21 June 2011 External T.I. 2011-0395031E5 - Long-term care at a hospital and the DTC

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.

Principal Issues: Whether an individual can claim a medical expense tax credit ("METC") for payments made for long-term care at a hospital and the disability tax credit ("DTC").

Position: Question of fact.

Reasons: The wording of Paragraph 118.3(1)(c) of the Act prevents an individual from claiming both the disability tax credit and the medical expenses for nursing home care or attendant care if a claim is made under paragraph 118.2(2)(b). This restriction does not apply if a medical expense claim is made in respect of part-time attendant care under paragraph 118.2(1)(b.1).

XXXXXXXXXX 						2011-039503

June 21, 2011

Dear XXXXXXXXXX :

Re: Medical Expense Tax Credit ("METC") for Hospital Payments

This is in reply to your correspondence dated February 1, 2011, in which you enquired about the income tax treatment of payments made to the Mount Sinai Hospital for long-term care in that facility. You explained that your mother, who is eligible for the disability tax credit, pays $XXXXXXXXXX per month to this hospital for such care.

Our comments

Written confirmation of the tax implications inherent in particular transactions is given by this Directorate only where the transactions are proposed and are the subject matter of an advance income tax ruling request submitted in the manner set out in Information Circular 70-6R5, Advance Income Tax Rulings, dated May 17, 2002. Also, where the particular transactions are completed, the inquiry should be addressed to the relevant Tax Services Office. Nonetheless, we are prepared to offer the following general comments.

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. Subsection 118.2(2) of the Act contains a list of expenditures that qualify as medical expenses. Your questions relate specifically to paragraphs 118.2(2)(a), (b), and (b.1) of the Act, each of which are discussed below.

Paragraph 118.2(2)(a) - Public or licensed private hospital

Pursuant to paragraph 118.2(2)(a) of the Act, amounts paid to a medical practitioner, dentist or nurse or public or licensed private hospital in respect of medical services are qualifying medical expenses for purposes of the medical expense tax credit. However, in this case, since the amounts paid to Mount Sinai Hospital are for long-term care in that facility, it is our view that a portion of the amounts paid may be for attendant care (see discussion of paragraphs 118.2(2)(b) and (b.1) below).

Paragraph 118.2(2)(b) - Full-time attendant or full-time care in a nursing home

Paragraph 118.2(2)(b) allows an individual to include, as a qualifying medical expense, remuneration paid for one full-time attendant or the cost of full-time care in a nursing home for a patient. The patient must be a person who qualifies for the disability tax credit for the taxation year in which these medical expenses were incurred. Also, at the time the remuneration is paid, the full-time attendant cannot be under 18 years of age or be the individual's spouse or common-law partner.

The expression "one full-time attendant" is not intended to mean one attendant only looking after the patient on a continuous basis but rather several attendants could be utilized over a specific period of time so long as there is only one attendant for any given period of time.

The use of the expression "full-time care in a nursing home" is not intended to place a requirement of a minimum time spent caring for the patient but rather it implies the constant care and attendance required by an individual by reason of the injury, illness or affliction of the individual. To provide such care, there must be appropriately qualified medical personnel in attendance in sufficient numbers on a 24-hour basis.

Paragraph 118.2(2)(b.1) - Remuneration for attendant care

Paragraph 118.2(2)(b.1) allows an individual to include, as a qualifying medical expense, remuneration paid for attendant care provided in Canada of a patient who qualifies for the disability tax credit (subsection 118.3(1)) for the taxation year in which the expense was paid. The claim for these expenses cannot be more than $10,000 ($20,000 if the patient died in the year). The individual must file receipts, issued by the recipient, for payment of remuneration for the attendant care. If the recipient is an individual, such receipts should include the recipient's social insurance number. Also, at the time the remuneration is paid, the attendant cannot be under 18 years of age or be the individual's spouse or common-law partner. No part of the remuneration may be claimed in respect of the patient under sections 63, 64 or paragraphs 118.2(2)(b), (b.2), (c), (d), or (e) of the Act for any taxation year.

If an individual makes a claim under paragraph 118.2(2)(b) instead of paragraph 118.2(2)(b.1), it may have an impact on eligibility for the disability tax credit under subsection 118.3(1). Paragraph 118.3(1)(c) of the Act provides that an individual who might otherwise be entitled to claim the disability tax credit is prevented from doing so if medical expenses are being claimed in respect of attendant care or care in a nursing home in respect of the same individual for the same taxation year under paragraph 118.2(2)(b) of the Act. However, this restriction on the disability tax credit does not apply if a claim for attendant care is made under paragraph 118.2(2)(b.1) of the Act.

In this case, since some of the amounts paid to Mount Sinai Hospital appear to be for long-term care in that facility, a breakdown of the amounts charged by the hospital for medical services and for attendant care would be required in order to determine whether amounts can be claimed as medical services under paragraph 118.2(2)(a) of the Act or as attendant care under paragraph 118.2(2)(b) or (b.1) of the Act.

We trust these comments will be of assistance.

Yours truly,

G. Moore
for Director
Business and Partnerships Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch