4 November 2003 External T.I. 2003-0044045 - MEDICAL EXPENSES INCURRED 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 costs of cancer treatments available only in the USA qualify as medical expenses under subsection 118.2(2) of the Act.

Position:

The expenses would qualify if paid to a medical practitioner or to a public or licensed private hospital. Also certain travel expenses may qualify if the conditions in paragraphs 118.2(2)(g) or (h) are met

Reasons:

Definition of medical expense in ss. 118.2(2)

Lena Holloway, CA
XXXXXXXXXX (613) 957-2104
2003-004404
November 4, 2003

Dear XXXXXXXXXX:

Re: Medical Expense Tax Credit

We are replying to your letter of October 16, 2003 wherein you enquired whether amounts paid for cancer treatments in the United States qualify as medical expenses under subsection 118.2(2) of the Income Tax Act (the "Act"). You stated that upon recommendation of your Canadian doctors, you sought treatment in the United States as there is no facility in Canada that could provide the same therapy considered necessary to treat your esophageal cancer.

Written confirmation of the tax consequences that apply to a particular fact situation is given by this directorate only in the context 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.

Payments to Medical Practitioners and Hospitals

Amounts paid by an individual to a medical practitioner or to a public or licensed private hospital (i.e., licensed by the province or state in which the hospital operates) to obtain medical services, qualify as medical expenses eligible for the medical expense tax credit. Qualifying medical expenses also include amounts paid for laboratory, radiological or other diagnostic procedures or services, with necessary interpretations, for maintaining health, preventing disease or assisting in the diagnosis or treatment of an injury, illness, or disability as prescribed by a medical practitioner. Qualifying medical expenses can be in respect of amounts paid to persons or for services received either within, or outside of Canada.

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. Similarly, other travel expenses (e.g. amounts expended for meals and accommodation for a patient and, where an individual has been certified as being incapable of travelling alone, for an accompanying individual) may qualify as medical expenses if the individual travels not less than 80 kilometres from the locality where the individual dwells to a place where medical services are received.

An individual is entitled to claim transportation and travel expenses 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 him or herself and it is reasonable, having regard to the circumstances, for the individual to have travelled to that place for medical services.

It is our view that the requirement in (iii) may be met even if medical services are available nearer to the individual's locality if, in the circumstances, it is reasonable for the individual to have travelled to the place where the medical services were obtained.

We would like to point out that draft legislation exists that would require written certification from a medical professional that substantially equivalent medical services were not available in the locality in support of a claim for transportation and travel expenses. This legislation, when enacted, will be effective for certifications made after December 20, 2002 and will be accepted by the Canada Customs and Revenue Agency (the "CCRA") as substantiating such a claim. The attachments to your letter from your Canadian doctors in our opinion would support such a claim.

If you require any further assistance, please contact us.

Yours truly,

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