12 April 2005 External T.I. 2005-0115011E5 - Medical Expense Tax Credit

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 tuition fees for a taxpayer's child to attend a school for gifted children would qualify as a medical expense for purposes of claiming the medical expense tax credit.

Position: No

Reasons: Notwithstanding the fact that some part of an amount could be construed as tuition fees, to qualify as a medical expense under paragraph 118.2(2)(e) of the Act all of the conditions of the provision must be met, including certification by an appropriately qualified person that the child is suffering from a known physical or mental handicap.

Randy Hewlett
XXXXXXXXXX 613-941-7239
2005-011501
April 12, 2005

Dear XXXXXXXXXX:

Re: Medical Expense Tax Credit

We are writing in response to your letter of February 3, 2005, wherein you asked for our opinion on whether tuition fees for your son's attendance at the "XXXXXXXXXX" would qualify as a medical expense for purposes of your claiming the medical expense tax credit.

You indicated that your son is a "highly gifted learner who also has a learning disability". Included with your letter was a report by XXXXXXXXXX, a registered psychologist, who made a psychological and educational assessment of your son and recommended that he be placed in an accelerated academic program commensurate with his abilities. You indicated that the public school system is unable to provide your son with the academic program recommended by XXXXXXXXXX. You also included a letter from XXXXXXXXXX, a naturopathic physician, who indicated that your son was suffering from stress caused by his current academic program. XXXXXXXXXX recommended that your son be placed in a more challenging educational program to alleviate this stress.

You requested that we confirm that the tuition fees are a qualifying medical expense for purposes of the medical expense tax credit. As support for your request, you referred to the decision of the Tax Court of Canada ("TCC") in Collins v The Queen (1998 DTC 3415).

Our Comments

Written confirmation of the tax implications inherent in particular transactions is given by this Directorate only where the transactions are proposed and are the subject matter of an advance income tax ruling request submitted in the manner set out in Information Circular 70-6R5, Advance Income Tax Rulings, dated May 17, 2002. Where the particular transactions are completed, the inquiry should be addressed to the relevant Tax Services Office. However, we are prepared to offer the following comments.

Section 118.2 of the Income Tax Act (the "Act") contains rules for determining the amount that may be claimed as a tax credit in respect of qualified medical expenses. The tax credit applies to qualifying medical expenses that are in excess of defined limits. The qualifying medical expenses must have been incurred within any period of 12 months ending in the taxation year, except in the case of an individual's death, in which case the qualifying medical expenses must have been incurred within any period of 24 months that includes the day of death. Generally, an individual can claim qualifying medical expenses in respect of his or her child where the child was dependent on the individual for support at any time in the year.

Pursuant to paragraph 118.2(2)(e) of the Act, a qualifying medical expense includes an amount paid "for the care, or the care and training, at a school, an institution or another place of the patient, who has been certified in writing by an appropriately qualified person to be a person who, by reason of a physical or mental handicap, requires the equipment, facilities or personnel specially provided by that school, institution or other place for the care, or the care and training, of individuals suffering from the handicap suffered by the patient". Certifications that are made on or before December 20, 2002, do not have to be in writing.

The determination of whether a particular expense meets all of the requirements in paragraph 118.2(2)(e) of the Act can only be made with a complete knowledge of all the facts and circumstances surrounding a particular situation. We would note, however, that notwithstanding the fact that some part of an amount could be construed as tuition fees, the amount may still qualify as a medical expense under paragraph 118.2(2)(e) of the Act provided all of the conditions of the provision are met.

It should be noted that the decision in Collins was rendered on or around the same time as the TCC rendered its decisions in Burns et al v The Queen (1998 DTC 3419), Robinson v The Queen (1998 DTC 3419) and Giroday v The Queen (1998 DTC 3416). All of these cases involved the determination of whether an amount paid for the attendance of the particular taxpayer's child at the Choice School For Gifted Children was a qualified medical expense. The only decision that the TCC rendered in any taxpayer's favour was Collins. In Collins, the child was certified by an appropriately qualified person to be suffering from Attention Deficit Hyperactive Disorder and Oppositional Defiance Disorder. In Burns, Robinson and Giroday, while recognising that the children had learning difficulties, the TCC was unable to conclude that the children suffered from any known mental handicap.

Based on the information you provided, we are unable to provide you with a favourable opinion since there is no clear indication that your child suffers from a known physical or mental handicap in accordance with the requirements of paragraph 118.2(2)(e) of the Act as summarized above.

We trust our comments will be of assistance to you.

Yours truly,

John Oulton, CA
for Director
Business and Partnerships Division
Income Tax Rulings Directorate
Policy and Planning Branch