25 February 2025 External T.I. 2024-1016651E5 - METC and amounts paid to obtain embryos

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 certain amounts paid to obtain embryos would qualify as an eligible medical expense for the purposes of the medical expense tax credit (METC).

Position: Question of Fact.

Reasons: Paragraph 118.2(2)(v) is amended to add the term "embryos" to ensure that embryo transportation costs would be recognized under the METC. The nature of the costs and the amounts paid need to be in compliance with the Assisted Human Reproduction Act.

XXXXXXXXX							2024-101665
								Chris Brennan, CPA, CA

February 25, 2025

Dear XXXXXXXXXX:

Re: METC and amounts paid to obtain embryos

This is in reply to your email of May 1, 2024 wherein you requested our views on whether certain amounts paid to obtain embryos would qualify as an eligible medical expense pursuant to paragraph 118.2(2)(v) of the Income Tax Act (the Act) for the purposes of the medical expense tax credit (METC). We apologize for the delay in our response.

Our Comments

This technical interpretation provides general comments about the provisions of the Income Tax Act and related legislation (where referenced). It does not confirm the income tax treatment of a particular situation involving a specific taxpayer but is intended to assist you in making that determination. The income tax treatment of particular transactions proposed by a specific taxpayer will only be confirmed by this Directorate in the context of an advance income tax ruling request submitted in the manner set out in Information Circular IC 70-6R12, Advance Income Tax Rulings and Technical Interpretations.

In Canada, surrogacy and the donation of reproductive material are regulated under the Assisted Human Reproduction Act (AHR Act). Health Canada is responsible for developing policy and regulations under the AHR Act. According to Health Canada’s webpage “Prohibitions related to Purchasing Reproductive Material and Purchasing or Selling In Vitro Embryos”, the AHR Act forbids the buying and selling of embryos in Canada. This means that embryos may never be bought or sold in exchange for money, property or services and that fertility clinic or donor bank’s are not allowed to pay a donor for the donation of their embryos. However, the AHR Act recognizes that there are certain costs involved in the maintenance and transfer of an embryo and allows for reimbursement of actual expenses.

Paragraph 118.2(2)(v) of the Act allows as an eligible medical expense amounts paid to a fertility clinic or donor bank in Canada as a fee or other amount paid or payable, to obtain sperm, ova or embryos, to enable the conception of a child by the individual, the individual's spouse or common-law partner or a surrogate mother on behalf of the individual.

The Department of Finance technical notes explain that paragraph 118.2(2)(v) of the Act was amended to add the term “embryos” to ensure that embryo transportation costs would be recognized under the METC.

Therefore, it is our view that certain amounts (such as amounts paid for the costs involved in the maintenance and transfer of an embryo) paid to a fertility clinic or donor bank in Canada, through an arrangement or transaction that is in accordance with the AHR Act and its related regulations, as a fee or other amount paid or payable, to obtain embryos to enable the conception of a child by the individual, the individual's spouse or common-law partner or a surrogate mother on behalf of the individual, could be eligible medical expenses for purposes of the METC pursuant to paragraph 118.2(2)(v) of the Act.

We trust that these comments will be of assistance to you.

Yours truly,

Eric Wirag, CPA, CMA
Manager, Tax Credits and Ministerial Issues
Business and Employment Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch