Principal Issues: [TaxInterpretations translation]
In a particular situation, do certain expenses incurred for an applied behaviour analyst qualify as attendant care expenses for the purposes of paragraph 118.2(2)(b) of the Act?
Position:
Question of fact.
Reasons:
In particular, the expenses of the applied behaviour analysis therapist must be incurred to assist the disabled child in daily activities that the child cannot perform on the child’s own because of the child’s disability.
XXXXXXXXXX 2009-034338 I. Landry, M. Fisc. June 2, 2010
XXXXXXXXXX ,
Subject: Attendant care expenses
This is in response to your email of October 6, 2009 requesting our comments regarding the qualification of certain expenses of applied behaviour analysis as attendant care expenses for the purposes of paragraph 118.2(2)(b) of the Income Tax Act (the "Act").
Specifically, you described the following hypothetical situation:
A mother of an autistic child, whose severe and prolonged mental or physical impairment has been certified by a medical practitioner and qualifies for the credit for mental impairment in subsection 118.3(1), hired an applied behaviour analysis therapist to intellectually stimulate her child.
The analysis therapist cares for the child 35 hours a week, using an individual analysis teaching methodology to stimulate cognitive skills on a daily basis and increase the autonomy of the child, who has a pervasive developmental disorder. The therapist also applies behavioural strategies to teach the child appropriate behaviours and modify inappropriate or aggressive behaviours.
The analysis therapist has a background in psychology and/or autism as well as relevant experience. She holds a specialized graduate degree from a recognized university in behavioural intervention with persons with pervasive developmental disorders. She is an employee of the mother, she is not her spouse or common-law partner and she is over 18 years of age.
Unless otherwise indicated, all legislative references herein are to the provisions of the Act.
The situation you indicated in your e-mail appears to be related to an actual situation involving a specific taxpayer. As explained in Information Circular 70-6R5, Advance Income Tax Rulings, it is not the practice of this Directorate to provide comments on proposed transactions involving specific taxpayers otherwise than through advance income tax rulings. If your situation involves a specific taxpayer and a completed transaction, you should provide all relevant facts and documentation to the appropriate Tax Services Office for its views.
Whether an individual can claim the medical expense tax credit is a question of fact and law that requires an examination of all the facts relevant to the situation and depends on the individual's particular circumstances. We are, however, prepared to provide the following general comments, which we hope you will find helpful.
Subsection 118.2(1) allows an individual to claim a tax credit for a particular taxation year in respect of medical expenses incurred by the individual, the individual’s spouse, the individual’s common-law partner or a child of the individual who has not attained the age of 18 years.
By virtue of paragraph 118.2(2)(b), medical expenses include remuneration paid to a full-time attendant for the full-time care in a nursing home of an individual in respect of whom an amount would, but for paragraph 118.3(1)(c), be deductible under section 118.3 as a tax credit for mental or physical impairment.
The term "care" as used in paragraph 118.2(2)(b), among others, is not defined in the Act and therefore must be given its ordinary meaning. For this purpose, it is our view that where an individual with an impairment is incapable of performing or requires an unusual amount of time to perform ordinary activities of daily living because of the impairment, the use of an attendant to assist the individual in performing these activities could generally qualify as "care". Depending on the situation, these ordinary activities may include meal preparation, housekeeping and cleaning services, transportation, and personal services such as banking and shopping.
However, we are of the view that the expenses for the analysis therapist as described in the particular situation cannot be characterized as for "care" within the meaning of paragraph 118.2(2)(b) since what is involved is more a matter of there being a learning endeavour in order to meet the personal needs of the person with an impairment than of assisting that person in daily activities that the person cannot perform on the person’s own because of the person’s impairment.
However, other provisions of the Act may apply to the situation described in your email. Indeed, if the therapist's expenses satisfy all the conditions of application of one of paragraphs 118.2(2)(a), (e), (I.9) or (I.91), the therapist's fees could then give rise to an entitlement to the tax credit for medical expenses by virtue of one of those paragraphs. The application of those paragraphs to a particular situation is, however, a question of fact and, because of the limited information provided to us with respect to the particular situation, it is impossible for us to comment on the application of those paragraphs in this situation.
Best regards,
Randy Hewlett
Manager
for the Director
Ontario Corporate Tax Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch.