2020-0842761E5 METC – Amounts paid for attendant care

Principal Issues: Whether amounts paid for attendant care provided in a retirement home, under various scenarios, qualify as eligible medical expenses for the purposes of the METC under the Act.

Position: Question of fact, there are various provisions that may apply to allow an amount paid for attendant care to qualify as eligible medical expenses for the purposes of the METC, and each provision has its own specific requirements that must be met in order for the expenditure to be eligible for the METC pursuant to that particular provision.

Reasons: Under paragraphs 118.2(2)(b) through (d) of the Act, eligible medical expenses may include costs paid for attendant care or care in certain types of facilities, such as nursing homes or retirement homes. Paragraphs 118.2(2)(b) and (b.1) of the Act, only apply in respect of the costs of caring for an eligible person with a disability. Paragraph 118.2(2)(d) of the Act applies in respect of the costs of caring for a patient regardless of whether the patient is an eligible person with a disability.

Author: Underhill, Cynthia
Section: ITA: Subsection 118.2(2); 118.3(1); Paragraphs 118.2(2)(b), (b.1), (b.2), (c), (d), and (e); and 118.3(1)(c).

XXXXXXXXXX                                                              2020-084276
                                                                                      C. Underhill

January 23, 2023

Dear XXXXXXXXXX:

Re: Medical Expense Tax Credit – remuneration paid for attendant care

We are writing in response to your correspondence asking if an individual who resides in a retirement home may claim amounts paid as remuneration for attendant care (full or part-time), under various scenarios, as an eligible medical expense for the purposes of the medical expense tax credit (METC). We apologize for the delay in responding to your request.

In your submission, you referred to Lines 33099 and 33199 – Eligible medical expenses you can claim on your tax return on the Canada Revenue Agency’s (CRA) website and Guide RC4065, Medical Expenses. You asked for clarification as to whether a retirement home is distinct from a nursing home and whether amounts paid as remuneration for attendant care (full or part-time) in a retirement home are deductible under the Income Tax Act (the Act). You described various scenarios where the individual resides at a retirement home, incurs attendant care expenses, and either:

* qualifies for the disability tax credit (DTC) and has a signed form T2201, Disability Tax Credit Certificate (form T2201); or

* has a physical or mental handicap and has a letter from a doctor, but they do not have a signed form T2201.

Our comments:

This technical interpretation provides general comments about the provisions of 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 70-6R12, Advance Income Tax Rulings and Technical Interpretations.

Medical expenses eligible for the METC are limited to those 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) of the Act, or if the conditions under which the expenditure would qualify are not met, the expenditure does not qualify for purposes of the METC, even though the expenditure may have been incurred for medical reasons.

Under paragraphs 118.2(2)(b) through (d) of the Act, eligible medical expenses may include costs paid for attendant care or care in certain types of facilities such as nursing homes, retirement homes, or group homes. We are only discussing paragraphs 118.2(2)(b), (b.1) and (d) of the Act as these provisions apply to your query.

Paragraphs 118.2(2)(b), and (b.1) of the Act, only apply in respect of the costs of caring for an eligible person with a disability. An eligible person with a disability refers to a person in respect of whom a DTC could be claimed (either by the person with the disability or by some other person for the tax year in which the medical expense was incurred). This would require an individual to have a signed form T2201 by an appropriate medical practitioner. An individual that does not have a signed form T2201 by an appropriate medical practitioner is not an eligible person with a disability.

Full-time attendant care or full-time care in a nursing home – paragraph 118.2(2)(b)

Under paragraph 118.2(2)(b) of the Act, eligible medical expenses of an individual for a tax year include remuneration paid for one full-time attendant, or the cost of full-time care in a nursing home provided that:

* the patient is an eligible person with a disability (as discussed above) in the tax year in which the expense is incurred; and

* at the time the remuneration is paid, the full-time attendant is not under 18 years of age nor the individual’s spouse or common-law partner.

Attendant care is care provided by an attendant who performs those personal tasks which a patient is unable to do for him or herself. Depending on the situation, such tasks could include meal preparation, maid and cleaning services, transportation, and personal services such as banking and shopping. Attendant care would also include providing companionship to a patient. However, if a person is employed as a single service provider, such as a provider of only maid and cleaning services, or a provider of only transportation services, the provision of such service would not be viewed as attendant care. Where the expression one full-time attendant is used, it is not intended to mean one attendant only looking after the patient on a continuous basis but rather several attendants could be utilized over a specific period of time so long as there is only one attendant for any given period of time.

A nursing home is generally considered to be an establishment that provides full-time maintenance or nursing home care for patients who are unable to care for themselves. While a particular place need not be a licensed nursing home, it must have the equivalent features and characteristics of a nursing home. For example, a nursing home is normally a facility of a public character which offers 24-hour nursing care to patients who are not related to the facility owner/operator. The use of the expression full-time care in a nursing home is not intended to place a requirement of a minimum time spent caring for a patient but rather implies the constant care and attendance required by the patient by reason of an injury, illness or disability of the patient. The CRA is generally of the view that a retirement home does not provide the care required to be classified as a nursing home.

In the case of a facility that provides multiple levels of care, the facility would be considered a nursing home only in respect of the portion of the facility that provides regular nursing care of the type provided by a nursing home.

If a claim for remuneration paid for attendant care or for care in a nursing home is made under paragraph 118.2(2)(b) of the Act, no disability tax credit may be claimed (under section 118.3) in respect of the eligible person with a disability by any taxpayer for that tax year.

Limited claim for attendant care – paragraph 118.2(2)(b.1)

Paragraph 118.2(2)(b.1) of the Act allows an individual to include up to $10,000 as an eligible medical expense for a tax year, for remuneration paid for attendant care provided that:

* the patient is an eligible person with a disability (as discussed above) in the tax year in which the expense is incurred;

* at the time the remuneration is paid, the attendant is not under 18 years of age nor the individual’s spouse or common-law partner;

* the attendant care is provided in Canada;

* no part of the remuneration is claimed by any taxpayer as a child care expense deduction, or by the eligible person with a disability as a disability supports deduction;

* no part of the remuneration is claimed by any taxpayer in any tax year as an eligible medical expense under any of paragraphs 118.2(2)(b), (b.2), (c), (d) or (e) of the Act; and

* receipts for payments to the attendant are issued by the payee and include, if the payee is an individual, his or her social insurance number.

The amount that may be claimed by an individual as an eligible medical expense under paragraph 118.2(2)(b.1) of the Act for a tax year is the lesser of the amount paid as remuneration for attendant care and $10,000. The limit under paragraph 118.2(2)(b.1) of the Act is increased from $10,000 to $20,000 where the individual dies in the year.

A claim under paragraph 118.2(2)(b.1) of the Act will generally be made where the remuneration is paid for part-time attendant care. However, remuneration for full-time attendant care may be claimed under paragraph 118.2(2)(b.1) of the Act (subject to the maximum dollar limit and provided the requirements set out above are otherwise met), so that a disability tax credit may also be claimed for the year in respect of the eligible person with a disability. Individuals will need to determine, based on their specific circumstances, whether it is more beneficial to claim the limited amount of attendant care expenses provided under paragraph 118.2(2)(b.1) of the Act plus the disability tax credit in respect of an eligible person with a disability, or to claim the full amount of the cost of attendant care with no claim for the disability tax credit.

Full-time nursing home care due to lack of normal mental capacity -– 118.2(2)(d)

Under paragraph 118.2(2)(d) of the Act, the cost of full-time care in a nursing home is an eligible medical expense, provided that a medical practitioner certifies in writing that the patient receiving care in the nursing home is, and in the foreseeable future will continue to be, dependent upon others for personal needs and care due to a lack of normal mental capacity.

To be eligible to claim a medical expense under paragraph 118.2(2)(d) of the Act, the patient does not need to qualify for the disability tax credit.

Receipts from the nursing home are required to support a claim under paragraph 118.2(2)(d) of the Act.

A medical practitioner may certify the patient’s lack of normal mental capacity in a letter.

We trust that these comments will be of assistance to you.

Yours truly,

Eric Wirag, CPA, CMA
Acting Manager, Tax Credits and Ministerial Issues
Business and Employment Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch

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