Principal Issues: [TaxInterpretations translation] Are pathology fees paid to a physician and fees related to a preliminary report of a genetic counsellor to establish the risk of breast cancer, medical expenses under subsection 118.2(2)?
Position: The pathology fees paid to a physician appear to be expenses referred to in paragraph 118.2(2)(o). However, we do not believe that the costs associated with a preliminary report from a genetic counsellor are costs incurred for maintaining health, preventing disease or assisting in the diagnosis or treatment of any injury, illness or disability.
Reasons: Expenses must be incurred for maintaining health, preventing disease or assisting in the diagnosis or treatment of any injury, illness or disability.
XXXXXXXXXX 2010-038665 Anne Dagenais, Advocate M. Fisc. B.A.A.
February 11, 2011
Dear Madam,
Subject: Medical expense tax credit
This is in response to your letter of October 22, 2010, in which you requested our opinion on whether expenses are medical expenses under section 118.2 of the Income Tax Act (the "Act").
You specified in your letter that you are the manager of a health care spending account that provides coverage for expenses that would qualify as medical expenses under subsection 118.2(2) for the purposes of the medical expense tax credit under subsection 118.2(1) of the Act. You presented us with two receipts for which one of those insured would like to be reimbursed from that account. You wish to know if the expenses are medical expenses under subsection 118.2(2).
Unless otherwise indicated, all legislative references in this document are to the provisions of the Act.
Our Comments
It appears to us that the situation described in your letter and above could constitute an actual situation involving taxpayers. As explained in Information Circular 70-6R5, it is not the practice of this Directorate to provide comments on proposed transactions involving specific taxpayers otherwise than in the form of an advance income tax ruling. If your situation involved specific taxpayers and a transaction or transactions, you should submit all relevant facts and documents to the appropriate Tax Services Office ("TSO") for its opinion. However, we are able to provide you with the following general comments that may be useful to you.
Section 118.2 provides that an individual may claim a non-refundable tax credit for eligible medical expenses paid by the individual for, among others, the individual, the individual's spouse or common-law partner or a dependant. Paragraph 118.2(2)(a) provides that an individual's medical expenses are the expenses paid to a medical practitioner, dentist or nurse or a public or licensed private hospital in respect of medical or dental services provided to the individual, the individual’s spouse or common-law partner or a dependant of the individual in the taxation year in which the expense was incurred.
Furthermore, paragraph 118.2(2)(o) states that expenses paid by an individual for laboratory, radiological or other diagnostic procedures or services together with necessary interpretations, for maintaining health, preventing disease or assisting in the diagnosis or treatment of any injury, illness or disability, for the patient as prescribed by a medical practitioner or dentist qualify as medical expenses.
Whether the expenses paid by your insured are eligible medical expenses for the purposes of subsection 118.2(2) is a question of fact that requires a review of all the relevant facts surrounding the insured's situation.
We are of the view that the procedures set out in paragraph 118.2(2)(o) must assist the health professional in diagnosing or establishing medical treatment. Consequently, we are of the view that the pathology expenses paid to a physician were incurred for the purpose of maintaining health, preventing disease and diagnosing or treating an injury, illness or disability and are, as such, come within subsection 118.2(2).
Furthermore, although the application of paragraph 118.2(2)(a) is a question of fact and it is difficult for us to comment on the application of that paragraph with respect to costs related to a preliminary report of a genetic counsellor to establish the risk of breast cancer, we would generally be of the opinion that such costs are not incurred for maintaining health, preventing disease and diagnosing or treating an injury, illness or disability. As a result, such costs would not be provided for in subsection 118.2(2).
These comments do not constitute an advance income tax ruling and do not bind the Canada Revenue Agency to a particular factual situation.
We hope that the above comments will be of assistance and will answer your questions.
Best regards,
François Bordeleau, Advocate
Manager
Business and Partnerships Section
Income Tax Rulings Directorate.