Principal Issues: [TaxInterpretations translation]
1. Does the cost and installation of an air exchanger that also performs the function of an air purifier qualify as a medical expense pursuant to paragraph 118.2(2)(m) of the Act?
2. What is meant by "severe chronic respiratory ailment" or a "severe chronic immune system dysregulation" as those terms are used in paragraphs (c) and (c.1) of section 5700 of the Regulations?
Position:
1. Question of fact.
There is no definition in the Act of what constitutes a “severe chronic respiratory ailment or a severe chronic immune system dysregulation”. Certain diseases have been identified by Health Canada as chronic respiratory diseases: asthma, chronic obstructive pulmonary disease (COPD), lung cancer, bronchitis, cystic fibrosis and respiratory distress syndrome (RDS). This list is not exhaustive. The opinion of the treating physician is still the best tool to determine if a taxpayer has a severe chronic respiratory ailment or a severe chronic immune system dysregulation.
Reasons:
1. A device that is an air purifier in addition to being an air exchanger may meet the parameters of paragraph 5700(c.1) of the Regulations.
2. The taxpayer must demonstrate that the taxpayer meets the conditions to claim an amount as a medical expense.
June 24, 2004
Jonquière Tax Centre Headquarters Observation Section N. Deslandes, CGA
Attention: Mr. Gilles Pellerin
2004-006530
Medical expenses: Paragraph 118.2(2)(m) of the Income Tax Act
This is in response to your fax of March 3, 2004, requesting our opinion on the above subject. We apologize for the delay in responding to your request.
You asked whether a taxpayer can claim as a medical expense under paragraph 118.2(2)(m) of the Income Tax Act (the "Act") the cost including installation of an air exchanger that also functions as an air purifier and that operates only with a Hepa filter. According to the retailers, one of the elements would not work without the other.
You also asked whether it is possible to clarify what is meant by "severe chronic respiratory ailment” or “a severe chronic immune system dysregulation” as those terms are used in paragraphs (c) and (c.1) of section 5700 of the Income Tax Regulations (the "Regulations").
OUR COMMENTS
Paragraph 118.2(2)(m) of the Act provides that expenses paid by an individual for any device or equipment for use by the individual, the individual's spouse or common-law partner, or a dependant may qualify as a medical expense if the device or equipment:
(i) comes within section 5700 of the Regulations,
(ii) is prescribed by a medical practitioner,
(iii) is not described in any other paragraph of subsection 118.2(2)
(iv) meets such conditions as may be prescribed as to its use or the reason for its acquisition.
In order to determine whether the air exchanger/purifier system acquired by the taxpayer is a device or equipment described in section 5700 of the Regulations, paragraphs 5700(c) and (c.1) of the Regulations may be consulted as they refer to devices that most closely resemble the one you have described.
Paragraph 5700(c) of the Regulations refers to a device or equipment, including a replacement part, designed exclusively for use by an individual suffering from a severe chronic respiratory ailment or a severe chronic immune system dysregulation. However, it specifically excludes certain devices including air exchangers. Paragraph 5700(c.1) of the Regulations refers to air or water filter or purifier for use by an individual who is suffering from a severe chronic respiratory ailment or a severe chronic immune system dyjsregulation to cope with or overcome that ailment or dysregulation.
Since for the described devices there is no statement that they are designed exclusively for use by an individual suffering from a severe chronic respiratory disease or severe chronic immune system disorder, we are of the view that they do not meet the requirements of paragraph 5700(c) of the Regulations, especially since this paragraph specifically excludes air exchangers.
However, paragraph 5700(c.1) of the Regulations refers to an "air … purifier". This term is not defined in the Act or the Regulation. The Grand dictionnaire terminologique de l'Office québécois de la langue française indicates [TaxInterpretations translation] that an air purifier is, in its common meaning, an electrical device that draws and purifies air through filters before releasing it. Whether a device or equipment is an air purifier is a question of fact. We have indicated in a previous interpretation (2002-0140205) that the fact that a piece of equipment has the dual function of being an air exchanger as well as an air purifier would not automatically exclude it from paragraph 5700(c.1) of the Regulations. However, if an air exchanger and an air purifier are two separate devices that could be purchased separately, i.e., their functions of exchanging or purifying air are sufficiently independent that they cannot be found to be one device, it is our opinion that only the cost of the air purifier could be allowable as a medical expense under section 5700(c.1) of the Regulations. In the situation you presented to us, if it is demonstrated that the air purifier cannot function without the air exchanger, the total cost of the equipment may be eligible as a medical expense provided the other conditions for application set out above are satisfied.
With respect to your second question, there is no definition in the Act of "severe chronic respiratory ailment" or "severe chronic immune system dysregulation". Therefore, those terms must be given their ordinary meaning. We have obtained the following clarification of chronic respiratory diseases from the Health Canada website: [TaxInterpretations translation]
"There is no universal definition for chronic respiratory diseases. Several diseases fall into this category, the most important being asthma, chronic obstructive pulmonary disease (COPD), lung cancer, bronchitis, cystic fibrosis and respiratory distress syndrome (RDS).”
You will note that paragraphs 5700(c) and (c.1) of the Regulations refer to "severe" chronic respiratory ailments or "severe" chronic immune system dysregulations. For this reason, we have concluded that seasonal allergies, although troublesome, are not severe chronic respiratory ailments.
However, each case must be examined on the basis of the facts and documents supporting the taxpayer's claim. We believe that the opinion of the treating physician is still the best tool to determine if an individual is affected by a severe chronic respiratory ailment or severe chronic immune system dysregulation.
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.
We hope that these comments are of assistance.
Best regards,
Ghislaine Landry, CGA
Manager
Individuals and Business and Partnerships Section
Business and Partnerships Division
Income Tax Rulings Directorate