Section 118.2

CRA indicated that the qualifying costs of medically-assisted dying where there is compliance with the detailed procedures set out in the Criminal Code and various provincial rules would qualify for the medical expense tax credit. By implication, the costs of going abroad for the procedure might not qualify.

Neal Armstrong. Summary of 21 November 2017 CTF Annual Conference CRA Roundtable (Official Response), Q.16 under s. 118.2(2)(a).

What impact does the timing of payment of medical expenses have on the computation of the medical expense tax credit ("METC") in s. 118.2(1), e.g., where fees are paid on January 1, 2015 for a dental treatment plan under which the services would be rendered in 2015 and 2016?

CRA responded that “an individual's medical expenses include expenses paid to a dentist which are for dental services provided to the individual in the taxation year in which the expenses were incurred,” so that fees which were prepaid in 2015 for services charges that would not be incurred in 2016, such fee could not qualify as medical expenses until 2016. After stating that it could be considered that “an expense is ‘incurred’…only where there is an obligation to pay a sum of money,” CRA went on to state:

[I]f it is established that that the services are provided and the expenses are incurred in 2016, the expenses paid to a dentist for dental services would be medical expenses under paragraph 118.2(2)(a) as long as the expenses were paid at some time. The time of payment may be before or after 2016.

CRA went on to confirm that for purposes of computing the medical expense tax credit ("MEC") in s. 118.2(1) for a year, an individual may choose any 12-month period ending in the year, but that the medical expenses must have been paid during the period so chosen. For example, if dental fees were paid on December 31, 2015, they would not be eligible for the METC computation for the 2016 taxation year if the individual had selected the calendar year, but such fees could be included in the computation of the METC in the 2016 return if the selected period included December 31, 2015.

Can an orthodontist’s travel expenses qualify as a medical expense? CRA stated (TaxInterpretations translation):

[M]edical services are diagnostic, therapeutic or rehabilitative services that are performed by a medical practitioner acting within the scope of his or her professional training. Thus, in general, the transportation of a medical practitioner (for example, an orthodontist) is not a medical service, and the fees paid for such travel would not be fees paid for medical or dental services.

Are osteopaths and naturopaths practising in Quebec health professionals for the purposes of the medical expenses tax credit? CRA responded:

Osteopaths and naturopaths in Quebec are not included in the health professionals (or "medical practitioners", as defined in subsection 118.4(2) of the ITA) who are recognized for purposes of the Medical Expense Tax Credit.

CRA then referenced the Authorized medical practitioners by province or territory for the purposes of claiming medical expenses list.

Medical expenses that are paid for the services provided by an orthotherapist or an osteopath in the province of Quebec are not eligible for purposes of the medical expense tax credit, as there is no legislation in Quebec which authorizes orthotherapists or osteopaths to provide medical services or to exercise medicine in Quebec.

Would a vasectomy reversal qualify? CRA stated:

[T]he fact that a service or procedure is elective would not disqualify it from being considered a medical service. … [A]n amount paid for a medical service that relates to an existing medical condition or illness, for example, infertility, would likely qualify as a medical expense… .

Were costs of hyperbaric oxygen therapy administered by a registered respiratory therapist in a private clinic in Alberta eligible? CRA stated that "the Treatment could be considered a medical service when it is offered to an individual for therapeutic or rehabilitative reasons," and that "a respiratory therapist is authorized to practise in the province of Alberta and would be considered a medical practitioner."

The individual had a worsening medical condition for which his specialist did not recommend surgery given the risks, and the second specialist in the region was too busy to provide a second opinion. He located the "Organization" promoting medical services in Country A, and used its services in accessing lumbar surgery there (accompanied by his spouse). Respecting the costs of his hospitalization, CRA stated:

In general, eligible medical expenses are not limited to expenses paid in Canada or medical services provided in Canada. Thus … the hospitalization expenses … may be eligible medical expenses if the hospital in Country A is a public hospital or a private licensed hospital and the fees were paid for medical services.

fees paid to a medical practitioner to obtain Special Authority status for a prescription medication qualified as a medical expense under s. 118.2(2) as "the completion of the form(s) for Special Authority by a medical practitioner would normally be ancillary to the medical service provided by the practitioner."

After a physician’s referral, the taxpayer’s child (with a severe and prolonged impairment entitling the taxpayer to a credit for mental or physical impairment under s. 118.3) has been using the services of a speech-language pathologist in the private sector, who can only provide services to the child once every two weeks – so that for the other weeks, the child is seen by a specialized speech therapy technician to whom the child was referred by the speech-language pathologist.

In the course of finding that the taxpayer would not be entitled to claim the medical expense tax credit (the “METC”) respecting the fees of the technician, CRA stated:

[W]e are not aware of any legislation in Quebec that would authorize speech therapy technicians to provide, as such, medical services in Quebec. Thus, the fees paid to these technicians are not eligible … .

In order to finance the cost of surgery, the taxpayer took out a bank loan. Did the interest expense qualify? CRA responded:

[T]he interest expense incurred by the taxpayer in respect of dental services is not an expense paid to a medical practitioner, dentist or nurse or a public or licensed private hospital … [and] those interest expenses do not qualify for the medical expense tax credit pursuant to paragraph 118.2(2)(a).

Expenditures for aquatherapy classes did not qualify. Although they were prescribed by the taxpayer’s doctor, they were not paid to a medical practitioner, dentist or nurse or a public or licensed private hospital.

Respecting pain management courses, CRA stated:

such expenses will be eligible for the METC if both of the following conditions are satisfied:

• they have been incurred for diagnostic, therapeutic or rehabilitative services for a pre-existing medical condition;
• they have been paid to a medical practitioner or a public or licensed private hospital.

"Generally, all regular fees charged by a nursing home, including any component for accommodation or meals, are normally accepted as being on account of full-time care in a nursing home. On the other hand, an amount charged for meals and accommodation in a place which does not ordinarily provide full-time nursing care to its residents would not be considered an amount paid for full-time care in a nursing home."

After referring to the Wakelyn case (71 DTC 35) where "the Tax Appeal Board held that the phrase 'one full-time attendant' should not be interpreted to mean one attendant only looking after the patient on a continuous basis without a respite but rather that several attendants could be utilized over a specified period so long as the claim for tax purposes included only one attendant for any given portion of that period", RC stated that more than one attendant could be utilized "provided that the period of care provided by each attendant did not overlap".

A taxpayer who does not carry on a business and who hires and remunerates employees such as a home care worker, a gardener, a maid, a housekeeper and a cleaner as well as other employees. The Directorate stated:

[I]f a person is employed to provide a single service, such as providing household or transportation services, the provision of these services is not considered to be attendant care.

Respecting whether a private seniors’ residence was a “nursing home,” CRA stated (TaxInterpretations transalation):

[T]he requirement [in S1-F1-C1, para. 1.33] that a facility "offers 24-hour nursing care" would not be satisfied if the establishment offers limited nursing care. This would be the case, for example, where the only nursing care a facility offers its residents is to make available an on-call nurse or where the number of applicable residents does not permit the staff to provide nursing care around the clock.

It may be that the same institution offers several levels of care so that a floor or part of the facility is reserved for residents who are unable to care for themselves and need nursing care 24 hours a day. In such cases, the establishment may qualify as a nursing home with respect to that floor or part of the facility only.

Can accommodation expenses paid to a retirement home for a patient with advanced Alzheimer's and who is on a floor with other high-need seniors qualify as expenses of full time care in a nursing home for the purposes of s. 118.2(2)(d)? CRA responded:

The fact that a person lives in a retirement residence and has Alzheimer's disease at a stage requiring the help of others for personal needs and care may be an element that helps leads to a determination that the person lives in a nursing home, but this does not automatically qualify the residence as a nursing home. In addition, other criteria such as the number of staff at the facility, their skills and the equipment available in order to provide nursing care to patients 24 hours a day are elements that may be considered to establish if a retirement residence is a nursing home. To the extent that the floor where this person lives meets the above criteria, we believe that the residence can qualify as a nursing home with respect to that floor. Accordingly, the expenses of full-time care in respect of that floor could qualify for the tax credit under subsection 118.2(2)(d) if the other conditions therein provided are satisfied.

IT-519R2, paras. 29-30 indicated that the fees paid to a nursing home could qualify as eligible medical expenses under s. 118.2(2)(e), whereas this reference is dropped in Folio S1-F1-C1. Does this position remain valid? CRA responded:

The 2005-0155731E5 and 2008-0293121I7 technical interpretations no longer represent the position of the CRA to the extent that both tax credits could simultaneously be claimed if the costs referred to in those letters were living expenses for stays in a nursing home. Indeed, the tax credit described in section 118.3 may not be claimed where accommodation expenses for a nursing home are claimed as medical expenses, regardless of under which paragraph in subsection 118.2(2) the medical expenses tax credit has been claimed, with the exception of paragraph 118.2(2)(b.1) in respect of remuneration for attendant care for an individual.

The individual had a worsening medical condition for which his specialist did not recommend surgery given the risks, and the second specialist in the region was too busy to provide a second opinion. He located the "Organization" promoting medical services in Country A, and used its services in accessing lumbar surgery there (accompanied by his spouse).

Respecting the eligibility of the related airline ticket expenses, and after referencing the 40-kilometre test, CRA stated:

For these expenses to qualify under paragraph 118.2(2)(g), the following conditions must also be met:

(a) substantially equivalent medical services are not available in that locality;
b) the route travelled is, having regard to the circumstances, a reasonably direct route
c) it is reasonable, having regard to the circumstances, for the patient to travel to that place to obtain those services.

…[T]he condition listed in (a) could be met even if medical services are available at a location closer to the patient's place of residence, provided that it was reasonable in the circumstances that the patient moved to the locality where the medical services were received.

Paragraph 118.2(2)(g) also allows a taxpayer to claim the same type of transportation expenses described above for one individual who accompanied the patient, where the patient was, and has been certified in writing by a medical practitioner to be, incapable of travelling without the assistance of an attendant.

A patient (the taxpayer) moved from Locality A to Locality B but, due to a shortage of family doctors in Locality B, could not be taken on as a patient there and, therefore, would travel approximately 330 kilometers to get medical care from the patient’s family doctor in Locality A. After referencing the requirement in s. 118.2 (2)(g) that substantially equivalent medical services are not available in the patient’s current locality, CRA stated that this condition:

could be satisfied even if medical services are available at a locality closer to the patient's place of residence, provided that it was reasonable in the circumstances that the patient moved to the locality where the medical services were received.

The taxpayer was treated for a rare type of cancer in the U.S. Subsequently, a drug which the taxpayer had been taking became available in Canada. However, but the taxpayer’s doctors in Canada and the U.S. that the taxpayer should continue to be followed by the doctor in the U.S., and the taxpayer considers that the U.S. doctor has more expertise and seems able to offer alternative treatments that are not available in Canada in the event that the taxpayer stops responding to this medication.

After summarizing ss. 118.2(2)(a), (g) and (h), and noting that one of the rquirements in s. 118.2(2)(g) was that substantially equivalent medical services are not available in [the patient's] locality CRA stated that such condition:

could be satisfied even if medical services are available at a location closer to the patient's place of residence, provided that it was reasonable in the circumstances that the patient moved to the locality where the medical services were received.

In response to a query on the methodology used to establish the kilometric rate for travel for medical expense tax credit purposes, CRA stated:

The CRA uses these kilometric rates according to guidelines from the Treasury Board of Canada Secretariat (TBS). These guidelines are based on the rates set by the National Joint Council (NJC) of the Public Service of Canada. The CRA has always accepted the NJC rates as fair and reasonable. The NJC determines the rates by analyzing new vehicle prices, depreciation and financing rates, current fuel prices, insurance premium rates, and operating costs in each province or territory. When these costs increase or decrease, the kilometric rates change accordingly.

…at njc-cnm.gc.ca/doc.php?did=117&lang=eng#tc-tm_4_1 … includes a link to the kilometric rates for each Canadian province and territory.

The individual had a worsening medical condition for which his specialist did not recommend surgery given the risks, and the second specialist in the region was too busy to provide a second opinion. He located the "Organization" promoting medical services in Country A, and used its services in accessing lumbar surgery there (accompanied by his spouse).

Respecting the eligibility of the related airline ticket expenses, and after referencing the 40-kilometre test and the three tests in subparas. (g)(iii) to (v) and stating re (g)(iii) that its “could be met even if medical services are available at a location closer to the patient's place of residence, provided that it was reasonable in the circumstances that the patient moved to the locality where the medical services were received,” CRA then referred to the 80-kilometer test in s. 118.2(2)(h), and stated respecting their accommodation and meal expenses in Country A (including during convalescence):

In general, we are of the view that paragraph 118.2(2)(h) applies under the same conditions as set out above, whether the expenses were incurred and paid in Canada or elsewhere.

CRA also noted:

In addition, the medical expenses described in paragraph 118.2(2)(h) may include reasonable accommodation and meal expenses in respect of one individual who accompanied the patient, provided that the patient has been certified in writing by a medical practitioner to be incapable of travelling without the assistance of an attendant.

Travel expenses may include expenses for meals, accommodations, and public transportation or, where public transportation is not readily available, vehicle expenses. An individual can choose the detailed method or the simplified method for calculating vehicle and meal expenses.

If a medical practitioner certifies that an individual is incapable of travelling alone to obtain medical services, the individual can also claim the travel expenses of an accompanying attendant.

For more information, see "Meal and Vehicle Rates Used To Calculate Travel Expenses for 2010".

Is a taxpayer entitled to the medical expense tax credit ("METC") under s. 118.2(2)(i) for the cost of a scooter where, even if he can walk, he cannot drive a car or walk long distances because of partial vision loss?

CRA indicated that the purchase of a scooter will qualify for the medical expense tax credit where it is acquired in place of and instead of a conventional wheelchair, that is, where the taxpayer has difficulty in walking, or cannot walk.

A disabled child requires breathing equipment. Would the cost of purchasing and installing an emergency, whole-house generator to power the breathing equipment (in case of a power outage) qualify? CRA stated:

[I]t is not clear to us that the installation of a whole-house generator meets all of the requirements.

Amounts paid in respect of the installation of a wheelchair lift to the second floor of an older home for the benefit of a disabled son, of extending the driveway in the back of the house where the lift is to be located, and dismantling the system of ramps currently in use (to the extent that such costs are necessary and integral to the other modifications), and of installing a bathroom suitable for his needs, would qualify.

The reasonable costs of constructing an addition to a house to accommodate the needs of a wheelchair-bound spouse are creditable.

A proposed ground level addition to the taxpayer's residence necessitated by the second storey no longer being accessible to the taxpayer's disabled spouse, together with a related entrance and access ramp, would qualify for the credit.

An air filtration system may qualify for a medical expense credit if it is prescribed by a qualified medical practitioner for a patient suffering from a chronic respiratory ailment, and a water purification device may so qualify if it is prescribed by a qualified medical practitioner for a patient suffering from severe chronic immune system disregulation.

Given the clear finding of fact made by the Tax Court judge that nothing linked tuition paid for the attendance of the taxpayer's child at nursery and elementary school and for swimming and ballet lessons to the child's speech and language problems, there was no basis for reversing a finding that the medical expense credit under s. 118.2(2)(e) (and under s. 118.2(2)(h)) was not available.

After a physician’s referral, the taxpayer’s child (with a severe and prolonged impairment entitling the taxpayer to a credit for mental or physical impairment under s. 118.3) has been using the services of a speech-language pathologist in the private sector, who can only provide services to the child once every two weeks – so that for the other weeks, the child is seen by a specialized speech therapy technician to whom the child was referred by the speech-language pathologist.

In the course of finding that the taxpayer would not be entitled to claim the medical expense tax credit (the “METC”) respecting the fees of the technician, CRA stated:

Although the individual, in the particular situation, is entitled to claim an amount for persons with disabilities because of the individual’s child's disability, there is no indication that the services rendered by the speech therapy technician constitute a treatment that is both prescribed and administered under the general supervision of a medical doctor.

The taxpayer’s a daughter is permanently eligible for the disability tax credit because of her mental functioning. If the parent hires a full-time or part-time specialized educator with a mandate to stimulate the child in a structured setting and according to her needs in accordance with a specified educational program, would the educator’s salary qualify for purposes of the medical expense tax credit, and would a written statement from the doctor be required to certify that such child needs those services because of learning difficulties or mental impairment? CRA responded:

Although … the child appears to be eligible for the disability tax credit …we cannot confirm whether the services that would be offered by a specialized educator (by following the XXXXXXXXXX program or other program) would be tutoring services supplementary to primary education pursuant to paragraph 118.2(2)(1.91) and if a medical practitioner would certify that the child requires such services because of the child’s learning difficulties or mental impairment … based on the information received.

After a physician’s referral, the taxpayer’s child (with a severe and prolonged impairment entitling the taxpayer to a credit for mental or physical impairment under s. 118.3) has been using the services of a speech-language pathologist in the private sector, who can only provide services to the child once every two weeks – so that for the other weeks, the child is seen by a specialized speech therapy technician to whom the child was referred by the speech-language pathologist.

In the course of finding that the taxpayer would not be entitled to claim the medical expense tax credit (the “METC”) respecting the fees of the technician on other grounds as well, CRA stated:

[T]he fees paid to a speech therapy technician are not eligible for the purposes of the METC because their actions do not assist the medical doctor (or the speech-language pathologist, in this case) to diagnose or to establish medical treatment.

In finding that the expenses of telemonitoring individuals in order to provide an emergency call service that is activated by a bracelet or a pendant – as well as the related expenses of purchasing or renting a tracking device and the associated user fees - were not eligible for the medical expenses tax credit ("METC") under s. 118.2(2)(m) or (o) or any other provision, CRA stated:

[O]nly expenses paid for a specific laboratory, radiology or other diagnostic procedure may qualify as medical expenses, if that procedure was done on the order of a physician. We are of the view that the expenses paid for the goods or services described in your first question are not directly attributable to a specific medical service rendered to an individual, but rather are paid for the availability of those services. whether or not they are actually used by the individual.

"[P]remiums paid to the NBDP [New Brunswick Drug Plan] are qualifying medical expenses pursuant to paragraph 118.2(2)(q)… ."

2013-0490901I7 reversed 2001-0113237 in finding that the Ontario Healthy Homes Renovation Tax Credit would not be considered a "reimbursement" for purposes of s. 118.2(3)(b). What about the Québec refundable tax credits could be considered as a "reimbursement" of medical expenses for purposes of paragraph 118.2(3)(b), in particular, the Tax Credit for Home-Support Services for Seniors ("CIMAD"), the Independent Living Tax Credit for Seniors ("CIALB") and the Rehabilitation Centre Tax Credit ("CISUT") – and may an individual who has treated a CIMAD as a medical expense for such purposes amend their tax returns for the last 10 years to adjust the calculation of the Medical Expenses Tax Credit ("METC")?

CRA stated:

[T]he CIMAD, CIALB and CISUT would not generally be considered a "reimbursement" for purposes of paragraph 118.2(3)(b) in a situation where an expense that is eligible for any of these credits is also an eligible expense for the METC. These credits would not reduce the amount of eligible medical expenses for the METC. …

[A]n individual who has already filed tax returns for the tax years 2013 and 2014 and treated a CIMAD as a medical expense reimbursement for purposes of paragraph 118.2(3)(b), may obtain, within the normal reassessment period, a correction for a tax return already filed for those years.

Before ruling that lump sum payments, made under a CCAA plan to former employees in settlement of their claims respecting private health services plans of which they had been beneficiaries, were non-taxable to them, CRA noted that the plan beneficiaries would be advised by the court-appointed counsel acting on their behalf that "that for purposes of calculating the non-refundable medical expense tax credit under section 118.2, neither [they] nor their spouse or common-law partner can include any amounts that would otherwise be qualifying medical expenses until such time as their cumulative medical expenses incurred since the termination of the Plans exceed the amount of the Payment received."

See summary under s. 6(1)(a).

CRA indicated that upon review it had concluded that the refundable Ontario Healthy Homes Renovation Tax Credit (OHHRTC):

will not be considered to be a reimbursement for the purpose of paragraph 118.2(3)(b) of the Act. Consequently, medical expenses eligible for the medical expense tax credit will not be reduced by the OHHRTC

A taxpayer who does not carry on a business and who hires and remunerates employees including a home care worker, and deducts source deductions and files T4 slips as required thereby generates the small business job credit ("SBJC"). The Directorate stated:

[P]aragraph 118.2(3)(b) generally provides that an individual must not treat as eligible medical expenses the expenses for which the individual is entitled to be reimbursed. An exception to this rule is where the amount of the reimbursement is required to be included in computing income and is not deductible in computing taxable income. Considering that the Act does not define the term "reimbursement", we are of the view that the SBJC amount could be considered a reimbursement for the purposes of paragraph 118.2(3)(b).

The taxpayer was reimbursed by the Régie de l'assurance-maladie du Québec ("RAMQ") for drug costs incurred in 2007 through 2011, but in 2011, was required to reimburse the amounts paid by the RAMQ for those years since the taxpayer was also covered under a private plan. The taxpayer was only reimbursed by the private insurer for 2010 and 2011 because the deadlines for submitting claims had passed. CRA stated:

Paragraph 118.2(3)(b) provides that qualifying medical expenses of an individual do not include any expense for which the individual, the patient or the legal representative of either such person has been, or is entitled to be, reimbursed except to the extent that the amount is required to be included in income and cannot be deducted in computing taxable income. …

[T]he taxpayer could claim the METC for the medical expenses incurred in 2007, 2008 and 2009 in that the taxpayer no longer has the right to be reimbursed for these expenses as part of the group drug insurance plan. Since the METC must be claimed for medical expenses paid in the year, the taxpayer should make an application to the Minister of National Revenue pursuant to subsection 152(4.2).