23 March 1994 External T.I. 9327455 - MEDICAL EXPENSES

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.

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.

Principal Issues:

Are facility fees paid to a surgical clinic deductible pursuant to 118.2(2)(a)?

Would the surgical clinic qualify as a "private licensed hospital" for the purposes of the ITA?

What is a "private licensed hospital" for the purposes of the ITA?

Position TAKEN:

Yes the facilities qualify as a "licensed private hospital" and thus, provided the facility fee meets the other provisions of 118.2(2)(a) it would be deductible.

Reasons FOR POSITION TAKEN:

The term "licensed private hospital" is not defined in the ITA. Research into the meaning of the terms (Black's Law Dictonary and The Encyclopedia of Wods and Phrases Legal Maxims) indicate the terms are broad enough to include this facility. It has met the licensing standards of the College of Physicians and Surgeons of the Province of the Manitoba for the facility. The College has the authority to grant this license pursuant to the Medical Act of Manitoba (Sections 40(1) and 40(2)). In addition it has also met the municipal codes for a hospital are in possession of an occupancy permit issued upon meeting these codes.

932745
XXXXXXXXXX D. Zion

Attention: XXXXXXXXXX

March 23, 1994

Dear Sirs:

Re: Medical Expenses

We are writing in reply to your letters of September 24, 1993 and February 15, 1994 and various telephone conversations (Zion/XXXXXXXXXX) in which you requested the Department's interpretation as to whether or not a "facility fee" paid by patients to a private surgical centre would qualify as a medical expense pursuant to paragraph 118.2(2)(a) of the Income Tax Act (the "Act").

As we understand it, a partnership which owns or leases all of the surgical facilities and equipment charges the patient a "facility fee" for making the surgical facilities, equipment and the related staff (not including the physicians and dentists) available for their operation or procedure. This facility fee is in addition to the fee that the physician or dentist who uses the surgical facilities of the partnership to perform the surgery or other medical procedures would charge the patients or the Manitoba Health Services Commission for their personal services. The "facility fee" is paid directly to the partnership by the patient.

The surgical facilities of the partnership are licensed by the Manitoba College of Physicians and Surgeons. In addition you have provided further documentation showing that the facility has been issued an occupancy permit indicating it meets all the municipal codes for hospital facilities.

Our Comments

In the comments that follow unless otherwise stated, all statute references are to the Income Tax Act S.C. 1970-71-72, c.63 as amended, consolidated to June 10, 1993.

Subparagraph 118.2(2)(a) of the Act states that an individual's medical expenses, which would qualify for the medical expense tax credit, are amounts paid to a medical practitioner, dentist or nurse or a public or licensed private hospital, in respect of medical or dental services provided to the individual, the individual's spouse or to a dependant in respect of whom the individual may deduct an amount under section 118 from tax payable under Part I of the Act for the taxation year in which the expense was incurred.

From the information you have provided, it is our view that the facilities qualify as a licensed private hospital. Thus, provided the facility fee meets the other provisions of subparagraph 118.2(2)(a) of the Act, it would qualify as a medical expense of an individual.

We trust our comments will be of assistance to you.

Yours truly,

P.D. Fuoco
for Director
Business and General Division
Rulings Directorate
Legislative and Intergovernmental
Affairs Branch