Principal Issues: [TaxInterpretations translation] Can a taxpayer who claims the medical expense tax credit pursuant to paragraph 118.2(2)(e) also claim the tax credit for mental or physical impairment?
Position: Question of fact. In this case, yes.
Reasons: No one can claim the disability tax credit or the transfer of the disability tax credit if the cost of a stay in a nursing home or rest home or the remuneration of an attendant in respect of the person with a disability is included, as an eligible medical expense under section 118.2, in the calculation of the medical expense credit of the person with the disability or another person.
November 17, 2008
XXXXXXXXXX Tax Services Office Headquarters
Income Tax Rulings Directorate
Attention: XXXXXXXXXX F. Bordeleau, Advocate
2008-029312
Medical expense credit for mental or physical impairment
This is in response to your memorandum of September 12, 2008 in which you requested our opinion regarding the eligibility of an individual for the tax credit for mental or physical impairment when that same individual claims the medical expense tax credit pursuant to paragraph 118.2(2)(e) of the Income Tax Act (the "Act").
More specifically, you described a situation where a taxpayer has Alzheimer's disease and is housed in a special-care unit XXXXXXXXXX. The taxpayer's accommodation costs in the special-care unit are a minimum of $XXXXXXXXXX per month, including meals, care and activities.
You wish to know if the taxpayer can claim the medical expense tax credit by pursuant to paragraph 118.2(2)(e) in addition to claiming the tax credit for mental or physical impairment pursuant to section 118.3.
Unless otherwise indicated, all legislative references herein are to the provisions of the Act.
Our Comments
The tax credit for mental or physical impairment is a tax credit that may be claimed by a person suffering from severe and prolonged impairments in physical or mental functions whose effects are such that the person's ability to perform a basic activity of daily living is markedly restricted in the absence of certain therapeutic care.
Furthermore, an individual may claim the medical expense tax credit in computing tax payable under Part I of the Act. The amount of the medical expense tax credit is obtained by multiplying the lowest personal tax rate for the year by the amount of eligible medical expenses in excess of certain minimum amounts.
Where an individual claims the medical expenses in respect of either remuneration paid to an individual's attendant or the individual's living expenses in a nursing home, the individual will not be able to claim the credit for mental or physical impairment by reason of paragraph 118.3(1)(c). Generally, a claim for the medical expense credit in respect of remuneration paid to an attendant or for a stay in a nursing home is made under paragraphs 118.2(2)(b) and (d).
However, a school, institution or other place referred to in paragraph 118.2(2)(e) may also fall under the definition of nursing home. Thus, an individual who claims the medical expense tax credit under paragraph 118.2(2)(e) could be denied access to the tax credit for mental or physical impairment if the only care the individual requires is that in a nursing home and not the specialized care by an institution described in paragraph 118.2(2)(e).
In summary, the Canada Revenue Agency (the "CRA") is of the view that an individual will be able to claim the tax credit for mental or physical impairment, if he or she claims the medical expense credit under paragraph 118.3(1)(e) [sic], if the following conditions are satisfied:
- The medical expenses were incurred for the care, or the care and training, at a school, institution or other place of the individual;
- The medical expenses relate to specialized equipment, facilities or personnel provided as a result of the individual's disability;
- A person authorized for this purpose has certified in writing that the individual is someone who, because of a physical or mental disability, requires the equipment, facilities or personnel specially provided by that institution;
- The medical expenses are not remuneration for a full-time attendant as defined in paragraph 118.2(2)(b).
In this case, we are of the view that the taxpayer will be able to claim both the medical expense credit and the tax credit for mental or physical impairment.
Access to Information
For your information, unless exempted, a copy of this memorandum will be severed using the Access to Information Act criteria and placed in the Canada Revenue Agency's electronic library. A severed copy will also be distributed to the commercial tax publishers for inclusion in their databases. The severing process will remove all material that is not subject to disclosure, including information that could disclose the identity of the taxpayer. Should your client request a copy of this memorandum, the electronic library version can be provided. Alternatively, the client may request a severed copy using the Privacy Act criteria, which does not remove client identity. Requests for this latter version should be made by you to Ms. Jackie Page at (819) 994-2898. A copy will be sent to you for delivery to the client.
François Bordeleau, Advocate
Manager
Business and Partnerships Section
Income Tax Rulings Directorate.