Principal Issues: [TaxInterpretations translation] Are therapy costs incurred by taxpayers in a vertebrotherapy centre eligible for the medical expense tax credit?
Position: Question of fact. Not in this case, since the costs are not covered by paragraphs 118.2(2)(a) or (l.9).
Reasons: The Income Tax Act.
XXXXXXXXXX 2006-020418
October 3, 2006
Dear Sir,
Subject: Request for technical interpretation - therapy costs
This letter is in response to your letter received on September 6, 2006, regarding the eligibility of vertebrotherapy expenses for the medical expense tax credit. You also provided us with additional information in a telephone conversation (XXXXXXXXXX/Bordeleau) on September 28, 2006.
Facts
In your letter and following our telephone conversation, you indicated that you have acquired the XXXXXXXXXX system with the aim of setting up a Vertebrotherapy Centre that welcomes clients who wish to use this system. In addition, the XXXXXXXXXX system is a thermal acupressure massager that aims to massage and relax the user while improving blood circulation, clearing QI energy channels and relieving muscle tension.
During our telephone conversation, you indicated that you had received training from XXXXXXXXXX in the use of the massager, although you are not a health professional licensed to practise under the applicable provincial legislation.
Question
You wish to know whether the costs incurred by your clients for the use of the XXXXXXXXXX system can be deducted in computing their tax liability for a particular year. In addition, you wish to know if your clients need to obtain a prescription from a doctor or occupational therapist in order to benefit from such a deduction.
Analysis
Subsection 118.2(1) of the Income Tax Act (the "Act") allows an individual to claim a tax credit - for a particular taxation year - for medical expenses incurred by the individual in respect of the individual, the individual's spouse or common-law partner, or the individual's child under the age of 18.
On the one hand, paragraph 118.2(2)(a) allows an individual to include, as eligible medical expenses, amounts paid to a doctor, dentist or nurse in respect of medical or dental services, or to any other health professional as defined in subsection 118.4(2). Since you are not a health professional authorized to practice a profession under the applicable legislation, the fees paid by your clients cannot qualify for the medical expense tax credit under paragraph 118.2(2)(a).
On the other hand, paragraph 118.2(2)(l.9) allows remuneration paid for therapy administered to an individual to be included as a medical expense.1 For this paragraph to apply in a particular situation, the following conditions must be satisfied:
- the treatment must be provided to the individual because of a severe and prolonged impairment;
- because of that impairment, the individual may claim an amount under the credit for mental or physical impairment;
- the treatment must have been prescribed by a medical doctor or a psychologist (in the case of mental impairment) or a medical doctor or an occupational therapist (in the case of a physical impairment).
- the recipient of the payment is not the individual's spouse or common-law partner and is not under 18 years of age;
Subsection 118.4(1) defines an individual as having a severe and prolonged impairment if the individual's ability to perform a basic activity of daily living is markedly restricted (or would be so restricted but for therapy) and the impairment has lasted, or can reasonably be expected to last, for a continuous period of at least 12 months. A health professional (a medical doctor or other professional depending on the impairment) must confirm the existence of a severe and prolonged impairment.
The term "basic activity of daily living" is defined to include the following:
- mental functions necessary for everyday life include
- memory;
- problem solving, goal-setting and judgement;
- adaptive functioning;
- functional learning for independence;
- feeding oneself or dressing oneself;
- speaking so as to be understood, in a quiet setting, by another person familiar with the individual;
- hearing so as to understand, in a quiet setting, another person familiar with the individual,
- bowel or bladder functions; and
- walking.
It should be noted that no other activity, including work, housework, and social or recreational activities, is considered a basic activity of daily living. A copy of Interpretation Bulletin IT-519R2, Medical Expense and Disability Tax Credits and Attendant Care Expense Deduction, is attached to this letter.
In Herzig v. The Queen,2 Associate Chief Justice Bowman wrote the following regarding paragraph 118.2(2)(l.9):
An interpretation of those words that is more consonant with the scheme of section 118.2 as a whole is that it refers to amounts paid to a person for rendering the service of providing therapy such as physiotherapy, massage therapy or psychological counseling.
In this case, and to summarize our comments above, unless your clients meet the requirements of paragraph 118.2(2)(l.9), we do not believe that the amounts disbursed for the XXXXXXXXXX massager treatments qualify for the medical expense tax credit.
We hope that our comments are of assistance.
Best regards,
François D. Bordeleau, LL.B.
Individual, Business and Partnerships Section
Income Tax Rulings Directorate
Encl.
ENDNOTES
1 Any reference to the word "individual" in section 118.2 includes the individual's spouse or common-law partner and any child of the individual under the age of 18.
2 [2004] T.C.J. No. 237