Principal Issues: Would costs associated with the rental or purchase of a riding horse to be used for therapeutic purposes qualify for the medical expense tax credit?
Position: Question of fact, but in this case likely not.
Reasons: The physical impairment does not meet the requirements of paragraph 118.2(2)(l) of the Act. Further, the riding horses described are not "specially trained to assist patients in coping with an impairment".
XXXXXXXXXX 2010-037846 T. Posadovsky, CMA (613) 952-8283 September 13, 2010
Dear XXXXXXXXXX :
Re: Medical Expense Tax Credit.
We are writing in response to your undated letter received on August 20, 2010, in which you requested our opinion on whether cost associated with the rental or purchase of a riding horse used for therapeutic purposes would qualify for the medical expense tax credit.
In your letter, you explained that you are experiencing worsening bouts of spasticity in different parts of your body as a symptom of multiple sclerosis. You recently found that therapeutic horseback riding alleviates your pain, which allows you to sleep better at night. You believe that an increase in the frequency of your riding would result in a further reduction of pain and fatigue. Your hope is to augment your weekly riding therapy at XXXXXXXXXX , with something closer to home.
Subsection 118.2(2) of the Income Tax Act (the "Act") lists the medical expenses that qualify for purposes of the medical expense tax credit under subsection 118.2(1) of the Act. Paragraph 118.2(2)(l) allows amounts paid for the cost of a specially trained animal for use by a person who is blind, profoundly deaf, has a severe and prolonged physical impairment that markedly restricts the use of their arms or legs, or severely affected by autism or epilepsy. The animal must be provided by a person or organization whose purpose is training such animals.
As explained in Interpretation Bulletin IT-519R2 Medical Expense and Disability Tax Credits and Attendant Care Expense Deduction, a "severe and prolonged impairment" is such that the individual's ability to perform a basic activity of daily living is markedly restricted. An individual's ability to perform a basic activity of daily living is considered to be markedly restricted only if the individual is blind, or is unable to perform a basic activity of daily living, all or substantially all (at least 90%) of the time, even with therapy, the use of appropriate medical devices and medication. A basic activity of daily living in reference to paragraph 118.2(2)(l) of the Act would include marked restrictions in feeding/dressing oneself or walking, but does not include restrictions in working and housekeeping, or participating in social and recreational activities.
Generally, disabling ailments and conditions must be considered on a case-by-case basis, since it is the effect of the impairment on the ability to perform the basic activities of daily living that determines whether an individual has a severe and prolonged impairment. Based on the information you provided with your letter, it does not appear that you are impaired to a degree as described in IT-519R2. Further, it is our view that costs associated with your renting or purchasing a riding horse for the purpose of therapeutic riding would not qualify for a medical expense tax credit, since it does not appear that the horses you described are specially trained to assist a patient in coping with the type of impairments specified in paragraph 118.2(2)(l) of the Act.
Please note that our position in this matter is based strictly on the legislative provisions of the Act. As the primary responsibility for tax policy and legislation rests with the Department of Finance, we would encourage you to contact the Tax Legislation Branch of the Department of Finance and advise them of your concerns. It is our understanding that the Department of Finance is continually reviewing the legislation governing medical expenses to ensure that all proper costs incurred in connection with a medical disability are properly recognized for tax purposes. The address for correspondence is:
Department of Finance Canada
Tax Legislation Division
140 O'Connor Street
Ottawa ON K1A 0G5
We regret our response could not be more favourable.
Yours truly,
Randy Hewlett
Manager
for Director
Ontario Corporate Tax Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch