14 March 2011 External T.I. 2011-0395531E5 - Various medical expenses

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 expenditures qualify as medical expenses

Position: Some

Reasons: Some conditions in subsection 118.2(2) are met

XXXXXXXXXX
								2011-039553
								S. D'Angelo

March 14, 2011

Dear XXXXXXXXXX :

Re: Medical expenses

This is in response to your correspondence of February 5, 2011, wherein you provided a list of expenditures incurred by your spouse and asked whether they are eligible medical expenses for purposes of the medical expense tax credit ("METC").

You indicate that your spouse is 82 years old and has been diagnosed with Parkinson's Plus for over 4 years. This disease has resulted in your spouse not having any balance or mobility and difficulty transferring in and out of his wheelchair. You have also incurred rent expense for your spouse residing in a senior's residence, bus transportation and personal trainer costs along with prescription medication and maintenance and repair costs for his wheelchair.

Our comments

Since your enquiry concerns an actual situation involving questions of fact, it should be dealt with by your local Tax Services Office. Nonetheless, we have provided our general views regarding the application of the relevant income tax legislation. If you wish to have the CRA review your actual situation, you should submit all of the relevant information and documentation to the particular Tax Services Office serving your area, a list of which is available on the "Contact Us" page of the Canada Revenue Agency website, which may be accessed on the internet at http://www.cra-arc.gc.ca.

Medical expenses which are eligible for the METC are limited to those described in subsection 118.2(2) of the Income Tax Act (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 was incurred for medical reasons. Additionally, in order to claim an amount as a medical expense, there must be no reason that would preclude its deduction, which would happen, for example, if a private or public health insurance plan reimburses you for the particular expense.

Rent paid to a seniors' residence

You have indicated that since you are unable to care for your husband, he resides in a seniors' residence and that he may have to move to a nursing home if his condition and mobility worsens. You are asking if any part of the monthly rent paid to the seniors' residence would qualify as eligible medical expenses for purposes of the METC.

There are several paragraphs (118.2(2)(b), (c) and (e)) within the medical expense tax credit provisions of the Act which may be relevant to your circumstance. We have reviewed each of these provisions to determine whether it may have application.

1. Paragraph 118.2(2)(b) - Nursing Home Care

Under paragraph 118.2(2)(b), a qualifying medical expense includes remuneration paid for the cost of full-time care in a nursing home for a patient who has a severe and prolonged physical impairment, provided certain conditions are met. In order for a seniors' residence to qualify as a nursing home for the purposes of the METC, it must have the equivalent features and characteristics of a nursing home. It is a question of fact whether the senior's residence you describe has the equivalent features and characteristics of a nursing home. Generally fees paid for an individual's accommodation in a place which is not a nursing home, such as a seniors' residence or a home for the aged, do not qualify as a medical expense, even if the individual has a severe and prolonged mental or physical impairment.

2. Paragraph 118.2(2)(c) - Full-time Attendant at Home

Alternatively, we considered whether the rental payments would qualify as "remuneration for one full-time attendant" within the meaning intended by paragraph 118.2(2)(c) of the Act. It is our view that rental payments to a seniors' residence, including those that might indirectly cover the costs of occasional assistance by an attendant would not be considered as remuneration for this purpose.

3. Paragraph 118.2(2)(e) - School, Institution or Other Place

In certain circumstances, fees paid to an institution that is not a nursing home may qualify as a medical expense under paragraph 118.2(2)(e) of the Act. In order for an amount to qualify as a medical expense under paragraph 118.2(2)(e) of the Act, the individual receiving care or care and training at a particular place must be certified by an appropriately qualified person to be in need of the specialized equipment, facilities or personnel provided by that place for care or care and training of individuals with the handicap suffered by that individual. Whether the seniors' residence you describe provides any specialized equipment, facilities or specially trained personnel is a question of fact. Although an individual who is resident in a seniors' residence or in an assisted living facility may require long term care or assistance in carrying out the daily activities of living, fees paid for such care will not qualify as a medical expense under paragraph 118.2(2)(e) of the Act unless the conditions described above are met.

Based on the information available, it does not appear that the rental payments to the seniors' residence you describe meet any of the conditions in any of paragraphs 118.2(2)(b), (c) or (e) of the Act and as such it is our view that these rental payments would not qualify as medical expenses for purposes of the METC.

Cost of Medication

You have indicated that your spouse's medication is prescribed by a physician and the purchase is recorded by a pharmacist.

Paragraph 118.2(2)(n) of the Act allows the costs paid for drugs, medicaments or other preparations or substances (hereinafter referred to as "drugs"):

(A) that are manufactured, sold or represented for use in the diagnosis, treatment or prevention of a disease, disorder or abnormal physical state, or its symptoms, or in restoring, correcting or modifying an organic function;

(B) that can lawfully be acquired for use by the patient only if prescribed by a medical practitioner or dentist; and

(C) the purchase of which is recorded by a pharmacist.

Based on the foregoing, only drugs that can lawfully be purchased only with a prescription qualify under this provision. Since over-the-counter drugs (including natural health products) do not lawfully require a prescription, they would not qualify for the METC under this provision.

Subject to certain exceptions, drugs that may lawfully be acquired without a prescription generally do not qualify for the METC. A notable exception is found in paragraph 118.2(2)(k) of the Act which provides that insulin, oxygen, liver extract injectible for pernicious anaemia and vitamin B12 for pernicious anaemia may qualify for the METC if prescribed by a medical practitioner. Also, drugs that may lawfully be acquired without a prescription may qualify for the METC under section 5701 of the Income Tax Regulations which allows the cost of a drug if the drug:

(a) is manufactured, sold or represented for use in the diagnosis, treatment or prevention of a disease, disorder or abnormal physical state, or its symptoms, or in restoring, correcting or modifying an organic function;

(b) is prescribed for a patient by a medical practitioner; and

(c) may, in the jurisdiction in which it is acquired, be lawfully acquired for use by the patient only with the intervention of a medical practitioner.

Thus, a drug that may only be acquired through the intervention of a medical practitioner (a pharmacist, for example) may qualify under section 5701 of the Income Tax Regulations even if it does not lawfully require a prescription. However, pursuant to this provision, the patient must still obtain a prescription for the particular use of the drug.

As over-the-counter drugs (including natural health products) would not generally meet the requirements of any of the above noted provisions, such drugs would not qualify as medical expenses for purposes of the METC.

Maintenance and repairs to a wheelchair

You have indicated that you have purchased a computer unit which reconfigures the controls for your spouse's wheelchair. You have also replaced a motor assembly and battery for the wheel chair.

Paragraph 118.2(2)(i) of the Act allows as a medical expense, amounts paid "for, or in respect of," various items, including a wheel chair. As outlined in paragraph 35 of IT-519R2 (Consolidated) - "Medical Expense and Disability Tax Credits and Attendant Care Expense Deduction", costs in respect of these devices also include rental charges and related expenses such as maintenance, repairs and supplies.

The expenditures you have made appear to be maintenance and repairs for the wheel chair and as such meet the requirements in paragraph 118.2(2)(i) of the Act.

Transportation Costs / Personal Trainer

You have indicated that your spouse is transported three times per week, approximately two miles each time, by bus from the seniors' residence to a gym. You have also indicated that since your spouse cannot be left unattended, he is required to have a trainer with him at all times while at the gym. You are inquiring whether the transportation and personal trainer costs would qualify for medical expenses for purposes of the METC.

Under paragraph 118.2(2)(g) of the Act, an amount paid to a person engaged in the business of providing transportation services can qualify as a medical expense to the extent that the amount relates to transporting a patient between the locality where the patient lives and a location which is at least 40 kilometres away in order for the patient to receive medical services at that location. The transportation costs you describe do not meet the conditions of paragraph 118.2(2)(g) and as such do not qualify as medical expenses for purposes of the METC.

Subsection 118.2(2)(l.9) of the Act provides that an amount paid as remuneration for therapy provided to a patient because of the patient's severe and prolonged impairment qualifies as a medical expense provided certain conditions are met. The therapy must be prescribed by, and administered under the general supervision of, a medical doctor or a psychologist, in the case of mental impairment and a medical doctor or an occupational therapist, in the case of a physical impairment. At the time the remuneration is paid, the payee must be neither the individual's spouse nor an individual who is under 18 years of age. Each receipt filed with the Minister to prove payment of the remuneration must be issued by the payee and must contain, where the payee is an individual, that individual's Social Insurance Number. Finally, for the year the remuneration is paid, the patient must qualify for the disability tax credit under section 118.3 of the Act because of his or her impairment.

The payments made to the personal trainer do not meet the conditions of paragraph 118.2(2)(1.9) of the Act described above. In our view, there is no provision in the Act that allows personal trainer costs to be claimed as medical expenses for the purposes of the METC.

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