At issue
The scope of expenses that may be claimed under the medical expense tax credit (METC) is limited to the criteria outlined in subsection 118.2(2) of the Income Tax Act.
For a medical “service” to qualify, the payment must be made directly to a licensed medical professional, or to the corporation employing that professional. For any “device or equipment” to qualify, it must be prescribed (in the medical sense) by a medical practitioner to qualify, and also be prescribed in the legislative sense. This prescribed list of about two dozen types of equipment and devices appears in Income Tax Regulation 5700.
Though on the face of it, these rules are fairly black-and-white, they are often the subject of inquiries to the Canada Revenue Agency (CRA) and appeals to the court system.
Roberts v. The Queen, 2012 TCC 319
The taxpayer had prostate cancer, and suffered from incontinence following a radical prostatectomy. His doctor recommended that he join the local YMCA and engage in an exercise routine. Correspondence from the doctor confirmed that the symptoms of incontinence decreased dramatically after joining the club.
The disallowed METC claim was “regrettably” upheld on appeal, as there is no provision for health club membership within s.118.2(2). The taxpayer’s alternative argument was that the CRA allows for recreational programs to qualify as medical expenses, but the judge clarified that this would only apply for individuals entitled to claim the disability tax credit.
Anthony v. The Queen, 2012 TCC 334
The taxpayer suffered from severe chronic panic, for which her doctors recommended she purchase and use a hot tub. This alleviated the pain and significantly assisted her ability to walk. Even so and even though CRA did not dispute the effectiveness of the hot tub, the METC claim was denied on reassessment.
On appeal, the judge considered ITA paragraphs by which the hot tub might constitute a home renovation that is “of a type that would not normally be incurred by persons who have normal physical development” and/or whether it is a “device that is exclusively designed to assist an individual in walking where the individual has a mobility impairment.” [The emphasis appeared in the judgment.]
Though the judge was explicitly sympathetic, on both grounds she found that a hot tub is something “commonly purchased by persons who do not suffer severe disabilities and is not exclusively designed to assist persons with a mobility impairment.” Accordingly it did not fulfill the legislative intent, and the appeal was dismissed.
CRA 2011-0402881E5 – Weight Loss Program as a medical expense
The CRA was asked about METC qualification for a few types of expenditures, including fees paid for a weight-loss program.
The author took the view that such a program undertaken by an individual for the treatment of obesity may qualify if provided by a licensed medical practitioner for therapeutic or rehabilitative purposes. On the facts presented however, the opinion was given that the intended claim would be unlikely to succeed.
Practice points:
1
- Patients should take their medical advice from qualified medical practitioners, but as taxpayers they should not assume that a treatment or device automatically qualifies for the METC just because it was medically prescribed.2
- Where alternative treatments, devices and/or device features are presented, it would be prudent to review the METC criteria before making a final decision.3
- Guidance on the CRA’s approach is available on its website. Search for Interpretation Bulletin IT-519R2 (Consolidated), Medical Expense and Disability Tax Credits and Attendant Care Expense Deduction.
