4 April 2011 External T.I. 2011-0392051E5 - METC - Cosmetic

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: The manner by which a determination is made whether or not an amount paid for a medical or dental service is ineligible for the METC pursuant to subsection 118.2(2.1) which excludes amounts paid for services provided purely for cosmetic purposes unless necessary for medical or reconstructive purposes. Will the CRA rely on the opinion of the medical practitioner and will a receipt indicating that the procedure was "not purely for cosmetic purposes" be sufficient evidence to make a determination?

Position: Generally, the local Tax Services Office would be responsible for making the determination based on a review of all the relevant facts of the particular situation including the opinion of a qualified medical practitioner. A general statement on a receipt indicating that the procedure was "not purely for cosmetic purposes" would not, by itself, be determinative. Additional information or explanation may be necessary in order to determine that a cosmetic procedure qualifies for the METC in a particular case.

Reasons: The CRA is responsible for the administration and enforcement of the income tax legislation. As such, the CRA must be satisfied that an amount paid for a medical or dental service is not excluded pursuant to subsection 118.2(2.1). It is a question of fact whether or not a medical or dental service is provided purely for cosmetic purposes and whether or not it is necessary for medical or reconstructive purposes.

XXXXXXXXXX
									2011-039205
									Chrys Tzortzis, CA

April 4, 2011

Dear XXXXXXXXXX :

Re: Cosmetic procedures

We are writing in reply to your email dated January 6, 2011, wherein you inquire into the manner by which a determination is made whether an amount paid for a cosmetic procedure is ineligible for the medical expense tax credit ("METC"). Specifically, you inquire as to who determines whether or not a particular medical or dental service is provided purely for cosmetic purposes and whether or not it is necessary for medical or reconstructive purposes. In addition, you ask whether the CRA will rely on the opinion of the medical practitioner and whether a receipt indicating that the procedure was "not purely for cosmetic purposes" is sufficient evidence to make a determination.

Written confirmation of the tax consequences that apply to a particular fact situation is given by this Directorate only in the context of an advance income tax ruling request submitted in the manner set out in Information Circular 70-6R5, Advance Income Tax Rulings, dated May 17, 2002. This Information Circular and other CRA publications can be accessed on the CRA Web site at www.cra-arc.gc.ca. However, we are prepared to provide the following general comments, which may be of assistance.

Subsection 118.2(2.1) of the Income Tax Act (the "Act") excludes from eligible medical expenses any amounts paid for medical or dental services, or any related expenses, provided purely for cosmetic purposes, unless necessary for medical or reconstructive purposes. Surgical and non-surgical procedures purely aimed at enhancing one's appearance such as liposuction, hair replacement procedures, botulinum toxin injections, and teeth whitening would generally not qualify for the METC. A cosmetic procedure will continue to qualify for the METC if it is required for medical or reconstructive purposes. Examples of procedures that would generally be considered to have a medical or reconstructive purpose include those that would ameliorate a deformity arising from, or directly related to, a congenital abnormality, a personal injury resulting from an accident or trauma, or a disfiguring disease.

The CRA is responsible for the administration and enforcement of the Act. As such, the CRA must be satisfied that an amount paid for a medical or dental service is not excluded pursuant to subsection 118.2(2.1) of the Act. The local Tax Services Office is generally responsible for determining in an actual situation whether or not a particular expenditure qualifies as an eligible medical expense for the METC. It is a question of fact whether or not a medical or dental service is provided purely for cosmetic purposes and whether or not it is necessary for medical or reconstructive purposes. Therefore, the determination in a particular situation would be based on a consideration of all the relevant facts and supporting documentation including the opinion of a qualified medical practitioner. If there is doubt as to the eligibility of a particular expenditure or the opinion is unclear, further information or clarification may be requested in order to make a determination.

In our view, a general statement on a receipt indicating that the procedure was "not purely for cosmetic purposes" would not, by itself, be determinative. It may be necessary to provide additional information or explanation in order to determine that a cosmetic procedure qualifies for the METC in a particular case. For example, a description of the nature and purpose of the procedure may be required in sufficient detail in order to be able to make a determination.

We trust that these comments will be of assistance.

Yours truly,

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