3 October 2002 External T.I. 2002-0159315 - MEDICAL TREATMENT OUTSIDE CANADA

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 the cost of cancer treatments in the United States qualifies as a medical expense under subsection 118.2(2) of the Income Tax Act (the "Act").

Position: Payment to a public or licensed private hospital (i.e., licensed by the state in which the hospital operates) by an individual to obtain medical services qualifies as a medical expense under paragraph 118.2(2)(a) of the Act. Certain travel and transportation expenses qualify as medical expenses if the conditions in paragraphs 118.2(2)(g) or (h) are met.

Reasons: Definition of medical expenses in subsection 118.2.

XXXXXXXXXX 2002-015931
J. Gibbons, CGA
October 3, 2002

Dear XXXXXXXXXX:

We are writing further to your letter of August 19, 2002 wherein you asked us if certain costs incurred by your client for cancer treatments in the United States qualify as a medical expense under subsection 118.2(2) of the Income Tax Act (the "Act"). You stated that the main reason your client sought treatment in the United States was that no facility in Canada could provide the same treatment in its entirety.

Written confirmation of the consequences inherent in particular transactions are given by this directorate only where the transactions are proposed and are the subject matter of an advance ruling request submitted in the manner set out in Information Circular 70-6R5. Where the particular transactions are partially completed or completed, the enquiry should be addressed to the relevant tax services office. Nonetheless, we are prepared to provide the following general comments that we hope will be of assistance.

Hospital Payments

An amount paid to a public or licensed private hospital (i.e., licensed by the state in which the hospital operates) by an individual to obtain medical services qualifies as a medical expense under paragraph 118.2(2)(a) of the Act. If there is any doubt as to whether a particular facility qualifies, the individual should contact his or her local tax services office for assistance.

Transportation and Travel Expenses

An amount paid to a person engaged in the business of providing transportation services to transport an individual not less than 40 kilometres from the locality where the individual resides to a place where medical services are received may qualify as a medical expense under paragraph 118.2(2)(g) of the Act. Similarly, other travel expenses may qualify as medical expenses under paragraph 118.2(2)(h) of the Act if the individual travels not less than 80 kilometres from the locality where the individual dwells to a place where medical services are received. Transportation and travel expenses for an accompanying individual may also qualify under paragraphs 118.2(2)(g) and (h) of the Act if the patient has been certified by a medical practitioner as being incapable of travelling alone.

An individual is entitled to claim transporation and travel expenses under paragraphs 118.2(2)(g) and (h) only if the following requirements are met:

(i) substantially equivalent medical services were not available in the individual's locality,

(ii) a reasonably direct travelling route was taken by the individual, and

(iii) the individual travelled to the particular place to obtain medical services for himself or herself and it is reasonable, having regard to the circumstances, for the individual to have travelled to that place for medical services.

Whether or not the above-noted requirements are met is a question of fact, and assistance in making this determination may be obtained from the individual's tax services office. We would point out that an opinion from a medical professional that substantially equivalent medical services were not available in the locality may be required to substantiate a claim for transportation and travel expenses. In addition, even if substantially equivalent medical services were not available in an individual's locality, the requirement in (iii) may not be met unless it is reasonable, having regard to the availability of substantially equivalent medical services nearer to the individual's locality, for the individual to have travelled to the place where the medical services were obtained.

We trust that these comments will be of assistance.

Yours truly,

Daryl Boychuk, LL.B
for Director
Business and Partnerships Division
Income Tax Rulings Directorate

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