11 August 2015 External T.I. 2014-0527291E5 F - Remboursement de frais médicaux-CIMAD -- translation

Principal Issues: 1- Whether the position stated in document 2001-0113237 is still valid following the change in position stated in document 2013-0490901I7? 2- Can a taxpayer, who has previously considered the Tax Credit for Home-Support Services for Seniors (CIMAD) as a reimbursement for the purpose of medical expense tax credit, correct their income tax return for the 10 previous years? 3- Are Quebec provincial refundable tax credit as the Refundable Tax Credit for the Purchase or Rental of Equipment to Help Seniors Continue Living Independently at Home (CIALB) and the Refundable Tax Credit for Seniors for Stays in Functional Rehabilitation Transition Units (CISUT) considered reimbursements under paragraph 118.2(3)(b)?

Position: 1- No. 2- Inside the normal reassessment period, a taxpayer could request a correction of their income tax return for the tax return already filed for 2013 and 2014. 3- CIALB and CISUT will generally not be considered to be a reimbursement for the purpose of paragraph 118.2(3)(b).

Reasons: See below.

XXXXXXXXXX Danny Gagnon, CPA, CA, M. Fisc.
2014-052729

August 11, 2015

Dear Sir,

Subject: Reimbursement of medical expenses

This is in response to your letter of April 8, 2014 in which you requested clarification of the term "reimbursement" referred to in paragraph 118.2(3)(b) of the Income Tax Act ("Act").

Specifically, you wished to know whether the following 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"). We apologize for the time required to respond to your request.

Unless otherwise stated, all statutory references herein are references to the provisions of the Act.

Questions

You asked us the following questions:

1- Following the change of position of the Canada Revenue Agency ("CRA") in the technical interpretation 2013-0490901I7, is the position of the CRA regarding CIMAD set out in the technical interpretation 2001- 0113237 still valid?

2- If this position is no longer valid, may an individual who has treated a CIMAD as a medical expense for purposes of paragraph 118.2(3)(b) amend their tax returns for the last 10 years, under the relief provisions, to adjust the calculation of the Medical Expenses Tax Credit ("METC")?

3- Are CIALB and CISUT considered "reimbursements" for the purposes of paragraph 118.2(3)(b)?

Our Comments

This technical interpretation provides general comments about the provisions of the Income Tax Act (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 a particular transaction 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 70-6R6, Advance Income Tax Rulings and Technical Interpretations.

Questions 1 and 3:

Paragraph 118.2(3)(b) generally provides that there shall not be included as a medical expense of an individual for the purposes of being eligible for the METC any expense to the extent that, inter alia, the individual is entitled to be reimbursed for the expense. There exists an exception to this rule where the amount of the reimbursement is required to be included in computing income and is not deductible in computing taxable income.

We have indicated in the 2013-0490901I7 technical interpretation issued on August 19, 2013, that the Ontario Healthy Homes Renovation Tax Credit would not be considered a "reimbursement" for purposes of paragraph 118.2(3)(b). Accordingly, the position stated in the 2001-0113237 technical interpretation no longer represents the views of the CRA.

We are of the view that the 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.

Question 2:

When a change of position is issued in a technical interpretation, and that change is for the benefit of the taxpayer, it usually applies to present and future assessments and reassessments. Thus, an 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.

We hope that our comments will be of assistance.

Michel Lambert, CPA, CA, M. Fisc.
Manager
Business and Employment Income Division
Income Tax Rulings Directorate
Legislative Policy
and Regulatory Affairs Branch