Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CCRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ADRC.
Principal Issues: whether disabled person can claim food, hydro etc as deduction
Position: no
Reasons: no deduction in the Act, however 118.3 gives non-accountable tax credit to severely disabled persons
XXXXXXXXXX
Dear XXXXXXXXXX:
The Honourable Martin Cauchon, Minister of National Revenue, has asked me to reply to your letter addressed to the Honourable Allan Rock, Minister of Health, concerning income tax deductions for disabled people. Mr. Rock sent Mr. Cauchon a copy of your letter on July 3, 2001.
For an expense to be deductible from income, it must either be specifically permitted as an expense incurred to earn employment income, or have been directly incurred for the purpose of gaining or producing income from a business pursuant to paragraph 18(1)(a) of the Income Tax Act. It must not be considered a personal or living expense. Items such as housing, clothing, food, and medical bills are considered personal or living expenses. If a particular expense is not deductible as an employment or business expense, the Act would require a specific provision to permit a deduction for it. Such is the case with medical expenses, where, subject to certain limitations, amounts may be deducted in computing tax. Although these are personal or living expenses, the Act has specific provisions that allow them to be deducted.
Since the cost of hydro, food, property damage, and laundry are not specifically mentioned as deductions in earning employment income, nor are they usually directly incurred in earning business income, and there is no specific provision in the Act, which permits a direct deduction from income for these costs, such expenses cannot be deducted for income tax purposes. In addition to the numerous costs that may be claimed as medical expenses, including attendant-care expenses, costs of wheelchairs and walkers, costs incurred to make driveways, homes or vans accessible to persons with certain impairments, the Act provides an income tax credit for persons with a severe and prolonged mental or physical impairment that markedly restricts the individual's ability to perform the basic activities of daily living. The maximum amount available is $6,000 for the 2001 taxation year. The disability tax credit may help reduce the amount of federal income tax payable by a disabled person by up to $1,020 each year. Unlike medical expenses, specific expenses do not have to be incurred by the disabled person to qualify for the credit, and receipts are not required.
The role of the Canada Customs and Revenue Agency is to administer and enforce the Act as passed by Parliament. The Department of Finance is responsible for tax policy and proposed changes to the Act. As the concerns raised in your letter relate to tax policy, I am sending a copy of your correspondence to Mr. Munir Sheikh, Senior Assistant Deputy Minister of the Tax Policy Branch of that department, for his consideration.
I appreciate being made aware of your concerns.
Yours sincerely,
Bill McCloskey Assistant Commissioner Policy and Legislation Branch
C.C. Mr. Munir Sheikh
Senior Assistant Deputy Minister
Tax Policy Branch
Department of Finance
140 O'Connor Street
Ottawa, Ontario
K1A 0G5
Denise Dalphy
July 30, 2001
957-9231