18 December 2007 Internal T.I. 2007-0255741I7 - Medical Expenses - Block Fees

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 a block fee paid to cover the cost of certain ancillary or incidental uninsured medical services qualifies as an eligible medical service under 118.2(2)(a).

Position: Yes

Reasons: 118.2(2)(a) includes any amount paid to a medical practitioner or a public or licensed private hospital in respect of medical services provided. The block fee paid to the medical centre relates almost entirely to eligible medical services that are likely to be rendered to the vast majority of Plan members.

										December 18, 2007

	Sudbury Tax Services Office					HEADQUARTERS											Income Tax Rulings
		  								Directorate
	Attention:  Luciana Buchy					Amanda Riddell
(613) 957-2128

										2007-025574

Medical Expenses - Block Fees

This is in reply to your October 12, 2007 facsimile, concerning a question you received from XXXXXXXXXX.

XXXXXXXXXX asked whether certain expenses qualify as medical expenses for the purposes of the medical expense tax credit. It is our understanding that the XXXXXXXXXX charges fees to its clients to cover the cost of certain ancillary or incidental medical services that are not covered under the Ontario Health Insurance Plan. The clients have the option of paying for these services either on a pay-per-service basis or by signing up for the Medical Centre's extended plan ("Plan"). Under the Plan, a client pays a relatively modest annual fee (known as a block fee) for unlimited use of a particular list of services for the year. XXXXXXXXXX would like to know whether this block fee qualifies as an eligible medical expense.

Subsection 118.2(2) of the Income Tax Act ("Act") provides a list of expenditures that qualify as medical expenses. Paragraph 118.2(2)(a) of the Act includes any amount paid to a medical practitioner or a public or licensed private hospital in respect of medical services provided. Whether a particular service qualifies as a "medical service" for purposes of this provision is a question of fact.

We recognize that the block fee in question relates almost entirely to eligible medical services and that these eligible medical services are likely to be rendered to the vast majority of Plan members. For these reasons, we consider this block fee to be a medical service under paragraph 118.2(2)(a).

We trust that these comments will be of assistance.

For your information a copy of this memorandum will be severed using the Access to Information Act criteria and placed in the Canada Revenue Agency's electronic library. A severed copy will also be distributed to the commercial tax publishers for inclusion in their databases. The severing process will remove all material that is not subject to disclosure, including information that could disclose the identity of the taxpayer. Should your client request a copy of this memorandum, they can be provided with the electronic library version, or they may request a severed copy using the Privacy Act criteria, which does not remove client identity. You should make requests for this latter version to Mrs. Jackie Page at (819) 994-2898. A copy will be sent to you for delivery to the client.

G. Moore
For Director
Business and Partnerships Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch