23 June 2011 External T.I. 2011-0408941E5 - Oxygen Therapy

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.

Principal Issues: Whether the cost of renting equipment for Topical Pressurized Oxygen Therapy qualifies as a medical expense for purposes of the METC.

Position: Yes.

Reasons: It is the law, paragraph 118.2(2)(i) of the Income Tax Act.

XXXXXXXXXX
					2011-040894
					Linda Compton
					(613) 957-2135

June 23, 2011

Dear XXXXXXXXXX :

Re: Medical Expense Tax Credit -Oxygen Therapy

This is in response to your e-mail of June 6, 2011 inquiring about whether the rental cost of Topical Pressurized Oxygen Therapy ("TPOT") equipment qualifies as a medical expense for purposes of the medical expense tax credit ("METC").

In your correspondence, you indicated that TPOT can only be prescribed by a licensed physician in Ontario. It treats chronic wounds associated with diabetic, venous or pressure ulcers. The equipment required includes an extremity system controller which operates the system, an extremity bag which is placed on the affected limb, and an oxygen concentrator which delivers the oxygen to the extremity bag..

Written confirmation of the tax implications inherent in particular transactions is given by this Directorate only where the transactions are proposed and are the subject matter of a request for an advance income tax ruling submitted in the manner set out in Information Circular 70-6R5, "Advanced Income Tax Rulings", dated May 17, 2002. This Information Circular and other Canada Revenue Agency ("CRA") publications can be accessed on the internet at http://www.cra-arc.gc.ca. Where the particular transactions are complete, the inquiry should be addressed to the relevant tax services office, a list of which is available on the "Contact Us" page of the CRA website. Although we cannot comment on your specific situation, we are prepared to provide the following comments in respect of the issues that you raised. Please note, however, that these comments are of a general nature only and are not binding on the CRA.

In order for the cost of any device or equipment to qualify as a medical expense, the device or equipment must be prescribed by a medical practitioner and be described in the specific provisions of subsection 118.2(2) of the Income Tax Act (the "Act") or prescribed by section 5700 of the Income Tax Regulations ("Regulations").

Paragraph 118.2(2)(i) of the Act provides that qualifying medical expenses include the purchase price or the rental charge related to the following:

i) "for, or in respect of, an artificial limb, an iron lung, a rocking bed for poliomyelitis victims, a wheel chair, crutches, a spinal brace, a brace for a limb, an iliostomy or colostomy pad, a truss for hernia, an artificial eye, a laryngeal speaking aid, an aid to hearing, an artificial kidney machine, phototherapy equipment for the treatment of psoriasis or other skin disorders, or an oxygen concentrator, for the patient;"

Oxygen concentrators are provided for in subsection 118.2(2) of the Act and therefore, the rental cost of such devices or equipment qualifies as a medical expense for purposes of the METC. With respect to the extremity system controller, it is our understanding that this device is used to control the oxygen concentrator. Pursuant to paragraph 118.2(2)(i) of the Act, this device is used "in respect of" the oxygen concentrator and as such it is our view that the rental charge qualifies as a medical expense for purposes of the METC.

With respect to the extremity bag, it is our understanding that this is a disposable bag which is used with the oxygen concentrator. Under paragraph 118.2(2)(i) of the Act, repairs, maintenance, and supplies for the machine and water and electricity to operate the machine, to the extent that they are reasonable, may also be included as qualifying medical expenses. It is our view that the extremity bag is a supply for the machine and qualifies as a medical expense for purposes of the METC.

Further information on devices and equipment prescribed by Regulation 5700 may be found in paragraph 56 and the Appendix of Interpretation Bulletin IT-519R2 (Consolidated), Medical Expense and Disability Tax Credits and Attendant Care Expenses Deduction, posted at: http://www.cra-arc.gc.ca/E/pub/tp/it519r2-consolid/it519r2-consolid-e.html.

We trust our comments will be of assistance to you.

Yours truly,

G. Moore
for Director
Business and Partnerships Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch