Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA. Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
Principal Issues: Whether the cost of sperm and/or donor eggs are eligible medical expenses for the purpose of the medical expense tax credit (METC).
Position: Question of fact, but not likely.
Reasons: Costs incurred by an individual for fertility treatments are eligible expenses only if they are paid in respect of a patient who is the individual, their spouse or common-law partner, or, a dependant.
Author: Underhill, Cynthia
Section: 118.2(2)(a), 118.2(2)(n), 118.2(2.2)
December 21, 2018
Provincial Territorial Affairs Division Income Tax Rulings
Service, Innovation and Integration Branch Directorate
Tax Credits and
Attention: Rachel Moore Ministerial Issues
Sperm and/or donor egg fees and the medical expense tax credit
This memorandum is in reply to your email of April 5, 2018, requesting our comments on whether the cost of sperm and/or donor eggs are eligible medical expenses for the purpose of the medical expense tax credit (METC). Specifically, you have asked whether the cost of sperm and/or donor eggs are qualifying medical expenses for the purpose of the METC given the enactment of subsection 118.2(2.2) of the Income Tax Act (the “Act”); and whether the cost of sperm and/or donor eggs could be considered a substance for the purposes of paragraph 118.2(2)(n) of the Act. We apologize for the delayed response.
Subsection 7(1) of the Assisted Human Reproduction Act (Canada) states no person shall purchase eggs and/or sperm from a donor or person acting on behalf of a donor, meaning an egg and/or sperm donor cannot be paid for the eggs they donate. It is our understanding that the fees associated with obtaining eggs and/or sperm paid to an egg and/or sperm donor organization are paid for services including locating an egg and/or sperm donor and reimbursing the medical expenses and other related expenses of the egg and/or sperm donor during the egg and/or sperm donation process.
The nature of the medical expenses provided to the egg and/or sperm donor may include medical services, amounts paid for drugs, and laboratory or other diagnostic procedures or services. Pursuant to paragraph 118.2(2)(a) of the Act, 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 (as defined for the purpose of the METC) is an eligible medical expense for the METC. Additionally, if the requirements of paragraphs 118.2(2)(n) and 118.2(2)(o) of the Act are met, the amounts paid for drugs and for laboratory or other diagnostic procedures or services for the patient will qualify as eligible medical expenses for the purposes of the METC. Under the previously mentioned provisions of the Act, amounts are considered eligible medical expenses for purposes of the METC when they are incurred for an illness or medical condition of the patient. Furthermore, to be eligible for the METC, the amounts paid by an individual must be for medical expenses for the patient. The patient, is a person who is the individual, the individual’s spouse or common-law partner, or the individual’s dependant.
For taxation years beginning in 2017, subsection 118.2(2.2) clarified the METC to allow individuals to claim expenses paid for reproductive technologies even where such treatment is used to conceive a child but not required because of a medical condition. This means that individuals who are patients and who 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 reproductive technologies on account of medical infertility. The introduction of subsection paragraph 118.2(2.2) is not intended to broaden the scope of qualifying medical expenses for the purposes of the METC but only to remove the requirement for a medical condition for medical expenses incurred for the purpose of conceiving a child. In addition, subsection 118.2(2.2) did not remove the condition that the amounts paid by an individual need to be medical expenses for the patient. Therefore, unless the egg and/or sperm donor is the individual, the individual’s spouse or common-law partner, or the individual’s dependant, the medical expenses paid on behalf of the egg and/or sperm donor would not be eligible medical expenses for the purposes of the METC.
Amounts paid for a “substance”
As previously mentioned, it is unlawful in Canada to purchase eggs and/or sperm from a donor or person acting on behalf of a donor. The fees associated with obtaining eggs and/or sperm from a donor or a donor organization, is not directly for the egg and/or sperm “substance” but is for the service of locating an egg and/or sperm donor and reimbursing the medical expenses and other related expenses of the egg and/or sperm donor during the egg and/or sperm donation process. Therefore, it is our view that the fees paid are not for “amounts paid for a substance” under paragraph 118.2(2)(n).
Unless exempted, a copy of this memorandum will be severed using the Access to Information Act criteria and placed in the CRA’s electronic library. After a 90-day waiting period, a severed copy will also be distributed to the commercial tax publishers for inclusion in their databases. You may request an extension of this 90-day period. The severing process removes all content that is not subject to disclosure, including information that could reveal the identity of the taxpayer. The taxpayer may ask for a version that has been severed using the Privacy Act criteria, which does not remove taxpayer identity. You can request this by e-mailing us at: ITRACCESSG@cra-arc.gc.ca. A copy will be sent to you for delivery to the taxpayer.
We trust our comments will be of assistance.
Lita Krantz, CPA, CA
Manager - Tax Credits and Ministerial Issues
Business and Employment Division
Income Tax Rulings Directorate
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