27 July 2010 External T.I. 2010-0371881E5 - METC - Lacrisert

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: 1- Whether Lacrisert qualifies for the METC as "other devices" pursuant to paragraph 118.2(2)(j) 2- Does it qualify as a drug etc under paragraph 118.2(2)(n)?

Position: 1- Generally, no. In special cases, may qualify under paragraph 118.2(2)(j) if for the treatment or correction of a defect of vision as prescribed by a medical practitioner or optometrist. 2- No. Does not qualify under subparagraph 118.2(2)(n)(i) as may be acquired without a prescription. Does not qualify under subparagraph 118.2(2)(n)(ii) and section 5701 of the Regulations as does not require intervention of a medical practitioner.

Reasons: 1- "Other devices" may include an ophthalmic insert. It may qualify in specific cases where it is used to treat or correct a defect in vision.

XXXXXXXXXX 								2010-037188
									C. Tzortzis
July 27, 2010

Dear XXXXXXXXXX :

Re: Lacrisert as an eligible medical expense

We are writing in reply to your letter dated June 9, 2010, wherein you inquire whether the cost of Lacrisert purchased directly from a supplier instead of a pharmacy qualifies as an eligible medical expense for the purposes of the medical expense tax credit ("METC"). Lacrisert is an ophthalmic insert used to treat moderate to severe dry eye syndrome.

It is not this Directorate's practice to comment on proposed transactions involving specific taxpayers other than in the form of an advanced income tax ruling. For more information about how to obtain a ruling, please refer to Information Circular 70-6R5, Advanced Income Tax Rulings, dated May 17, 2002. This Information Circular and other Canada Revenue Agency publications can be accessed on the CRA Web site at
www.cra-arc.gc.ca. Since your inquiry concerns an actual situation involving questions of fact, it should be dealt with by your local tax services office. 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 CRA Web site. Although we cannot comment on your specific situation, we are prepared to provide the following general comments, which may be of assistance.

Medical expenses which are eligible for the METC are limited to those described in subsection 118.2(2) of the Income Tax Act ("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 for medical reasons.

Subparagraph 118.2(2)(n)(i) of the Act allows the cost of drugs, medicaments or other preparations or substances (hereinafter referred to as "drugs") if certain conditions are met. One condition is that the purchase of the drugs be recorded by a pharmacist. As this condition would not be met where the drugs are purchased directly from the supplier and the purchase is not recorded by a pharmacist, the drugs would not qualify for the METC under this provision.

Subparagraph 118.2(2)(n)(ii) and section 5701 of the Income Tax Regulations allow the cost of a drug that is prescribed by a medical practitioner if the drug may, in the province in which it is acquired, be lawfully acquired for use by the patient only with the intervention of a medical practitioner. A reference to a medical practitioner is a reference to a person authorized to practice as such in the province. In our view, a person is authorized by a province to practise as a medical practitioner if there is specific legislation that enables, permits or empowers the person to practise as such (for example, a pharmacist). Therefore, drugs purchased directly from the supplier (even with a prescription) would not qualify under this provision as such drugs would not meet the condition that they may lawfully be acquired for use only with the intervention of a medical practitioner.

Paragraph 118.2(2)(j) of the Act allows the cost for eye glasses or other devices for the treatment or correction of a defect of vision of the patient as prescribed by a medical practitioner or optometrist. It is our understanding that Lacrisert is an ophthalmic insert used to treat dry eye syndrome which has various symptoms and causes. Therefore, in our view, Lacrisert would not generally qualify as an eligible medical expense under this provision. However, it may qualify in special cases where it is prescribed by a medical practitioner or optometrist specifically for the treatment or correction of a specified defect of vision. For example, it may qualify where it is prescribed by a medical practitioner (oculist or ophthalmologist) or an optometrist for the treatment or correction of progressive visual deterioration.

Further information on medical expenses may be found in Interpretation Bulletin IT-519R2 (Consolidated), Medical Expense and Disability Tax Credits and Attendant Care Expense Deduction, which is available on the CRA Web site.

We trust that 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