Principal Issues: Whether the costs incurred to replace carpet in a dwelling with hardwood flooring, based on a recommendation from a medical doctor in the case of a patient with severe asthma, qualify as a medical expense for purposes of the METC.
Position: No.
Reasons: Hardwood flooring is a type of home alteration that would typically be expected to increase the value of the dwelling, and it would normally be incurred by persons who have normal physical development or who do not have a severe and prolonged mobility impairment.
XXXXXXXXXX 2011-042299
January 24, 2012
Dear XXXXXXXXXX :
Re: Medical Expense Tax Credit for Hardwood Floors
This is in response to your email of September 22, 2011.
You have asked whether the cost of replacing the carpets in your dwelling with hardwood flooring would qualify as a medical expense for purposes of the medical expense tax credit ("METC"). In your email, you indicated that your daughter has severe asthma, and that her doctor recommended that you replace the carpets in your home with hardwood flooring to help prevent her asthma attacks.
Our Comments
Medical expenses which are eligible for the METC are limited to those described in subsection 118.2(2) of the Income Tax Act (the "Act"). If a particular expenditure is not described as an eligible medical expense in subsection 118.2(2) of the Act, or if the conditions under which the expenditure would qualify are not met, the expenditure does not qualify for purposes of the METC, even though the expenditure may have been incurred for medical reasons.
Paragraph 118.2(2)(l.2) of the Act provides for reasonable expenses relating to renovations or alterations to a dwelling of the patient who lacks normal physical development or has a severe and prolonged mobility impairment, to enable the patient to gain access to, or to be mobile or functional within, the dwelling.
Subparagraphs 118.2(2)(l.2)(i) and 118.2(2)(l.2)(ii) provide that such costs are eligible as medical expenses for purposes of the METC provided the expenses:
(i) are not of a type that would typically be expected to increase the value of the dwelling, and
(ii) are of a type that would not normally be incurred by persons who have normal physical development or who do not have a severe and prolonged mobility impairment.
The provisions in subparagraphs 118.2(2)(l.2)(i) and 118.2(2)(l.2)(ii) were added as part of a legislative amendment that was announced in the 2005 Federal Budget Supplementary Information. The latter clarified the METC measures regarding the eligibility of home renovation expenses as follows:
"...recent court decisions have interpreted these measures to apply more broadly, most notably, to include, in some cases, the cost of hardwood floors or installing a hot tub. Such an expansion goes far beyond the policy intent of the METC because it subsidizes renovation expenses that increase the value of the home, and extends tax recognition to expenses with a substantial element of personal consumption and personal choice."
The above-mentioned Budget information also clarified the type of renovations and alterations contemplated under paragraph 118.2(2)(l.2) of the Act to include such items as the cost of installing entrance and exit ramps, widening doorways, lowering shelves, modifying kitchen cabinets and moving electrical outlets. It is therefore our view that the cost of replacing the carpets in a home with hardwood flooring would not qualify as a medical expense for purposes of the METC under subsection 118.2(2) of the Act.
We trust that 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