11 January 2011 External T.I. 2010-0389391E5 - METC - Orthopaedic chair

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 the cost of an orthopaedic chair qualifies as an eligible medical expense for the METC.

Position: No.

Reasons: Not included in the list of qualifying devices or equipment contained in section 5700 of the Income Tax Regulations.

XXXXXXXXXX
								2010-038939
								Chrys Tzortzis, CA

January 11, 2011

Dear XXXXXXXXXX :

Re: Eligible medical expense

We are writing in reply to your email dated December 3, 2010, wherein you inquire whether the cost of an orthopaedic chair prescribed by a doctor for back pain qualifies as an eligible medical expense for the purposes of the medical expense tax credit ("METC"). Your inquiry is made in the context of claiming the cost under a health care spending account.

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. However, we are prepared to provide the following general comments, which may be of assistance.

Benefits received or enjoyed by an employee in respect of, in the course of, or by virtue of an office or employment are generally taxable as income from that office or employment pursuant to paragraph 6(1)(a) of the Income Tax Act (the "Act"). However, subparagraph 6(1)(a)(i) of the Act specifically excludes benefits derived from the contributions of a taxpayer's employer to or under a private health services plan ("PHSP"). A health care spending account may qualify as a PHSP provided it meets all the requirements of a PHSP.

Pursuant to subsection 248(1) of the Act, a PHSP means a contract of insurance in respect of hospital expenses, medical expenses or any combination of such expenses, or a medical care insurance plan or hospital care insurance plan or any combination of such plans. In Interpretation Bulletin IT-339R2, Meaning of Private Health Services Plan, the Canada Revenue Agency has set out the requirements that must be met in order for a plan to be considered a PHSP. In paragraph 4 of that bulletin, it is stated that coverage under a PHSP must be in respect of hospital care or expense or medical care or expense which normally would otherwise have qualified as a medical expense under the provisions of subsection 118.2(2) in the determination of the METC. If a particular plan does not qualify as a PHSP, the amount of any benefit received out of the plan will be taxable to the employee.

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 for medical reasons.

Under paragraph 118.2(2)(m) of the Act, a payment in respect of a device or equipment may qualify as a medical expense if certain conditions are met. Generally, to qualify, the device or equipment must be prescribed by a medical practitioner, must be included in the list of qualifying devices or equipment described in section 5700 of the Income Tax Regulations (the "Regulations") and must meet such conditions as are prescribed by the Regulations as to its use or the reason for its acquisition. Since an orthopaedic chair is not included in the list of qualifying devices or equipment described in the Regulations, an amount paid for an orthopaedic chair would not qualify as an eligible medical expense for the purposes of the METC, even if prescribed by a doctor. 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 and in the CRA publication RC4064, Medical and Disability-Related Information, both of which are posted 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