23 November 1995 External T.I. 9528625 - UPDATE ON FEES PAID FOR RESIDENTIAL CARE

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:

whether comments in 1993 correspondence 932721 are still applicable

Position:

view expressed by the Dept in the letter as they relate to the information provided to us at that time remain generally applicable. Minor amendments have been made to 118.2(2)(b) and 118.2(2)(b.1) has been added with respect to expenses incurred after 1990

Reasons:

		952862
XXXXXXXXXX	Sandra Short

November 23, 1995

Dear Sir:

Re: Fees Paid for Residential Care in a Nursing Home or Other Institution

This is in reply to your letter of October 26, 1995 which asks whether our opinion of October 1993 (our file #932721) on the above-noted subject is applicable in its entirety to the 1995 taxation year.

We have attached a severed version of this correspondence and comment as follows:

The views expressed by this Department in the letter as they relate to the information provided to us at that time remain generally applicable. Amendments have been made to paragraph 118.2(2)(b) of the Act since this opinion was issued in 1993. Paragraph 118.2(2)(b) was amended and paragraph 118.2(2)(b.1) was added by S.C. 1994, c. 7, Sched. 11, S. 89(1), applicable with respect to expenses incurred after 1990.

Our comments in 1993 state that: "(m)edical expenses for the purpose of the Income Tax Act (ITA) include, under paragraph 118.2(2)(b) of the ITA, amounts paid for full-time care in a nursing home where the patient has a severe and prolonged mental or physical impairment that has been certified in prescribed form by a medical doctor". Amounts paid for full-time care in a nursing home may continue to qualify as a medical expense for purposes of the Act where the patient has a severe and prolonged mental or physical impairment. The amendment, in conjunction with changes made to subsection 118.3(1) of the Act, merely clarifies that a patient cannot claim both an amount for full-time care in a nursing home and the credit for mental or physical impairment, thus the reference in paragraph 118.2(2)(b) to the patient "in respect of whom an amount would, but for paragraph 118.3(1)(c), be deductible under section 118.3...".

As it is our view that the provincial definition of extended care bed cannot be used to determine whether fees paid by a particular individual to a nursing, charitable or municipal home qualify as a medical expense for purposes of subsection 118.2(2) of the Act, we have not extended our review to incorporate any changes which may have been made to Ontario's Long-Term Care Statute Law Amendment Act, 1993, the Charitable Institutions Act, Homes for the Aged and Rest Homes Act and Nursing Homes Act.

We trust our comments will be of assistance to you.

Yours truly,

P.D. Fuoco
for Director
Business and General Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch