2018-0767261M4 Medical expenses - whether they include HST or GST

Principal Issues: Whether the harmonized sales tax (HST) or the goods and services tax (GST) that is required to be added to the cost of certain medical services can be included as part of the eligible medical expense for the purpose of claiming the medical expense tax credit (METC).

Position: Yes.

Reasons: See response.

Author: El-Kadi, Randa
Section: 118.2(2)

October 18, 2018

XXXXXXXXXX

Dear XXXXXXXXXX:

Thank you for your correspondence of June 17 and July 11, 2018, about claiming the harmonized sales tax as part of eligible medical expenses on your income tax return for the services of a registered massage therapist. In addition, you note that physiotherapy services are not subject to the goods and services tax/harmonized sales tax (GST/HST), and you propose that massage therapy services should also be exempt.

In the context of the medical expense tax credit (METC), an eligible medical expense is generally an outlay an individual makes to obtain medical services or devices that are described in the Income Tax Act and its Regulations.

Therefore, when an expense eligible for the METC is subject to the GST/HST, the Canada Revenue Agency takes the view that the GST/HST is also eligible for the METC. This view is consistent with the purpose of the METC, which is to recognize the effect of above-average medical- and disability-related expenses on an individual’s ability to pay income tax. It also allows individuals to claim a portion of the GST/HST they paid on certain medical services.

If you have questions about reimbursements from your insurance company, I suggest you contact XXXXXXXXXX for more information.

I understand your concern about the application of the GST/HST to massage therapy services. Many health care services are exempt from the GST/HST under the Excise Tax Act. For example, a GST/HST exemption applies to most health care services provided by medical practitioners who, under the laws of a province, are entitled to practise the professions of medicine.

The Act also exempts supplies of certain other regulated health care services made by a practitioner of the service who is licensed or otherwise certified, by a provincially established regulatory body, to practise their profession. The services that qualify for this exemption are specified in the Act and include physiotherapy, optometric, chiropractic, chiropodic, podiatric, osteopathic, audiological, speech-therapy, occupational therapy, psychological, and dietetic services. To include massage therapy services in the list would require a legislative amendment.

The CRA administers tax laws for the Government of Canada. The Department of Finance Canada is responsible for tax policy and legislative amendments, such as changes to the way the GST/HST applies to heath care services. Therefore, I am sending a copy of our correspondence to the Honourable Bill Morneau, Minister of Finance, for his consideration.

I appreciate the opportunity to respond to your concerns and trust the information I have provided is helpful.

Sincerely,

The Honourable Diane Lebouthillier

c.c.:  The Honourable Bill Morneau, P.C., M.P.

Randa El-Kadi
613-670-9054
2018-076726

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