12 June 2003 External T.I. 2003-0020485 - medical expenses-travel

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 travel expenses & expenses of new accommodations to facilitate obtaining medical care/ instruction for a dependant who has received a cochlear implant qualify for the medical expense tax credit

Position: Expenses are not qualifying medical expenses.

Reasons: These costs are not included in subsection 118.2(2).

2003-002048
XXXXXXXXXX Lena Holloway, CA
613-957-2104
June 12, 2003

Dear XXXXXXXXXX:

Re: Medical Expense Tax Credit

We are writing in reply to your letter of May 27, 2003, requesting our views on whether certain expenses incurred on behalf of your daughter qualify for the medical expense tax credit. Your letter explained that proper instruction and training relating to her cochlear implant was unavailable in your area. Hence it was necessary to enrol her in the XXXXXXXXXX (the "Center") for at least two and possibly three years beginning in XXXXXXXXXX where she could receive the professional care she requires. In order to facilitate her attendance at this school it was necessary for you to take up a second residence in XXXXXXXXXX and for each of you to take a leave of absence from your jobs for alternate years. You have asked whether the description in paragraph 29 of IT-519R2 would apply such that any or all of the expenses incurred to allow your daughter to learn to use her cochlear implant would qualify for the medical expense tax credit. If these expenses are not eligible for the medical expense tax credit, you have asked why expenses relating to travel and accommodation in obtaining a guide dog were "entitled to full reimbursement."

Our Comments

1. Medical Expense Tax Credit

Section 118.2 of the Income Tax Act (the "Act") provides rules for determining the amount that may be claimed, as a tax credit, in respect of medical expenses. The credit against taxes payable is calculated as a percentage of qualifying medical expenses, in excess of defined limits, incurred in any 12-month period ending in the taxation year. Subsection 118.2(2) of the Act contains a list of expenditures that qualify as medical expenses. Those parts of subsection 118.2(2) that are relevant to your situation are discussed below.

(a) Care at an Institution

Paragraph 118.2(2)(e) of the Act recognizes, as a medical expense, an amount paid for the care or the care and training at a school or an institution, provided the individual has been certified by an appropriately qualified person to require the equipment, facilities or personnel specially provided by that school/institution.

(b) Moving Expenses

Paragraph 118.2(2)(l.5) recognizes, as a medical expense, reasonable moving expenses (up to a maximum of $2,000) to move an individual, who lacks normal physical development or has a severe and prolonged mobility impairment, to housing that is more accessible by the individual or in which the individual is more mobile or functional. Unfortunately, there is no similar inclusion for costs incurred to facilitate a move made to obtain medical treatment.

(c) 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 transportation and travel expenses under paragraphs 118.2(2)(g) and (h) of the Act 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.

2. Guide and Hearing-Ear Dogs

Paragraph 118.2(2)(l) recognizes the costs of acquiring, caring and maintaining (including food and veterinary care) an animal as long as certain conditions are met. These costs must be paid on behalf of a patient who is blind, profoundly deaf or who has a severe and prolonged impairment that markedly restricts the use of the patient's arms or legs. The animal must be specially trained to assist a patient in coping with his or her impairment and the animal must be provided by a person or organization one of whose main purposes is the training of animals for this purpose. The patient's reasonable travel expenses incurred for the purpose of attendance at, and reasonable board and lodging expenses incurred for the purpose of full-time attendance at, a school, institution or other facility that trains persons with the same kind of impairment in the handling of such animals also qualifies as medical expenses. Although the Act acknowledges that travel expenses may be incurred in obtaining a guide dog, many other situations where medical travel may be necessary, such as the scenario presented in your letter, are not specifically recognized by the Act.

3. Summary

While section 118.2 of the Act provides some relief in recognizing that moving and travel expenses may be incurred in relation to necessary medical attention, such relief is only offered in limited circumstances. Unfortunately, neither the expenses of relocation nor those of lodging described in your letter appear to meet the eligibility requirements set out in the section. It is not clear from your letter if you incurred or will incur the type of travelling expenses described in paragraphs 118.2(2)(g) and (h). Therefore, we would encourage you to review the requirements carefully and, if you require any assistance in this regard, our local tax services office would be pleased to help.

4. Seeking Legislative Change

Please note that the Canada Customs and Revenue Agency is required to administer the Act as passed by Parliament. If you have concerns regarding the recognition of certain expenses as medical expenses, we would encourage you to contact the Tax Legislation Division of the Department of Finance. It is our understanding that the Department of Finance is continually reviewing the legislation governing medical expenses to ensure that all costs incurred in connection with a medical disability are properly recognized for tax purposes. The address for correspondence is:

Mr. Brian Ernewein

Department of Finance Canada
Tax Legislation Division
140 O'Connor Street
Ottawa ON K1A 0G5

We regret our response could not be more favourable.

Yours truly,

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

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