16 June 2010 External T.I. 2010-0361271E5 - Laser hair removal as a medical expense

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 hair removal procedures qualify for the purposes of the METC and for PHSPs.

Position: Generally no.

Reasons: Hair removal procedures are generally for enhancing a person's physical appearance.

XXXXXXXXXX
					2010-036127
					R. Ferrari
June 16, 2010

Dear XXXXXXXXXX :

Re: Laser hair removal procedures as a medical expense.

This letter is in reply to your email of March 23, 2010, regarding a proposed change to the law, relating to cosmetic procedures for the purposes of the medical expense tax credit ("METC"). In your email, you had asked whether a procedure for laser hair removal qualifies as a medical expense for the purposes of the METC and for the purposes of private health services plans ("PHSP").

Our Comments

Pursuant to paragraph 6(1)(a) of the Income Tax Act (the "Act"), 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. Subparagraph 6(1)(a)(i) of the Act, however, specifically excludes benefits derived from the contributions of a taxpayer's employer to or under a PHSP as defined under subsection 248(1) of the Act.

The Canada Revenue Agency's ("CRA") position on what constitutes a PHSP is outlined in Interpretation Bulletin IT-339R2 "Meaning of 'Private Health Services Plan'". As noted in paragraph 4 of IT-339R2, coverage under a PHSP must be in respect of medical expenses which normally would otherwise have qualified under subsection 118.2(2) of the Act for purposes 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.

The 2010 Budget proposes that expenses incurred after March 4, 2010 for purely cosmetic purposes, including any related services and other expenses such as travel, be ineligible for the METC. Both surgical and non-surgical procedures aimed purely at enhancing one's appearance will be ineligible. However, an expense will continue to qualify for the METC if it is required for medical or reconstructive purposes, such as surgery to address a deformity related to a congenital abnormality, a personal injury resulting from an accident or trauma, or a disfiguring disease.

The CRA has posted to its website examples of procedures that will generally be considered ineligible as medical expenses for the purpose of the METC, which include hair removal procedures. The following examples are provided on the CRA's website at http://www.cra-arc.gc.ca/gncy/bdgt/2010/mdcl-eng.html.

Examples of expenses that will generally be ineligible include:

• augmentations (such as chin, cheek, lips);
• body modifications (such as tongue splits);
• body shaping, contouring or lifts (such as, body, breasts, buttocks, face, and stomach);
• botulinum injections;
• chemical peels;
• implants (such as jewellery implanted into an eye or a tooth, or microdermal, transdermal, and subdermal cosmetic implants);
• filler injections (for removal of wrinkles);
• hair removal procedures;
• hair replacement procedures;
• laser treatments (skin resurfacing and removal of age spots);
• liposuction;
• reshaping procedures (such as rhinoplasty and otoplasty);
• rib removal;
• tattoo removal;
• teeth whitening; and
• tooth contouring and reshaping.

These expenses will continue to qualify for the METC:

• breast implant and related procedures for reconstructive purposes after a mastectomy;
• breast reduction to reduce back and shoulder pain;
• dental braces, if required to correct a misaligned bite;
• dental veneers to correct decayed or misaligned teeth;
• gastric bypass surgery or gastric stapling;
• laser eye surgery; and
• removal of excess skin after rapid weight loss due to a risk of infection.

We have not been provided with information to indicate that your hair removal procedure was required for medical or reconstructive purposes, such as surgery to address a deformity related to a congenital abnormality, a personal injury resulting from an accident or trauma, or a disfiguring disease. Accordingly, it is our view that generally, hair removal procedures will not qualify as medical expenses for purposes of the METC and should not be covered under PHSPs.

I trust this reply will be of assistance.

G. Moore

for Director
Business and Partnerships Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch