2019-0798981E5 Magnetotherapy devices & eligible medical expenses

Principal Issues: Whether the cost of a particular electromedical device for magnetotherapy (or electromagnetic therapy) is an eligible medical expense for the purpose of paragraph 118.2(2)(m) of the Act and paragraphs 5700(v) and 5700(z.2) of the Regulations.

Position: Question of fact. Depending on its use, the device may fall under the ambit of paragraph 5700(v) in limited situations, provided that all the conditions in paragraph 118.2(2)(m) of the Act and paragraph 5700(v) of the Regulations are met. However, it is unlikely that the device would be considered to be an electrotherapy device that is described in paragraph 5700(z.2) of the Regulations.

Reasons: The wording of paragraphs 5700(v) and (z.2).

Author: El-Kadi, Randa
Section: 118.2(2)(m); Regulations 5700(v) and 5700(z.2)

XXXXXXXXXX                                                                                                                                        2019-079898
                                                                                                                                                                Randa El-Kadi
May 6, 2019

Re:   The medical expense tax credit and electromagnetic therapy devices using ion cyclotron resonance

Dear XXXXXXXXXX,

We are replying to your correspondence wherein you ask whether the Seqex device (the “Device”) could be added to the list of medical devices eligible for the medical expense tax credit (METC). In your submission, you indicate that Health Canada lists the Device as a Class II medical device. The Device is generally described as an electro-medical device for magnetotherapy that administers pulsed or variable electromagnetic fields, using controlled settings (e.g. frequency, intensity, and waveform). It also incorporates ion cyclotron resonance (ICR), a phenomenon created from the application of two magnetic fields, one static and one variable through time. The treatment is usually applied using a mat connected to a central console, or by wearing a special corsage. You indicate that ICR promotes cell permeability, thus allowing the release of toxins and the absorption of nutrients. You also indicate that treatment with the Device helps reduce inflammation, increase microcirculation, alleviate pain, and assist with wound and bone healing, to list only a few indications.

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 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 70-6R8, Advance Income Tax Rulings and Technical Interpretations.

Under paragraph 118.2(2)(m) of the Act, an amount paid for a device or equipment may qualify as an eligible medical expense if certain conditions are met. Generally, to qualify, the device or equipment must be prescribed by a medical practitioner, must be included in the list of qualifying devices or equipment described in section 5700 of the Income Tax Regulations (the Regulations), and must meet conditions prescribed by the Regulations as to its use or the reason for its acquisition.

A description of the devices and equipment qualifying for the METC can also be found in Income Tax Folio S1-F1-C1, Medical Expense Tax Credit (the Folio), beginning at paragraph 1.118. The Folio is available at canada.ca/en/revenue-agency/services/tax/technical-information/income-tax/income-tax-folios-index/series-1-individuals/folio-1-health-medical/income-tax-folio-s1-f1-c1-medical-expense-tax-credit.

Currently, the Device may qualify under paragraph 5700(v) of the Regulations but only in specific circumstances where it is used as an “inductive coupling osteogenesis stimulator for treating non-union of fractures or aiding in bone fusion.” It is implied that the Device must be prescribed by a medical practitioner for that specific use.

We have also considered whether the Device may qualify under paragraph 5700(z.2) of the Regulations. This provision allows as an eligible medical device an “electrotherapy device designed to be used by an individual with a medical condition or by an individual who has a severe mobility impairment.” In our view, it is unlikely that the Device would be considered an electrotherapy device.

Electrotherapy versus electromagnetic therapy

The Regulations seem to dedicate two distinct provisions for electrotherapy devices (paragraph 5700(z.2)) and electromagnetic therapy devices (paragraph 5700(v)). Therefore, it can be argued that had the former been intended to encompass the latter, paragraph 5700(v) would have used similar wording as paragraph 5700(z.2), or vice-versa. Moreover, in our view, the two types of devices seem to be different both in the way they are applied and the way they stimulate target tissues.

In the present case, the Device seems to be marketed and sold as a “magnetotherapy” device. Moreover, references to medical studies you submitted with your query seem to refer exclusively to magnetic fields and electromagnetic fields.

The Department of Finance Canada (Finance) is responsible for tax policy and legislative changes to the Act, while the Canada Revenue Agency is responsible for administering the tax system and applying the legislation as enacted. Any proposal to change section 5700 of the Regulations will be a change in tax policy and therefore, will be the responsibility of Finance. It is our understanding that you have already forwarded your query to Finance for their consideration.

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
Legislative Policy and Regulatory Affairs Branch

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