2017-0699941E5 medical expense tax credit

Principal Issues: Provide information regarding the measure on reproductive technologies (the “Technologies”) announced in the 2017 Federal Budget regarding the application of the medical expense tax credit to individuals that require medical intervention to conceive a child.

Position: The measure clarified the METC to also apply to individuals who claim expenses paid for Technologies even where such treatment is not medically indicated because of the medical condition of infertility.

Reasons: The measure clarified the legislation so individuals who are patients (as defined for the purpose of the METC) and require medical intervention in order to conceive a child will be eligible to claim the same expenses that would generally only be eligible for individuals to claim who require the Technologies on account of medical infertility.

Author: Shea-Farrow, Nancy
Section: 118.2

XXXXXXXXXX                                                                                                    2017-069994
                                                                                                                            Nancy Shea-Farrow
December 22, 2017

Dear XXXXXXXXXX:

Re: Reproductive technologies and the medical expense tax credit

We are responding to your correspondence which was forwarded by the Honourable Diane Lebouthillier, Minister of National Revenue, regarding the measure on reproductive technologies (the “Technologies”) announced in the 2017 Federal Budget. The announcement concerned the application of the medical expense tax credit to individuals that require medical intervention to conceive a child.

Our comments

This technical interpretation provides general comments about the provisions of the Income Tax Act (“Act”) and related legislation (where referenced). It does not confirm the income tax treatment of a particular situation involving a specific taxpayer but is intended to assist you in making that determination. The income tax treatment of particular transactions proposed by a specific taxpayer will only be confirmed by this Directorate in the context of an advance income tax ruling request submitted in the manner set out in Information Circular IC 70-6R7, Advance Income Tax Rulings and Technical Interpretations.

The medical expense tax credit is a 15% non-refundable tax credit that provides tax relief for individuals who have incurred significant medical expenses for themselves or certain dependants. The Canada Revenue Agency’s (CRA) general views regarding the medical expense tax credit can be found in Income Tax Folio S1-F1-C1, Medical Expense Tax Credit (the “Folio”).

Medical services

Paragraph 118.2(2)(a) of the Act allows, as an eligible medical expense of an individual, an amount paid to a medical practitioner, dentist or nurse or a public or licensed private hospital for medical or dental services provided to a patient. For the purpose of the METC, the patient must be the individual, the individual’s spouse or common-law partner, or certain dependants of the individual. As explained in paragraph 1.26 of the Folio, medical services are diagnostic, therapeutic or rehabilitative services that are performed by a medical practitioner acting within the scope of his or her professional training. Generally, payments to medical practitioners are considered eligible medical expenses when they are paid for medical services or procedures that relate to existing illnesses or conditions of the patient.

The term “medical practitioner” encompasses a broad range of individuals in the medical profession including a medical doctor, pharmacist or nurse. For a medical service rendered to an individual, a reference to a medical practitioner is a reference to a person who is authorized to practice in the stated profession according to the laws of the jurisdiction in which the service is rendered. Paragraphs 1.20 - 1.23 of the Folio provide additional information regarding who is a medical practitioner for the purpose of the METC. As noted in paragraph 1.28 of the Folio, payments made to corporations, partnerships, societies, and associations for services rendered by their employees or partners are eligible medical expenses only where the person who provided the service is a medical practitioner and the service provided is a medical service.

Drugs, medicaments or other preparations or substances

Amounts paid for drugs, medicaments or other preparations or substances are eligible medical expenses if certain conditions are met. These conditions are described in the paragraph 1.123 and 1.124 of the Folio.

Laboratory, radiological or other diagnostic procedures or services

Under the Act, eligible medical expenses also include amounts paid:

*     for laboratory, radiological or other diagnostic procedures or services together with necessary interpretations;

*     for maintaining health, preventing disease or assisting in the diagnosis or treatment of any injury, illness or disability;

*     for the patient; and

*     as prescribed by a medical practitioner.

The expenditures must satisfy all four conditions in order to be eligible medical expenses.

*     Paragraph 1.130 of the Folio provides examples of expenses involved with artificial insemination that may qualify: the in-vitro fertilization procedure;

*     daily ultrasound and blood tests once the in-vitro procedure has begun; anaesthetist fees; and

*     cycle monitoring fees.

Budget 2017 clarified the METC to allow individuals to claim expenses paid for these same types of Technologies even where such treatment is not medically indicated because of the medical condition of infertility. This means that individuals who are patients (as defined for the purpose of the METC) and require medical intervention in order to conceive a child will be eligible to claim the same expenses that would generally only be eligible for individuals who require the Technologies on account of medical infertility. This applies to the 2017 and subsequent tax years.

However, if an individual makes a request to the CRA by completing Form T1-ADJ, T1 Adjustment Request or through My Account, the measure will also apply to a year prior to 2017.

Generally, an individual can only request a change to a return for a tax year ending in any of the 10 previous calendar years. For example, a request made in 2017 must relate to the 2007 or a later tax year to be considered. Therefore, if an individual wants to amend their 2007 return, they must make their request on or before December 31, 2017.

For more information on how to change your return please go to the Government of Canada website at:

https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/change-your-return.html.

We trust our comments will be of assistance.

Yours truly,

Lita Krantz, CPA, CA
Manager - Tax Credits and Ministerial Issues
Business and Employment Division
Income Tax Rulings Directorate

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