Principal Issues: Whether parking fees can be included in transportation or travelling expenses under paragraphs 118.2(2)(g) and (h) of the Act.
Position: Yes.
Reasons: As announced at the 2010 CTF, it is our position that eligible expenses for purposes of paragraph 118.2(2)(h) include travel costs (parking, meals, hotel) incurred en route to and from the city where the treatment is received as well as during the period of treatment.
XXXXXXXXXX 2011-039477 J. Gibbons, CGA June 6, 2011
Dear XXXXXXXXXX :
Re: Medical Expense Tax Credit ("METC") for Parking Fees
This is in reply to your email dated February 3, 2011, in which you enquired whether parking fees can be claimed as medical expenses for purposes of the METC in subsection 118.2(1) of the Income Tax Act (the "Act").
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.
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) 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.
An amount paid to a person engaged in the business of providing transportation services to transport an individual not less than 40 kilometres from the locality where the individual resides to a place where medical services are received, or from that place to that locality, may qualify for the METC under paragraph 118.2(2)(g) of the Act. Further, subsection 118.2(4) allows a taxpayer to claim reasonable expenses in respect of the operation of a vehicle, including gas, if a person engaged in providing transportation services is not readily available.
Other travel expenses such as meals and accommodation incurred for a patient to travel not less than 80 kilometres from the locality where the individual dwells to a place where medical services are received, or from that place to that locality, qualify for the METC under paragraph 118.2(2)(h) of the Act.
In addition to the above expenses, transportation and travel expenses for an individual to accompany the patient can also be claimed under the above provisions if a medical practitioner has certified that the individual was incapable of travelling alone. Paragraphs 118.2(2)(g) and (h) also have the following requirements:
(i) substantially equivalent medical services were not available in the individual's locality,
(ii) a reasonably direct travelling route was taken by the individual, and
(iii) the individual travelled to the particular place to obtain medical services for him or herself and it is reasonable, having regard to the circumstances, for the individual to have travelled to that place for medical services.
It is our view that the requirement in (iii) may be met even if medical services are available nearer to the individual's locality if, in the circumstances, it is reasonable for the individual to have travelled to the place where the medical services were obtained.
Certain transportation and travel costs (including parking fees) may also be claimed for the period during which a patient received medical treatment if it was reasonable in the circumstances for the patient to have remained at that place where medical services were received. In the specific case of parking expenses, the requirements of paragraph 118.2(2)(h) would otherwise have to be met, including the requirement that the patient travel not less than 80 kilometres from the locality where the individual dwells to a place where medical services are received.
Additional information on this topic may be found on the CRA web site at:
http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/ddctns/lns300-350/330/llwbltrvl-eng.html?=slnk
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