Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.
Principal Issues: An individual's son (born in XXXXXXXXXX ) has a severe and prolonged mobility impairment as a result of a terminal illness. The individual, who lives in a bungalow, proceeded to construct a detached structure for his son in XXXXXXXXXX . The self-contained structure, which is disability friendly and is within a close proximity of the bungalow so that the parents can interact with their son on a daily basis, is comprised of a kitchen, a bedroom for the son and a bedroom for a caregiver, a living area, and a storage room for supplies and medical equipment.
Do the costs of the structure qualify as eligible medical expenses under paragraph 118.2(2)(l.2) of the Act on the basis that they are alterations or renovations to a dwelling?
Position: No
Reasons: In order for paragraph 118.2(2)(l.2) of the Act to apply, a dwelling must be in existence with respect to the renovations or alterations. In this case the structure is considered to be a separate dwelling for which there is no tax assistance.
November 6, 2000
Surrey Taxation Centre HEADQUARTERS Sigrid Hagglund M. Eisner Enquiries and Adjustments (613) 957-2138 541-12 2000-003681
Medical Expenses - Construction of Dwelling
This is in reply to your memorandum of July 10, 2000 and your submissions of August 28, 2000 and October 13, 2000, in respect of which you asked us for our comments on whether the costs of constructing a self-contained dwelling (the "Structure") by XXXXXXXXXX (the "Individual") in which his son lives, are eligible medical expenses by virtue of paragraph 118.2(2)(l.2) of the Income Tax Act (the "Act").
XXXXXXXXXX. The life expectancy of the Individual's son was between 15 and 18 years. However, the son's life expectancy in later years increased as a result of research advancement and physiotherapy techniques. The son currently receives 12 hours of care each day from caregivers provided by the Province of British Columbia.
As a result of genetic hearing loss by the son's mother, she ceased to be employed XXXXXXXXXX and became the son's primary caregiver. However, since the son's mother subsequently experienced physical problems (back and hip), it became necessary to obtain part-time attendant care for the son. In XXXXXXXXXX, the Individual and
his wife, after having considered many possibilities, decided to build the Structure that was connected with the ranch home by a breezeway. The ranch home and the Structure are within a close proximity of each other on the same property. The Structure, which has a kitchen, a bedroom for the son and a bedroom for a caregiver, a bathroom, a living area, and a storage for supplies and medical equipment, has no hallways and is of an open design. There is daily interaction between the son and his parents.
With respect to the XXXXXXXXXX taxation year, you have asked us for our comments on whether the cost of the Structure is an eligible medical expense.
Our Comments
In the case of an individual who lacks normal physical development or who has a severe and prolonged mobility impairment, reasonable expenses relating to renovation or alterations to the individual's dwelling can be claimed as medical expenses under paragraph 118.2(2)(l.2) of the Income Tax Act (the "Act").
In order for the costs of "renovations or alterations to a dwelling of the patient" to qualify, it is our view that the expenses must be incurred for a dwelling that is in existence. Since it is clear that none of the costs were incurred to renovate the Individual's dwelling, it is our view that the costs of constructing the Structure are not eligible medical expenses.
These comments are consistent with paragraph 55 of IT-519R2 which presupposes the existence of a dwelling. In addition, under the 2000 Federal Budget, it is proposed that, for 2000 and subsequent taxation years, eligible medical expenses include certain incremental costs that relate to the construction of a new dwelling of an individual who lacks normal physical development or has a prolonged mobility impairment.
As a final note, you may wish to consider whether any of the costs incurred would otherwise qualify as eligible medical expenses, by virtue of paragraph 118.2(2)(m) of the Act and section 5700 of the Income Tax Regulations.
For your information, a copy of this memorandum will be severed using the Access to Information Act criteria and placed in the legislation Access Database (LAD) on the Agency's mainframe computer. 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, they can be provided with the LAD version or they may request a copy severed using the Privacy Act criteria which does not remove client identity. Requests for this latter version should be made by you to Jackie Page at (613) 957-0682. The severed copy will be sent to you for delivery to the client.
John Oulton
Manager
Business, Property & Employment Section III
Business and Publications Division
Income Tax Rulings Directorate
Policy and Legislation Branch
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