2018-0763791I7 Embryo freezing costs

Principal Issues: Whether the costs paid to freeze an embryo, for the purposes of implanting into a surrogate, are eligible medical expenses for the purposes of the medical expense tax credit.

Position: Question of fact, but likely yes.

Reasons: Legislation.

Author: Brennan, Christopher
Section: 118.2 (1), 118.2(2)(a), 118.2(2)(o), 118.2(2.2)

                                                                                                                                                                      November 5, 2018

Christiane Wolfe                                                                                                                                           HEADQUARTERS
Validation Policies and Procedures Section                                                                                                 Income Tax Ruling
 Individual Compliance Directorate                                                                                                                Directorate
Collections and Verification Branch                                                                                                              Christopher Brennan
                                                                                                                                                                      (613) 670-0827

                                                                                                                                                                      2018-076379

Embryo freezing

This memorandum is in reply to your request for our comments on whether the costs paid by a taxpayer to freeze embryos, for the purposes of implanting into a surrogate, would be eligible medical expenses for the purposes of the Medical expense tax credit (METC). The taxpayer is a male individual who is in a same-sex spousal or common-law relationship. He is trying to claim expenses incurred for using the services of an egg donation organization in conjunction with the couple’s fertility clinic to create embryos for surrogate implantation.  The fertility treatments were done on the egg donor.

Our comments

The cost of freezing embryos (and certain lab or diagnostic procedures within the in-vitro fertilization process), for a patient (as defined for the purpose of the METC) when medically indicated (such as, for the medical condition of infertility or when medically advisable because of impeding medical treatments that are likely to have a direct significant negative effect on reproduction functions) would qualify as eligible medical expenses if the requirements of paragraph 118.2(2)(o) are otherwise met.

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 not medically indicated because of the medical condition of infertility. 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. Therefore, the cost of freezing embryos, as part of the IVF procedure prescribed by a medical practitioner and paid for the medical expenses of the individual, the individual’s spouse or common-law partner, or a dependant of the individual, would be deemed to be an eligible medical expense for purposes of section 118.2.

Although subsection 118.2(2.2) applies to the 2017 and subsequent taxation years, if an individual makes a request to the Canada Revenue Agency (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 2018 must relate to the 2008 or a later tax year to be considered. Therefore, if an individual wants to amend their 2008 return, they must make their request on or before December 31, 2018.

Unless exempted, a copy of this memorandum will be severed using the Access to Information Act criteria and placed in the Canada Revenue Agency’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.

Yours truly,

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

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