2018-0753891E5 METC – list of fertility related procedures

Principal Issues: Whether there is a list of fertility-related procedures that are considered to be eligible medical expenses for the purposes of the METC.

Position: No, see response.

Reasons: See response.

Author: Underhill, Cynthia
Section: ITA: 118.2, 118.2(2)(a), (n), and (o), and 118.2(2.2))

XXXXXXXXXX                                                                                                                                      2018-075389
                                                                                                                                                              C. Underhill
January 9, 2019

Dear XXXXXXXXXX:

Re:  Medical expense tax credit - fertility-related procedures

We are writing in response to your email dated April 16, 2018, in which you requested a list of fertility-related procedures that qualify as eligible medical expenses for purposes of the medical expense tax credit (“METC”).

In your email, you refer to the Canada Revenue Agency (CRA) webpage entitled, Medical Expenses Tax credit (METC) – Reproductive Technologies, which states that, generally, the cost of medical services, drugs, and lab tests are included in the calculation of the METC for an individual receiving treatment to conceive a child, such as in vitro fertilization (IVF). You have specifically asked for additional information concerning the types of fertility-related procedures that will qualify as well as whether all procedures performed by a medical practitioner for the purpose of conceiving a child are considered eligible.

Our comments

This technical interpretation provides general comments about the provisions of the Income Tax Act (the “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 a particular transaction 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 CRA’s general views regarding the METC are contained in Income Tax Folio S1-F1-C1, Medical Expense Tax Credit (the Folio) which can be found on www.Canada.ca. As outlined in paragraphs 1.8 to 1.11 of the Folio, there are a number of conditions that must be satisfied in order for an individual to claim a METC for the medical expenses they have paid in a particular year. Among them, an individual’s medical expenses must be ‘eligible medical expenses’ as described in subsection 118.2(2) of the Act. If a particular expenditure is not described as an eligible medical expense in subsection 118.2(2), or if the conditions under which the expenditure would qualify are not met, the expenditure will not qualify for purposes of the METC, even though the expenditure may have been incurred for medical reasons. For information regarding the types of medical expenses described in subsection 118.2(2), see paragraphs 1.24 to 1.146 of the Folio.

In order to claim the METC, an individual must pay an eligible medical expense and the person in respect of whom the medical expense was incurred (that is, the patient) must be the individual, the individual’s spouse or common-law partner, or certain dependants of the individual (as described in paragraphs 1.2 to 1.7 of the Folio).

As you have correctly identified, generally the cost of medical services, drugs, and lab tests can be included in the calculation of an individual’s METC in respect of a patient receiving treatment to conceive a child. These three categories of medical expenses are specifically described as an eligible medical expense in paragraphs 118.2(2)(a), (n) and (o) of the Act, respectively. To qualify as an eligible medical expense under each of these paragraphs, certain conditions must be met (as outlined below).

Medical services - paragraph 118.2(2)(a)

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.

As explained in paragraphs 1.26 and 1.27 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, a payment to a medical practitioner is an eligible medical expense when made in respect of a medical service or procedure that relates to an existing condition or illness of the patient (subject to the comments below concerning subsection 118.2(2.2) under the heading ‘Reproductive technologies’). In the context of individuals receiving treatment to conceive a child, a medical service or procedure that relates to an existing illness would be one that is medically advisable because of an impending medical treatment (such as when a patient is to undergo chemotherapy for cancer that is likely to have a direct, significant, negative effect on reproductive functions). An existing condition in this context includes the medical condition of infertility.

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 to 1.23 of the Folio provide additional information regarding who is a medical practitioner for purposes 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 providing the service is a medical practitioner and the services provided are medical services.

Drugs – Paragraph 118.2(2)(n)

Paragraph 118.2(2)(n) of the Act allows as an eligible medical expense amounts paid for drugs, medicaments or other preparations or substances if certain conditions are met. These conditions are described in paragraphs 1.123 and 1.124 of the Folio.

Lab tests – Paragraph 118.2(2)(o)

Paragraph 118.2(2)(o) of the Act allows as an eligible medical expense 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.

An expenditure must satisfy all four of the above conditions in order to meet the requirements under paragraph 118.2(2)(o) of the Act (subject to the comments below concerning subsection 118.2(2.2) under the heading ‘Reproductive technologies’). For more information, see paragraphs 1.128 and 1.129 of the Folio.

Reproductive technologies

It is a question of fact whether a particular medical expense, including one paid for the purpose of conceiving a child, is an eligible medical expense for purposes of the METC. To qualify, the expenditure must fall within and meet the requirements of one of the paragraphs of subsection 118.2(2) of the Act.  Notwithstanding this, we can offer the following general comments regarding the eligibility of certain expenses for reproductive technologies.

For 2017 and subsequent tax years, subsection 118.2(2.2) was introduced to clarify the application of the METC to allow an individual to claim medical expenses paid for the purpose of conceiving a child in circumstances where the patient does not have a medical condition that prevents them from conceiving. As a result, the same expenses will be considered eligible for the METC for patients who have a medical condition preventing them from conceiving a child and for those who do not. More information regarding subsection 118.2(2.2) is contained on CRA webpage Medical Expenses Tax credit (METC) – Reproductive Technologies.

Although subsection 118.2(2.2) applies to the 2017 and subsequent tax years, 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 taxation year ending in any of the 10 previous calendar years. For example, a request made in 2019 must relate to the 2009 or a later tax year to be considered. Therefore, if an individual wants to amend their 2009 return, they must make their request on or before December 31, 2019.

Expenditures for reproductive technologies that may fall under paragraphs 118.2(2)(a), (n) and (o) in respect of medical services, drugs and lab tests, include, for instance, certain expenses involved with artificial insemination (AI) or IVF procedures, such as:

*     fees paid to a medical practitioner or nurse, acting within the scope of his or her professional training, for a patient undergoing AI or IVF (for example, consultations fees while in treatment or fees for an egg retrieval procedure, fresh or frozen embryo transfer procedure, or surgical sperm retrieval);
*     fees paid to a public or licensed private hospital for a patient undergoing an AI or IVF procedure (for example, day surgery fees, if applicable);
*     lab procedures performed within the IVF process (for example, the cost of sperm washing, sperm freezing, embryo freezing, sperm thawing or embryo thawing);
*     daily ultrasound and blood tests once the IVF procedure has begun;
*     anaesthetist fees;
*     cycle monitoring fees; and
*     fertility-related drugs.

Medical services must be provided by, and drugs and lab tests must be prescribed by, a medical practitioner. In each instance, the patient must be the individual who is claiming the METC, the individual’s spouse or common-law partner or a dependent of the individual.  However, fees for the services of a surrogate mother are generally not eligible for the METC.

Additionally, as noted in paragraph 1.16 of the Folio, qualifying medical expenses of an individual do not include any expense for which the individual or certain other persons are entitled to be reimbursed (for example under a public or private medical or hospitalization plan), except to the extent that the amount of the reimbursement is required to be included in income.

We trust our comments will be of assistance to you.

Yours truly,

Lita Krantz, CPA, CA
Manager, Tax Credits and Ministerial Issues
Business and Employment Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch

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