Principal Questions: 1) Whether a private seniors’ residence is a “nursing home” for the purpose of the medical expense tax credit (METC). 2) Whether travel expenses of an orthodontist paid by a taxpayer to receive dental services from the orthodontist, would qualify as medical expenses for the purpose of the METC. 3) Whether osteopaths and naturopaths in Quebec are medical practitioners for the purpose of the federal medical expense tax credit
Position: 1) Question of fact, depending on whether the private seniors’ residence has the equivalent features and characteristics of a nursing home; 2) No; 3) No.
Reasons: 1) General guidelines provided regarding the characteristics of a nursing home which distinguish between the requirement for nursing care as opposed to attendant care; and between the requirement for on-site nursing presence in sufficient number to provide 24/7 nursing care as opposed to on-call availability of nursing personnel. 2) The wording in 118.2(2)(h) which only allows for travel expenses incurred in respect of the patient (or an attendant, in specific circumstances).
3) Previous positions, namely 2015-0585011I7
21 January 2016 Quebec CPA Personal Income Tax Roundtable
Question 3 - Issues related to medical expenses
a) Is a private seniors' residence a "nursing home" for purposes of the medical expenses tax credit? (Quebec has spoken in the letter of interpretation 14-023049-001)
b) Can an orthodontist’s travel expenses qualify as a medical expense? (Quebec addressed this in Interpretation 14-021044-001)
c) Are osteopaths and naturopaths practising in Quebec health professionals for the purposes of the medical expenses tax credit? (CRA has already addressed this in an internal technical interpretation 2015-0585011I7; this could be the starting point for setting out the main differences federally and in Quebec on eligible medical expenses).
CRA Responses
a) Nursing Home
The term "nursing home" is not defined in the ITA. However, paragraph 1.33 of the Income Tax Folio S1-F1-C1 Medical Expense Tax Credit, provides the CRA position on the meaning of that term. That paragraph reads as follows:
"A nursing home is generally considered to be an establishment that provides full–time maintenance or nursing home care for patients who are unable to care for themselves. While a particular place need not be a licensed nursing home, it must have the equivalent features and characteristics of a nursing home. For example, a nursing home is normally a facility of a public character which offers 24-hour nursing care to patients who are not related to the facility owner/operator. 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 a patient but rather implies the constant care and attendance required by the patient by reason of an injury, illness or disability of the patient. The CRA is generally of the view that a retirement home does not provide the care required to be classified as a nursing home."
The question of whether an institution, such as a private seniors' residence, can be defined as a nursing home is a question that must be resolved in the light of all relevant facts. Consequently, each situation must be examined on a case by case basis on its own facts. Generally, a facility that provides services only to independent seniors does not meet the definition of a nursing home. The same applies for institutions that provide personal assistance services for dependent seniors but do not offer nursing care.
Moreover, we are of the view that the requirement that a facility "offers 24-hour nursing care" would not be satisfied if the establishment offers limited nursing care. This would be the case, for example, where the only nursing care a facility offers its residents is to make available an on-call nurse or where the number of applicable residents does not permit the staff to provide nursing care around the clock.
It may be that the same institution offers several levels of care so that a floor or part of the facility is reserved for residents who are unable to care for themselves and need nursing care 24 hours a day. In such cases, the establishment may qualify as a nursing home with respect to that floor or part of the facility only.
b) Travel expenses of an orthodontist
Paragraphs 118.2(2)(g) and (h) of the ITA are the specific provisions allowing an individual in certain circumstances to deduct, as medical expenses in calculating tax payable, transportation and travel expenses incurred to obtain medical services. However, these expenses must be incurred for the transportation of the patient, the patient’s spouse or the patient’s common-law partner or certain dependants (and a care attendant if necessary). These paragraphs do not cover the transportation of health professionals themselves.
Under paragraph 118.2(2)(a) of the Act, the medical expenses of an individual are the fees paid to a medical practitioner, dentist, nurse, public hospital or licensed private hospital in respect of medical or dental services provided to a person who is the individual, the individual’s spouse or common-law partner or a dependant of the individual in the taxation year in which the expenses were incurred.
As stated in paragraph 1.26 of Income Tax Folio S1-F1-C1, Medical Expense Tax Credit, medical services are diagnostic, therapeutic or rehabilitative services that are performed by a medical practitioner acting within the scope of his or her professional training. Thus, in general, the transportation of a medical practitioner (for example, an orthodontist) is not a medical service, and the fees paid for such travel would not be fees paid for medical or dental services.
c) Osteopaths and Naturopaths in Quebec
Osteopaths and naturopaths in Quebec are not included in the health professionals (or "medical practitioners", as defined in subsection 118.4(2) of the ITA) who are recognized for purposes of the Medical Expense Tax Credit. We addressed this subject in the Technical Interpretation 2015-0585011I7.
The list entitled “Authorized medical practitioners by province or territory for the purposes of claiming medical expenses”, available on the CRA website, allows taxpayers to determine which medical practitioners are generally "authorized" to exercise their profession in their own province or territory, without having to contact the CRA or their own province or territory.
Since the spring of 2015, the CRA has implemented a new process permitting provinces and territories to contact the CRA to request, if needed, changes to the list of medical practitioners referred to above, thereby providing an update promptly during the course of the year. The CRA reviews the change requests to ensure that the category of medical practitioners to be added to the list satisfies the provisions of paragraph 118.4(2) of the ITA, as they are reviewed in paragraphs 1.21 and 1.22 of the Income Tax Folio S1-F1-C1, Medical Expense Tax Credit, also available on the CRA website.
Typically, organizations able to submit such requests for change include the governing bodies of the medical professions in a province or territory, such as a college or a professional body. In Quebec, the Office des Professions du Québec would be an example of such a body since it reports to the Minister of Justice who, by law, is responsible for the application of the laws of professions.
Randa El-Kadi
(613) 670-9054
January 21, 2016
2016-062487