9 March 2011 External T.I. 2011-0395911E5 - Medical Expenses, travel, rent

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 various travel and rent expense for transporting an individual to a location that has a sign language interpreter available in order for the individual to complete her schooling qualify as medical expenses.

Position: Travel to the school and back home do qualify as medical expenses; rent expenses and travel home for Christmas do not.

Reasons: Travel costs do not include the cost for accommodation and trips that are not for the purpose of obtaining medical services.

XXXXXXXXXX 					2011-039591
						S. D'Angelo
March 9, 2011

Dear XXXXXXXXXX :

Re: Medical Expense Tax Credit - Travel and Accommodation Costs

This is in response to your correspondence of September 3, 2010, inquiring about travelling and accommodation costs for purposes of the medical expense tax credit ("METC").

In the situation you described, your daughter is hearing impaired, and since there was no sign language interpreter available in XXXXXXXXXX, she was required to move from a school in XXXXXXXXXX to a school in XXXXXXXXXX for the 2009/ 2010 school term in order for her to continue her grade 11 education. As a result of this move, you have incurred various travel, moving and accommodation expenses for your daughter and her mother and you are asking if these expenses would be eligible medical expenses for purposes of the METC.

The situation outlined in your letter appears to relate to a factual one, involving a specific taxpayer. Should your situation involve a specific taxpayer and a completed transaction, you should submit all relevant facts and documentation to the appropriate Tax Services Office ("TSO") for their views. A list of TSOs 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 general comments, which may be of assistance.

Our comments

Section 118.2 of the Income Tax Act (the "Act") provides rules for determining the amount that may be claimed, as a tax credit, in respect of medical expenses. Subsection 118.2(2) of the Act contains a list of expenditures that qualify as medical expenses.

Travel costs incurred to obtain medical services qualify as medical expenses if they satisfy the requirements in paragraph 118.2(2)(g) for costs related to transportation or paragraph 118.2(2)(h) of the Act for other travel costs. An individual is entitled to claim the transportation and travel expenses described in these paragraphs only if the following conditions are met:

i) substantially equivalent medical services were not available in the locality where the individual resides,

ii) a reasonably direct travelling route was taken by the individual, and

iii) the individual travelled to the particular place to obtain medical services for himself or herself and it is reasonable, having regard to the circumstances, for the individual to have travelled to that place to obtain these services.

An amount paid to a person engaged in the business of providing transportation services to transport an individual not less than 40 kilometres from the locality where the individual resides to a place where medical services are received may qualify as a medical expense under paragraph 118.2(2)(g) of the Act. Similarly, other travel expenses may qualify as medical expenses under paragraph 118.2(2)(h) of the Act if the individual travels not less than 80 kilometres from the locality where the individual dwells to a place where medical services are received.

In addition to the travel costs related to the individual, costs related to another person, who accompanies the individual in the circumstances discussed above, may qualify as medical expenses where the individual was, and has been certified by a medical practitioner to be, incapable of travelling without the assistance of an attendant.

Expenses meeting the criteria under paragraphs 118.2(2)(g) and (h) are generally allowed to the extent that they are reasonable and there is no reason to preclude their deduction (for example, if an insurance company were to reimburse the expenses).

In our view, given that sign language services qualify as medical services under paragraph 118.2(2)(l.4), the travel costs (including your meals and accommodations) to transport your daughter to the school in XXXXXXXXXX and the final travel costs home would qualify as medical expenses provided the above conditions are met. However, expenses such as the rent expenses incurred in XXXXXXXXXX , and travelling expenses incurred to come home for Christmas are not travel to obtain medical services and hence, do not qualify as medical expenses.

Enclosed are your receipts.

We trust our 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