12 March 2007 External T.I. 2006-0213231E5 - medical expenses, tuition, travel, counselling

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: Do various expenses incurred qualify as medical expenses for purposes of the medical expense tax credit in section 118.2 of the Income Tax Act?

Position: Some appear to qualify but these determinations are a question of fact and must be made by the TSO.

Reasons: General comments provided.

								2006-021323
XXXXXXXXXX 							J. Vis
(519) 457-4444
March 12, 2007

Dear XXXXXXXXXX:

Re: Tuition, Travel and Counselling Costs

This is in response to your letter of September 14, 2006, in which you inquired about the deductibility, for income tax purposes, of tuition, medical and travel costs incurred by you to enable your daughter to attend a therapeutic residential school, as recommended by a psychologist.

The Income Tax Rulings Directorate provides binding comments only with respect to proposed transactions and only in the context of an advance income tax ruling. Information about this service is available in Information Circular 70-6R5, Advanced Income Tax Rulings, dated May 17, 2002. This Information Circular and other Canada Revenue Agency ("CRA") publications can be accessed on the Internet at http://www.cra.gc.ca.

We note that your inquiry clearly relates to a specific situation and completed transactions, which means that all relevant facts and documentation should be submitted to the appropriate Tax Services Office ("TSO") for their views, should you wish a more definitive response. You may wish to forward your correspondence and a copy of our reply to the Regina TSO for their consideration. They will likely require additional information in order to complete their review, as each case must be judged on its own particular facts. Although we cannot comment on your specific situation, we are prepared to provide the following general comments, which may be of assistance.

Our Comments

The CRA's general views regarding the medical expense tax credit are contained in Interpretation Bulletin IT-519R2, Medical Expense and Disability Tax Credits and Attendant Care Expense Deduction. Our comments regarding tuition and residential costs, travel expenses, and counselling costs are discussed below.

Tuition and Residential Costs:

Where, due to a physical or mental handicap, an individual is certified to require specialized care or care and training at a school or institution, paragraph 118.2(2)(e) of the Income Tax Act (the "Act") considers the costs of such care or such care and training to be medical expenses. Depending on the circumstances, the tuition costs for an individual suffering from a behavioural problem arising out of a mental or physical handicap who attends a school that specializes in the care and training of persons who have the same type of handicap, may qualify under paragraph 118.2(2)(e) of the Act.

Fees paid to a particular school qualify as a medical expense if certain requirements are met. The student must be suffering from a physical or mental handicap, the severity of which is such that the student "requires" the equipment, facilities or personnel specially provided by the school, and not merely that the student will "benefit from" such equipment, facilities or personnel. An "appropriately qualified person" must certify that the above conditions are met with respect to the individual receiving the care or the care and training at that school. A medical practitioner, as well as any other person who has been given the required certification powers under provincial or federal law, may carry out this certification. The CRA must be satisfied the equipment, facilities or personnel provided by a particular school, meet the requirements outlined by the person who certified the need for those facilities. If all these conditions are met, the amount paid for the individual to attend the school may qualify as a medical expense, notwithstanding that some part of the amount paid could be viewed as tuition fees. Whether an amount qualifies as a medical expense is a question of fact that can only be determined after analysing all the facts and circumstances.

While there is no prescribed form of certificate required under paragraph 118.2(2)(e), the certificate should provide details on the nature of the individual's handicap and should explain why the equipment, facilities or the trained professionals at the school (or other institution) are required to provide the care and training that the individual needs. Further, the certification must clearly indicate that an "appropriately qualified person", who is fully informed as to the nature of the particular person's handicap, issued it. While a certification should be obtained prior to the individual's enrolment with the school, a certification made after enrolment will be accepted if all the above-noted requirements are satisfied.

Travel Expenses:

Travel costs incurred to obtain medical services qualify as medical expenses if they satisfy the requirements in paragraph 118.2(2)(g) for costs related to transportation or paragraph 118.2(2) (h) of the Act for other travel costs. An individual is entitled to claim the transportation and travel expenses described in these paragraphs only if the following conditions are met:

1) substantially equivalent medical services were not available in the locality where the individual resides,

2) a reasonably direct travelling route was taken by the individual, and

3) the individual travelled to the particular place to obtain medical services for himself or herself and it is reasonable, having regard to the circumstances, for the individual to have travelled to that place to obtain these services.

An amount paid to a person engaged in the business of providing transportation services to transport an individual not less than 40 kilometres from the locality where the individual resides to a place where medical services are received may qualify as a medical expense under paragraph 118.2(2)(g) of the Act. Similarly, other travel expenses may qualify as medical expenses under paragraph 118.2(2)(h) of the Act if the individual travels not less than 80 kilometres from the locality where the individual dwells to a place where medical services are received.

In addition to the travel costs related to the individual, costs related to another person, who accompanies the individual in the circumstances discussed above, may qualify as medical expenses where the individual was, and has been certified by a medical practitioner to be, incapable of travelling without the assistance of an attendant..

Where an individual's tuition costs qualify as a medical expense, in our view, the travel costs to originally transport the individual to the school (or other institution) and the final travel costs home when the individual no longer resides at the institution, would also qualify as medical expenses provided the above conditions are met. However, travel costs for an individual to visit his or her family while residing at the institution are not travel to obtain medical services and hence, does not qualify as medical expenses.

Counselling Costs:

Fees paid for counselling services are qualifying medical expenses where the requirements of paragraph 118.2(2)(a) are satisfied. Deductibility is determined based on the facts of each case; however, such fees generally qualify if the counsellor is working in a recognized mental health clinic, community agency or hospital, the counsellor is a member of the association governing their particular profession, and the treatment is at the request of or in association with a medical practitioner. It is a question of fact whether a particular institution is a recognized mental health clinic, community agency or hospital. Factors such as the professional qualifications of the staff in attendance, and whether medical services are provided to its clients, are relevant to making such a determination.

The above comments are an expression of opinion only and are not binding on the CRA, as explained in paragraph 22 of Information Circular 70-6R5. However, 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