21 June 1995 External T.I. 9512425 - MEDICAL EXPENSES

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 Department.

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

Principal Issues:

Ruling requested regarding whether certain devices or equipment, monthly monitoring fees, services and drugs are eligible medical expenses pursuant to 118.2(2) for the purposes of the tax credit under 118.2(1).

Position TAKEN:

Question of fact. Unable to determine from information provided. Each individual case must be reviewed.

Reasons FOR POSITION TAKEN:

It is very possible that the devices or equipment sold by the client would meet the definition specified in Regulation 5700(d). However it would also have to be prescribed by a medical practitioner and meet such conditions as are prescribed as to its use or the reason for its acquisition as well as other pertinent conditions of 118.2(2) to be eligible. No technical documentation pertaining to the items was submitted for review. Each individual case should be reviewed to ensure that medical services are being provided. Monitoring system or monthly fees not eligible in most instances. see 941748, 5-8853, 941561

		951242
XXXXXXXXXX	D. Zion

Attention: XXXXXXXXXX

June 21, 1995

Dear Sirs:

Re: XXXXXXXXXX

This is in reply to your letter of April 25, 1995 wherein you request an advance income tax ruling regarding whether or not the cost of certain services offered by the above-noted corporation would qualify as medical expenses pursuant to subsection 118.2(2) of the Income Tax Act (the "Act") for the purposes of the medical expense tax credit under 118.2(1).

In determining whether a particular payment fulfils the requirements of the Act as a qualifying medical expense, it is primarily the individual in respect of whom the payment is made who must satisfy the requirements of the Act. Accordingly, as you were advised in our telephone conversation of May 19, 1995 (Zion/XXXXXXXXXX), since it would involve a finding of fact with respect to each individual as to whether or not the payments would qualify as medical expenses, we are unable to respond to your enquiry by way of an advance income tax ruling. Accordingly, your deposit will be returned under separate cover. We are, however, prepared to offer the following general comments which should be of assistance to you.

Our Comments

As we understand the information provided with your request, your client provides the following products to its customers:

XXXXXXXXXX

XXXXXXXXXX

To qualify as a medical expense for the purposes of the medical expense tax credit, the payment in question must be an amount paid for eligible medical expenses by an individual in respect of the individual or the individual's spouse or dependant as defined in the Act. The expenditures that are eligible for the credit are described in subsection 118.2(2) of the Act and section 5700 of the Income Tax Regulations.

In order to be eligible for the medical expense credit an item of special equipment, such as the XXXXXXXXXX would have to be prescribed and listed in Regulation 5700 of the Act. In addition, the device or equipment must be prescribed by a medical practitioner, not be described in any other paragraph of 118.2(2) of the Act and meet such conditions as may be prescribed in Regulation 5700 as to its use or the reason for its acquisition. It is possible that, in certain individual cases, the XXXXXXXXXX (if purchased in conjuction for use with the XXXXXXXXXX) would be eligible medical expenses if all the provisions of paragraph (d) of Regulation 5700 are met. In addition, it should be noted that to be deductible as a medical expense, the device must have been prescribed by a medical practitioner and meet any other pertinent requirements of subsection 118.2(2) of the Act. This would be a question of fact to be determined upon a review of each individual's circumstances as well as further technical documentation with respect to the device or equipment.

Subparagraph 118.2(2)(o) of the Act was intended to cover specialized diagnostic procedures and services that assist the medical practitioner in making a complete diagnosis and formulating a course of treatment, with such procedures and services being prescribed by the medical practitioner. Accordingly, while the cost of some of the services provided by your client might qualify as eligible medical expenses for the purpose of the medical expense tax credit if actually provided to an individual and specifically paid for, we are of the view that no portion of a monthly service fee such as the service described above would so qualify. In our opinion, the amount paid is not directly attributable to any particular eligible medical service provided to an individual but rather, is paid for the availability of such service whether or not the service is actually used by the individual.

In order for the XXXXXXXXXX to qualify as a medical expense for a customer of your client under paragraph 118.2(2)(n) of the Act, it must be:

• prescribed by a medical practitioner and recorded as such by a pharmacist,
• manufactured, sold or represented for use in

a)restoring, correcting or modifying an organic function,

b)diagnosing, treating or preventing a disease, disorder or abnormal physical state, or

c)treating the symptoms of a disease, disorder or abnormal physical state.

Should one of your client's patients wish a more definitive response with respect to the deductibility of their payments to your client, we recommend that they submit all relevant facts and documentation to their local tax services office for their comments.

We trust our comments will be of assistance to you.

Yours truly,

P.D. Fuoco
Section Chief
Personal and General Section
Business and General Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch