph 118.2(2)(e) of the Act in respect of a student who receives care and training at that place, two basic requirements must be met:

1. The student must be suffering from a physical or mental handicap, the severity of which is such that the student requires the equipment, facilities or personnel specially provided by the school, institution or other place.

2. An appropriately qualified person must certify that the above conditions are met with respect to the individual receiving the care at that place. This certification is usually carried out by a medical practitioner, but is not restricted to such professionals. Generally, the certificate should include a description of the equipment, facilities or trained professionals required to adequately provide care, or care and training, for the individual. In addition, the Department must be satisfied that the equipment, facilities or personnel provided by a particular place meets this description.

The letter from XXXXXXXXXX, which was submitted with your letter, indicates that XXXXXXXXXX addresses the needs of children afflicted with various combinations of neurological and neuropsychiatric problems, physical and mental developmental delays, extreme emotional disturbance, autistic features, and learning disabilities. The letter also states that these children require highly-skilled behavioural analysis and complex combinations of medications which need to be closely monitored. Although not explicitly clear, it would appear that XXXXXXXXXX provides the specialized personnel necessary to perform these services. However, this fact alone cannot be used in isolation from the other criteria to determine whether the second condition is met. Fees paid to a school which has the equipment, facilities or personnel specially provided for the care, or care and training, of individuals with a particular disability will not qualify as a medical expense in respect of students who either do not have that particular disability or where the severity of the disability is not such that the student requires placement in that particular facility. As a result, we are unable to offer an opinion that particular fees paid to XXXXXXXXXX qualify as a medical expense under paragraph 118.2(2)(e) of the Act. You should also note that individualized programs of instruction and lower student-teacher ratios than that provided in the public school system are not sufficient for purposes of satisfying the second condition above.

As regards the certificate required under paragraph 118.2(2)(e) of the Act, while there is no prescribed form or specific wording required in a certificate, it should demonstrate that, as a result of a particular mental or physical handicap, the individual named in the certificate requires the equipment, facilities or personnel specially provided by a particular place to deal with that particular handicap. A statement that an individual may benefit from the special equipment, facilities or personnel provided by a particular place would not meet this requirement, since the individual must require such equipment, facilities or personnel because of a physical or mental handicap.

Generally, a certificate should be obtained prior to the individual’s attendance at the facility. However, where the care provided by a particular place is restricted to individuals with a particular handicap, a certificate made after the individual’s placement in that place may be accepted, since it is likely that the individual was placed in that facility because of his or her handicap.

With respect to the qualifications of the person providing the certification, while it is clear that a medical practitioner as defined in paragraph 118.4(2)(b) of the Act or a medical doctor is qualified to make the certification required by paragraph 118.2(2)(e) of the Act, the term "appropriately qualified individual" is not restricted to such professionals. However, it would be preferable that the certification be made by someone unconnected with the school, institution or other place.

We trust that these comments will be of assistance.

Yours truly,

P. Spice
for Director
Business and Publications Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch