Principal Issues: Whether an individual can claim amounts paid for full-time care in a nursing home under paragraph 118.2(2)(b.1) instead of under paragraphs 118.2(2)(b) or (d) in order to also claim the disability tax credit in a situation where there is no detailed breakdown on the receipt showing the portion of the payments relating to attendant care.
Position: No.
Reasons: The wording of paragraph 118.3(1)(c) prevents an individual from claiming both the disability tax credit and the medical expenses for an attendant or care in a nursing home if a claim is made under paragraphs 118.2(2)(b) or (d). Though this restriction does not apply if a medical expense claim is made in respect of attendant care under paragraph 118.2(2)(b.1), one of the conditions of that provision is the requirement of a receipt to prove payment of the remuneration for attendant care.
XXXXXXXXXX 2011-041808 Chrys Tzortzis, CA
December 14, 2011
Dear XXXXXXXXXX :
Re: Cost of Care in a Nursing Home and the Disability Tax Credit
We are writing in reply to your email dated August 22, 2011, wherein you inquire whether an individual may claim both the disability tax credit and amounts paid for care in a nursing home as an eligible medical expense for the purposes of the medical expense tax credit ("METC").
In particular, you inquire whether payments to a nursing home may be claimed under paragraph 118.2(2)(b.1) of the Income Tax Act ("Act") up to the limit of $10,000 ($20,000 if the individual dies in the year) instead of under paragraphs 118.2(2)(b) or (d) in order to also claim the disability tax credit in a situation where there is no detailed breakdown on the receipt showing the portion of the payments relating to attendant care.
Written confirmation of the tax consequences that apply to a particular fact situation is given by this Directorate only in the context of an advanced income tax ruling request submitted in the manner set out in Information Circular 70-6R5, Advanced Income Tax Rulings, dated May 17, 2002. This Information Circular and other Canada Revenue Agency publications can be accessed on the CRA Web site at www.cra-arc.gc.ca. However, we are prepared to provide the following general comments, which may be of assistance.
Medical expenses which are eligible for the METC are limited to those described in subsection 118.2(2) of the Act. If a particular expenditure is not described as an eligible medical expense in subsection 118.2(2), 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.
The disability tax credit is available if all of the conditions in subsection 118.3(1) of the Act are satisfied. One of the requirements, in paragraph 118.3(1)(c) of the Act, provides that the credit is only available if:
"(c) no amount in respect of remuneration for an attendant or care in a nursing home, in respect of the individual, is included in calculating a deduction under section 118.2 (otherwise than because of paragraph 118.2(2)(b.1)) for the year by the individual or by any other person".
Therefore, paragraph 118.3(1)(c) prevents an individual from claiming both the disability tax credit and the medical expenses for an attendant or care in a nursing home if a claim is made under paragraphs 118.2(2)(b) or (d) 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.
If certain conditions are met, paragraph 118.2(2)(b.1) of the Act allows as an eligible medical expense an amount paid as remuneration for attendant care provided in Canada to the extent that the total of amounts so paid does not exceed $10,000 (or $20,000 if the individual dies in the year). One of the conditions is that the individual must file receipts to prove payment of the remuneration for attendant care. Generally, payments to nursing homes are not solely payments for attendant care but also cover the expenses of the person for his or her room and board, as well as other services that cannot be described as attendant care. Therefore, a breakdown of the amounts charged by the nursing home showing the portion for attendant care would be required in order to make a claim under paragraph 118.2(2)(b.1). Accordingly, in our view, no portion of the payments to the nursing home would qualify as an eligible medical expense under paragraph 118.2(2)(b.1) of the Act where there is no detailed breakdown on the receipt showing the portion of such payments that relate to attendant care as one of the conditions of that provision would not be met.
Further information on attendant or nursing home care expenses may be found in Interpretation Bulletin IT-519R2 (Consolidated), Medical Expense and Disability Tax Credits and Attendant Care Expense Deduction and in the CRA publication RC4064, Medical and Disability-Related Information, both of which are posted on the CRA Web site.
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