17 April 2002 External T.I. 2002-0127575 - MEDICAL EXPENSES 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.

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

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

Principal Issues: Whether a certain portion of medical expenses incurred within January 1, 2001 to May 31, 2002 may be deducted by a taxpayer in the 2001 and 2002 taxation years.

Position: Yes, provided that the medical expenses being claimed consist of those that are paid within a period of 12 months ending in the particular year and that have not been deducted in a previous year.

Reasons: The words of B in the formula described in subsection 118.2(1).

XXXXXXXXXX 2002-012757
Frank Fontaine, FCCA
April 17, 2002

Dear XXXXXXXXXX:

Re: Medical Expenses

This is in reply to your facsimile transmission dated March 7, 2002 concerning whether medical expenses incurred by a taxpayer may be claimed in computing the income of the taxpayer for the 2001 and 2002 taxation years.

OUR COMMENTS

Written confirmation of the consequences inherent in particular transactions are given by the 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 70-6R4 (the "Circular"). Where the particular transactions are completed or partially completed, the enquiry should be addressed to the relevant Tax Services Office. Notwithstanding the foregoing, we are providing the following general comments:

For the purposes of the medical expense deduction in computing the tax payable by an individual for a taxation year, paragraph (b) under B in the formula described in subsection 118.2(1) of the Income Tax Act (the "Act") provides that the particular medical expenses must be those that are paid "within any period of 12 months ending in the year". See paragraph 11 of Interpretation Bulletin IT-519R2 (Consolidated) for further commentary in this regard.

1. Since the first twelve-month period ending in:

(a) the 2001 taxation year would commence on January 2, 2000 and end on January 1, 2001 and the last such period ending in that year would commence on January 1, 2001 and end on December 31, 2001, and

(b) the 2002 taxation year would commence on January 2, 2001 and end on January 1, 2002 and the last such period ending in that year would commence on January 1, 2002 and end on December 31, 2002,

only medical expenses that were paid within any one period of twelve months ending, in the case of (a), between January 1, 2001 and December 31, 2001 and, in the case of (b), between January 1, 2002 and December 31, 2002, would qualify in computing the amount deductible in the 2001 and 2002 taxation years, respectively, under subsection 118.2(1) of the Act, provided that the particular medical expenses have not been used in calculating a previous year's medical expense tax credit.

2. Accordingly, for the purposes of determining the amount of B in the formula described above, a particular period of twelve months in respect of a taxpayer's claim may end on:

(a) May 31, 2001, for the purposes of deducting medical expenses paid between June 1, 2000 and May 31, 2001 in computing the taxpayer's income for the 2001 taxation year, and

(b) May 31, 2002, for the purposes of deducting medical expenses paid between June 1, 2001 and May 31, 2002 in computing the taxpayer's income for the 2002 taxation year,

provided that the medical expenses claimed in a taxation year have not been deducted in a previous year.

The foregoing comments represent an opinion expressing our general views with respect to the subject matter. As indicated in paragraph 22 of the Circular, the above comments do not constitute an advance income tax ruling and, accordingly, are not binding on the Canada Customs and Revenue Agency.

We trust our comments will be of assistance to you.

Yours truly,

Steve Tevlin
for Director
Business and Partnerships Division
Income Tax Rulings Directorate
Policy and Legislation Branch

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