15 March 2011 External T.I. 2010-0390011E5 - Power of Attorney Fees - METC

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 fees paid pursuant to the provincially prescribed rates for power of attorney would qualify for the medical expense tax credit.

Position: No.

Reasons: Not in the list of eligible medical expenses in the Act or Regulations.

XXXXXXXXXX 				2010-039001
					J. Gibbons, CGA
March 15, 2011

Dear XXXXXXXXXX :

Re: Power of Attorney Fees

This is in reply to your email dated December 9, 2010, concerning fees paid by your mother pursuant to a "power of attorney." According to your email, your mother suffers from dementia and her doctor has indicated that she can no longer manage her own finances. You wish to know whether the fees paid under the provincially-prescribed rates for a power of attorney would qualify as a medical expense for purposes of the medical expense tax credit ("METC") under section 118.2 of the Income Tax Act (the "Act").

Our comments

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 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. Also, where the particular transactions are completed, the inquiry should be addressed to the relevant Tax Services Office. Nonetheless, we are prepared to offer the following general comments.

As we understand the law as it pertains to Ontario, a power of attorney may authorize the person named as attorney to do on the grantor's behalf anything in respect of property that the grantor could do if capable, except make a will. The power of attorney protects persons who are mentally incapable of attending to the basic financial transactions that adults would normally carry out for themselves. This might include doing their own banking, looking after day-to-day bills, buying personal items such as food, shelter and services, collecting payments to which they are entitled or dealing with assets such as their homes or other investments.

Medical expenses which are eligible for the METC are limited to those described in subsection 118.2(2) of the Act. If a particular expenditure is not described as an eligible medical expense in subsection 118.2(2) of the Act, or if the conditions under which the expenditure would qualify are not met, the expenditure does not qualify for purposes of the METC, even though the expenditure may have been incurred because of a person's financial incapacity due to medical reasons. In our view, fees paid under a power of attorney do not qualify under any of the provisions in subsection 118.2(2) of the Act.

We trust 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