15 September 1987 Income Tax Severed Letter ACC9054 - Medical Expenses — Subparagraphs 110(1)(c)(iv), (v) and (vi)

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.

Revenue Canada, Taxation MEMORANDUM Date: September 15, 1987

To:     All employees                   From: J-C Fortier
                                              Enquiries & Office
                                              Examination

Re: Medical expenses - subparagraphs 110(1)(c)(iv), (v) and (vi)

N.B. :  THE FOLLOWING IS A TRANSLATION OF AN MEMORANDUM DATED     
        SEPTEMBER 15, 1987 WRITTEN IN FRENCH.

1. Full time care in a nursing home - 110(1)(c)(iv) - (vi)

        a)    Definition
        b)    Eligible taxpayers
        c)    Eligible expenses

a) Nursing home: an establishment designed primarily to provide care or rest for persons.

Note: As a general rule, apartment buildings whose tenants are mainly independent or semi-independent senior citizens will not be considered nursing homes.

Although some medical services may be offered by such establishments, they are not "designed primarily to provide care or rest". Such an establishment is much more in the nature of an apartment house which accepts mainly senior citizens.

b) Eligible taxpayers:

Under paragraph 110(1)(c)(iv): a taxpayer, his spouse or dependant who has been certified by a medical doctor as having a severe and prolonged mental or physical impairment. In other words, the eligibility criteria listed on the T2201 must be met.

Under paragraph 110(1)(c)(v): a taxpayer, his spouse or dependant who, by reason of lack of normal mental capacity is and in the foreseeable future will on others for his personal needs and care. The mental incapacity must be certified by a qualified medical practitioner.

c) Eligible expenses: include medical expenses, room, board and services.

2.      Expenses paid to a school, institution or other place     
        110(1)(c)(vi)

              a)  Definition
              b)  Eligible taxpayers
              c)  Eligible expenses

a) School, institution or other place: these three expressions may be defined as establishments with equipment, facilities or personnel specially provided for the care, or care and training, of physically or mentally handicapped individuals.

b) Eligible taxpayers: a taxpayer, his spouse or dependant who has been certified by an appropriately qualified person to be an individual who requires specially provided equipment, facilities or personnel by reason of his handicap.

c) Eligible expenses: only expenses related to care, or care and training, are deductible. This means that personal and/or room and board expenses are excluded.

3. Summary

To qualify for a deduction under any of the above subparagraphs, two basic conditions must be met:

a) the individual must demonstrate a physical or mental handicap; and

b) the establishment must provide care or rest facilities (110(1)(c)(v)) or care and training, specially provided equipment, facilities or personnel required by reason of the taxpayer's handicap (110(1)(c)(vi)).

4. Responsibility of establishments to issue adequate receipts:

a) For purposes of subparagraphs 110(1)(c)(iv) and (v), all expenses paid for full-time residence in a nursing home are deductible. The receipt must therefore cover all expenses paid.

b) For purposes of subparagraph 110(1)(c)(vi), only that portion of expenses paid which relate to care, or care and training, qualifies as medical expenses.

This means that the establishment must provide a reasonable breakdown* of the amounts paid in the year.

*Reasonable breakdown: a reasonable breakdown may use one of the following methods:

(i) a portion of the accommodation charge proportional to the actual cost of the services provided;

(ii) a share of the total cost of services provided proportional to services actually used by the resident.

Example on an annualized basis:

        Total cost to the establishment to       $100,000.00
              provide care and training
        Total number of hours of care and/or      10,400 hours
              training services                                  

Number of hours of use by resident         1,040 hours

              1040 x $100.000                     $10,000
                   10,400

Note: The establishment is responsible for performing these calculations. The formulas given above are for use as a guide, and are not the only ones possible. If there is any doubt, an establishment can submit a proposed breakdown so that we can rule on its reasonableness.

(signed) J-C Fortier Enquiries and Office Examination Section