2 May 1990 Ministerial Correspondence 90M05194 F - Deductibility of Medical Expenses

Subject:  Paragraphs 118.2(2)(b), (d) and (e) ITA

Further to our telephone conversation of February 6, 1990, please find enclosed a translation of our memorandum #7-3760 dated July 28, 1989 and the relevant documents.

Section ChiefBilingual Services SectionBilingual Services and Resource Industries DivisionRulings Directorate

Encl.

Paragraphs 118.2(2)(b), (d) and (e) ITA

N.B. :     THE FOLLOWING IS A TRANSLATION OF THE MEMORANDUM #7-3760 DATED JULY 28, 1989 WRITTEN IN FRENCH.

This is further to your request for an opinion concerning your memorandum dated September 15, 1987 regarding the deductibility of medical expenses allowed under paragraphs 118.2(2) (b), (d) and (e) of the Income Tax Act (former subparagraphs 110(1) (c) (iv), (v) and (vi)).

OUR COMMENTS

1.     The passage of Bill C-139 has not resulted in any basic changes with respect to medical expenses previously allowed under subparagraphs 110(1)(c)(iv), (v) and (vi) of the Act, and now covered under paragraphs 118.2(1)(b), (d) and (e).

2.     We feel that the term "maison de sante ou de repos" should be interpreted restrictively, in light of the fact that the English version of the Act uses "nursing home".  The term "maison de sante ou de repose" should mean an establishment with the qualified medical personnel and equipment needed to provide full-time (that is, 24 hours a day) care for persons who are incapable of adequately caring for themselves.

     Therefore establishments (such as senior citizen homes) should be looked at on an individual basis to determine whether they can be described as "maison de santé ou de repos".

3.     The term "bénéficiaires admissibles" (eligible recipients) is preferable to "contribuables admissibles" (eligible taxpayers) which you use in paragraph 1(b) of your memorandum.

4.     We suggest that you use the following definition of "eligible recipients" for purposes of paragraph 118.2(2)(b):

     "eligible recipient: the taxpayer, his spouse or any dependant who has a severe and prolonged mental or physical impairment within the meaning of form T2201 that has been certified as such by a licensed medical doctor or, where the impairment is an impairment of sight, by a licensed medical doctor or an optometrist."

5.     Paragraph 1(c) of your memorandum should include, as eligible expenses, remuneration for a full-time attendant upon an eligible recipient.

6.     Our position with regard to eligible expenses, other than those described in item 5 above, is that all normal expenses paid to a nursing home may qualify as medical expenses.  This includes amounts charged for room, board, medical care and services.  However, other distinguishable personal expenses, such as hairdressing expenses, are not eligible.  If this latter type of personal expense is not distinguishable on the bill, it will be eligible.

7.     The second paragraph of your memorandum should be changed as follows:

(i)     paragraph (a) should define the term "eligible establishments", rather than "a school, institution or other place";

(ii)     we suggest the following definition for "eligible establishments":

     "eligible establishments: a school, institution or other place (including a nursing home) with equipment, facilities or personnel specially provided for the care, or care and training of  physically or mentally handicapped individuals.";

(iii)     paragraph (b) should use the term "bénéficiaires admissibles" (eligible recipients) instead of "contribuables admissibles" (eligible taxpayers);

(iv)     we suggest the following definition for "eligible recipients":

     "eligible recipients:  the taxpayer, his spouse or a dependant of the taxpayer who has been certified by an appropriately qualified person to be an  individual who suffers from a physical or mental handicap requiring the use of equipment, facilities or personnel specially provided by an eligible establishment";

(v)     we feel that it is not appropriate to limit eligible expenses to those which you list in paragraph (c).  All normal expenses paid to an eligible establishment should qualify as eligible expenses.

     When an individual's handicap requires that the person resides in an eligible establishment, room and board costs should be eligible, if paid to that establishment.  The same should apply to board expenses when treatment or training received by the individual requires that meals be taken in the eligible establishment.

     There should be no distinction between the eligible expenses described in paragraphs 118.2(2) (b) and (d) and those described in paragraph 118.2(2)(e).  In the English version of these paragraphs, the legislator used the same expression ("for the care").  The only distinction between these paragraphs lies not in the nature of the eligible expenses, but in whether or not the care is ongoing.

8.     In light of our comments in item 7, we are of the opinion that paragraph 4(b) of your memorandum is incorrect.

9.     Also, paragraph 4 of your memorandum leaves the impression that the establishments are responsible for issuing receipts.  We wish to point out that the Act imposes no such responsibility; taxpayers claiming tax credits for medical expenses are responsible for proving the eligibility of the expenses claimed.

10.     Paragraph 4(a) of your memorandum states that all expenses paid for full-time residence in a nursing home are deductible. We do not fully agree with this statement; see the comments under item 6 above.

11.     We are not convinced of the relevance of paragraph 3 of your memorandum.  Since the memorandum is designed to summarize the eligibility requirements in paragraphs 118.2(2)(b), (d) and (e), summarizing what is already a summary may cause more confusion than anything else.  Also, we feel that the wording of this paragraph does not highlight the specific conditions in each of the three paragraphs (118.2(2)(b), (d) and (e)) with respect to the handicaps covered:

     118.2(2)(b):  severe and prolonged mental or physical impairment

     118.2(2)(d):   lack of normal mental capacity requiring the assistance of others for personal needs and care;

     118.2(2)(e):  physical or mental handicap requiring specifically provided equipment, facilities or personnel.

We hope that you will find our comments helpful.

[signed]A. Thibaultfor the DirectorBilingual Services and Resources IndustriesRuling Directorate