2015-0593261M4 Medical expenses - Modification of a van

Principal Issues: 1. Request to revise the current limitations regarding the amount of expense that qualifies for the medical expense tax credit when a vehicle is adapted for use in transporting a patient who requires a wheelchair.

Position: 1. Tax policy decisions are the responsibility of the Department of Finance.

Reasons: See below.

Author: Dubis, Robert
Section: 118.2(2)(l.7); 118.2(2)(m)

July 20, 2015

XXXXXXXXXX

Dear Colleague:

Thank you for your correspondence of May 20, 2015, about the income tax affairs of your constituents, XXXXXXXXXX.

Payments for the purchase of and modifications to a van may qualify for the medical expense tax credit under certain conditions. Paragraph 118.2(2)(l.7) of the Income Tax Act provides that a portion of the cost of a van that has been adapted (at the time it is purchased or within six months after the time it is purchased) for use in transporting a patient who requires the use of a wheelchair may be an eligible medical expense. The amount that could qualify as an eligible medical expense is the lesser of $5,000 and 20% of the amount paid for the purchase of the van, after deducting any amount included in the cost of the van that qualifies as a medical expense under paragraph 118.2(2)(m) of the Act.

Medical expenses that may be eligible under paragraph 118.2(2)(m) of the Act include an amount paid for certain modifications to a van for an individual with a disability. For information about the purchase and modification costs of a van, please see paragraphs 1.109 to 1.112 of Income Tax Folio S1-F1-C1, Medical Expense Tax Credit, available at www.cra.gc.ca/tx/tchncl/ncmtx/fls/s1/f1/s1-f1-c1-eng.html.

The current limitation amounts of $5,000 and 20% of the amount paid for the purchase of the van under paragraph 118.2(2)(l.7) of the Act were introduced in the 1997 budget for 1997 and later tax years. There have been no changes to these limitation amounts since they were implemented. You have asked whether these amounts could be reviewed and based on current economic conditions.

The Canada Revenue Agency is responsible for administering the Act. Your comments relate to tax policy, which is the responsibility of the Department of Finance Canada. Therefore, I am sending a copy of our correspondence to the Honourable Joe Oliver, Minister of Finance, for his consideration.

I appreciate the opportunity to respond to your concerns.

Yours sincerely,

Hon. Kerry-Lynne D. Findlay, P.C., Q.C., M.P.
 

c.c.: The Honourable Joe Oliver, P.C., M.P.
         Minister of Finance
         House of Commons
         Ottawa ON  K1A 0A6

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