13 April 2010 Ministerial Correspondence 2010-0362981M4 - medical expenses - cosmetic procedures

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 client is requesting clarification on whether certain types of cosmetic procedures would be considered to be eligible medical expenses for purposes of the medical expense tax credit.

Position: Corrective laser eye surgery and dental crowns qualify as medical expenses.

Reasons: wording of proposed law (2010 Budget proposals).

From: Moore, Gwen
Sent: April 13, 2010 12:34 PM
To: XXXXXXXXXX

Subject: Medical expenses

Hello XXXXXXXXXX ,

I am writing in reply to your email of March 15, 2010, to the Department of Finance, regarding a proposed change to the law, relating to the medical expense tax credit. In your email, you had asked for a list of medical expenses that would be allowable or not allowable under the proposed new rules. Your email was forwarded to the Canada Revenue Agency.

With respect to your request for a list of allowable medical expenses under the proposed new law, we do not have an all-inclusive list of medical procedures that would be allowed or not allowed under the proposed change to the medical expenses tax credit as announced in the 2010 Budget. However, additional information relating to this proposed change is outlined below and is available on the Department of Finance website at the link below. For example, 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 not qualify as an eligible medical expense. A cosmetic procedure will continue to qualify for the medical expense tax credit if it is required for medical or reconstructive purposes, such as surgery to 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.

In particular, you have asked whether the following expenses would qualify as medical expenses for purposes of the medical expense tax credit: corrective laser eye surgery, liposuction, dental crowns, and parking fees while at doctor's appointments. It is our view that generally, corrective laser eye surgery and dental crowns would qualify as medical expenses, while liposuction and parking fees while at a doctor's appointment would not qualify.

For your information, as indicated on the Department of Finance website:
http://www.budget.gc.ca/2010/plan/anx5-eng.html#a9

Medical Expense Tax Credit - Purely Cosmetic Procedures

The Medical Expense Tax Credit provides tax recognition for above-average medical and disability-related expenses incurred by individuals. For 2010, the Medical Expense Tax Credit reduces the federal tax of a claimant by 15 per cent of eligible unreimbursed medical expenses in excess of the lesser of $2,024 and three per cent of net income.

An expense is generally eligible to be claimed under the Medical Expense Tax Credit if it is directly related to a disability or a medical condition. An expense is not generally intended to be eligible if it is ordinarily incurred by persons without a disability or a medical condition or has a substantial element of personal consumption and choice.

To ensure consistency with the intent of the Medical Expense Tax Credit, Budget 2010 proposes that expenses incurred for purely cosmetic procedures (including related services and other expenses such as travel) be ineligible to be claimed under the Medical Expense Tax Credit. This generally includes surgical and non-surgical procedures purely aimed at enhancing one's appearance such as liposuction, hair replacement procedures, botulinum toxin injections, and teeth whitening.

A cosmetic procedure, including those identified above, will continue to qualify for the Medical Expense Tax Credit if it is required for medical or reconstructive purposes, such as surgery to 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 proposed changes will make the tax treatment of purely cosmetic procedures consistent with that in other jurisdictions, such as the United States, the United Kingdom and Québec.

This measure will apply to expenses incurred after March 4, 2010.

I trust this reply will be of assistance.

Gwen Moore
Manager
Partnerships and Health Section
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch
Canada Revenue Agency
320 Queen Street
16th Floor, Tower A
Ottawa, ON K1A 0L5
phone: 613-957-2141
email: gwen.moore@cra-arc.gc.ca