26 May 1998 External T.I. 9809395 - ATTENDANT NURSING CARE IN RETIREMENT CENTRE

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 part of the fees paid to a retirement centre that is not a nursing home qualify as a medical expense

Position: No

Reasons: As stated in IT-519R2, imputed remuneration does not qualify. To qualify under 118.2(2)(b), there must be salary or remuneration actually paid.

		980939
XXXXXXXXXX 	N. Mondou, M.Fisc.
(613) 957-8961

May 26, 1998

Dear Sir

Re: Retirement Centres Annual Fees

This is in reply to your letter dated April 6, 1998, in which you requested our views with respect to fees charged by a retirement centre.

The situation outlined in your letter involves an actual fact situation. To the extent that it relates to a past transaction you should contact the appropriate tax services office, since the review of such transactions falls within their responsibility. However, we offer the following general comments.

Paragraph 118.2(2)(b) of the Income Tax Act provides that “medical expense” means, inter alia, the amount paid as remuneration for one full-time attendant (other than a person who, at the time the remuneration is paid, is the individual’s spouse or is under 18 years of age) on the patient where the patient has a severe and prolonged mental or physical impairment that has been certified in prescribed form by a medical doctor.

A case by case review of each patient’s circumstances is required to determine whether the individual meets this criteria. It is our view however that if the disabled individual does not require constant attendance, whether active or precautionary, then no amount can be included as a medical expense. The taxpayer must be markedly restricted in his or her activities of daily living as a result of his or her physical or mental impairment.

Since the Act refers to an amount “paid as remuneration”, it is our view that only amounts for salary or remuneration that are actually paid will qualify as medical expenses under paragraph 118.2(2)(b). Imputed salary or remuneration will not qualify since no actual payment is made

Finally, as discussed with you (XXXXXXXXXX/Mondou) concerning the deduction for the cost of full-time care in a nursing home under either paragraph 118.2(2)(b) or (d) of the Act, while we accept that a particular place does not necessarily need to be licensed as a nursing home in order to be considered as such, it must have sufficient staff to operate as a nursing home. In other words, it must have the equivalent features and characteristics of a nursing home in order to qualify as a nursing home for the purpose of the medical tax credit. Hence, it must provide sufficient calibre and number of qualified medical personnel to provide nursing care to its residents on a 24-hour basis. In the case of a facility which provides multiple levels of care, the portion of the facility which provides regular nursing care of the type provided by a nursing home will qualify as a nursing home and the portion of the facility which does not, will not so qualify.

For your information, we are enclosing a copy of a technical interpretation we issued on July 13, 1995 to the Individual Returns and Payments Processing Directorate (E9512696). This technical interpretation will provide you with additional details with respect to the requirements for qualification as medical expenses of payments to a facility that provides care to seniors.

We trust that these comments are of assistance.

Yours truly,

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