28 September 2010 Ministerial Correspondence 2010-0378121M4 - medical expenses - vitamins

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 vitamins qualifies as a medical expense for the purposes of the medical expense tax credit

Position: No

Reasons: Wording of 118.2(2)(n)

September 28, 2010

XXXXXXXXXX

Dear XXXXXXXXXX :

Thank you for your correspondence received on August 17, 2010, in which you express concern that the costs of certain over-the-counter drugs are no longer covered by a private health services plan (PHSP).

Health Canada is the federal regulator for drug and health products. Effective January 1, 2010, Health Canada reclassified many over-the-counter drugs as natural health products, identifying them by a Natural Product Number instead of a Drug Identification Number (DIN). According to the Health Canada Web site at
www.hc-sc.gc.ca, under the Natural Health Products Regulations, natural health products include vitamins and minerals, herbal remedies, homeopathic medicines (HMs), traditional medicines such as traditional Chinese medicines, probiotics, and other products like amino acids and essential fatty acids. Under these regulations, the product must be safe for consideration as an over-the-counter product. Natural health products are available for self-care and self-selection, and do not require a prescription to be sold. They are assigned a Natural Product Number and HMs are assigned a DIN-HM. Products that require a prescription and other over-the-counter drugs continue to be regulated under the Food and Drug Regulations and are assigned a DIN.

Benefits that an employee receives or enjoys in respect of, in the course of, or by virtue of an office or employment are generally taxable as income from that office or employment according to paragraph 6(1)(a) of the Income Tax Act. However, subparagraph 6(1)(a)(i) specifically excludes benefits an employee receives from contributions his or her employer makes to or under a PHSP.

According to the Act, a PHSP is a contract of insurance in respect of hospital expenses, medical expenses, or any combination of such expenses, or a medical care insurance plan, a hospital care insurance plan, or any combination of such plans. In Interpretation Bulletin IT-339R2, Meaning of private health services plan [1988 and subsequent taxation years], the Canada Revenue Agency lists the requirements a plan has to meet for it to be considered a PHSP. Paragraph 4 of that bulletin states that coverage under a PHSP must be for hospital care or expense or medical care or expense that would normally otherwise qualify as a medical expense under subsection 118.2(2).

Paragraph 118.2(2)(n) allows the costs paid for drugs, medicaments, or other preparations if:

(a) they are manufactured, sold, or represented for use in diagnosing, treating, or preventing a disease, disorder, or abnormal physical state or its symptoms or in restoring, correcting, or modifying an organic function;

(b) they can lawfully be acquired for use by the patient only if prescribed by a medical practitioner; and

(c) their purchase is recorded by a pharmacist.

Because over-the-counter drugs, including natural health products such as Gramcal and Rocaltrol, do not lawfully require a prescription, they would not qualify for the medical expense tax credit under this provision and would not qualify as medical expenses covered by a PHSP.

I trust that the information I have provided is helpful.

Yours sincerely,

Keith Ashfield

G. Moore
957-2141
2010-037812