Principal Issues: [TaxInterpretations translation] Are the costs associated with the collection and storage of stem cells eligible for the medical expense tax credit under section 118.2 of the Income Tax Act?
Position: No.
Reasons: These expenses are not related to an existing medical condition or injury, nor are they related to an act that is performed for the purpose of maintaining health, preventing disease and diagnosing or treating an injury.
XXXXXXXXXX 2010-038662 Anne Dagenais, Advocate M. Fisc. B.A.A. February 1, 2011
Dear Sir,
Subject: Medical expenses - collection and storage of stem cells
This is further to your letter of October 15, 2010 requesting our opinion as to whether the expenses associated with harvesting and storing stem cells are eligible for the medical expense tax credit under section 118.2 of the Income Tax Act (the "Act").
Unless otherwise indicated, all statutory references herein are to the provisions of the Act.
Our Comments
It appears to us that the situation described in your letter and summarized 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(s), you should submit all relevant facts and documentation to the appropriate tax services office ("TSO") for their opinion. However, we can offer the following general comments that may be helpful to you.
Section 118.2 provides that an individual may claim a non-refundable tax credit for eligible medical expenses paid, among other things, in respect of the individual, the individual’s spouse, the individual’s common-law partner or a child of the individual. Paragraph 118.2(2)(a) provides that a medical expense of an individual is an amount 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) provides 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 an individual can claim the medical expense tax credit is a question of fact that requires an examination of all the relevant facts of a given situation and depends on the individual's particular circumstances.
We are of the view that paragraph 118.2(2)(a) applies only to a pre-existing medical condition. In this case, since the collection and storage of stem cells is not a procedure related to an existing medical condition or injury, it is our view that the costs associated with this service would not qualify for the medical expense tax credit.
Furthermore, it is our view that the services referred to in paragraph 118.2(2)(o) must assist the health professional in diagnosing or establishing medical treatment. In your situation, the collection and storage of stem cells can be used to treat a number of diseases. Therefore, we do not consider the collection and storage of these stem cells to be an act for the maintaining of health, preventing disease or assisting in the diagnosis or treatment of any injury, illness or disability.
Consequently, expenses related to the collection and storage of stem cells would not qualify for the medical expense tax credit.
These comments do not constitute an advance income tax ruling and are not binding on the Canada Revenue Agency in respect of any particular factual situation.
We hope that the above comments will be of assistance and answer your questions.
François Bordeleau, Advocate
Manager
Business and Partnerships Section
Income Tax Rulings Directorate.