2020-0866561E5 METC –A

Principal Issues: Whether the amounts paid to lease a condominium to protect a family member’s health due to the extenuating circumstance of the Covid-19 pandemic qualify as eligible medical expenses for the purposes of the medical expense tax credit.

Position: No, see response.

Reasons: See response.

Author: Underhill, Cynthia
Section: ITA: Subsection 118.2(2).

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                                                                                                                          C. Underhill

January 19, 2021

Dear XXXXXXXXXX:

Re: Medical Expense Tax Credit – amounts paid to lease a condominium

We are writing in response to your correspondence received on October 15, 2020, asking if the amounts paid to lease a second condominium to protect a family member’s health during the Covid-19 pandemic qualify as an eligible medical expense for the purposes of the medical expense tax credit (“METC”).

Our comments:

This technical interpretation provides general comments about the provisions of the Income Tax Act (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 70-6R10, Advance Income Tax Rulings and Technical Interpretations.

The Canada Revenue Agency’s (CRA) general views regarding the METC are contained in Income Tax Folio S1-F1-C1, Medical Expense Tax Credit (the “Folio”).

Generally, an individual may claim the METC in respect of eligible medical expenses incurred in respect of the individual, the individual’s spouse or common-law partner, or a dependant of the individual, as described in paragraphs 1.2 to 1.7 of the Folio.

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.

Medical expenses eligible for the METC are limited to those described in the Act. If a particular expenditure is not described as an eligible medical expense in 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.

For information regarding the types of medical expenses described in the Act, see paragraphs 1.24 to 1.146.3 of the Folio. The cost to lease a condominium is not described in these paragraphs since this item is not provided for in the Act. Therefore, such lease costs would not be an eligible medical expense for purposes of the METC.

While we regret that we could not give you a more favourable response, we hope that the foregoing comments will be of assistance in clarifying our position.

The Department of Finance Canada is responsible for tax policy and legislative changes to the Act, while the CRA is responsible for administering the tax system and applying the legislation as enacted by Parliament. Changing the legislation to allow for such an expense to qualify as an eligible medical expense, as you suggest, would be the responsibility of the Department of Finance. Therefore, I suggest you write to the Honourable Chrystia Freeland, Minister of Finance, for her consideration at 90 Elgin Street, Ottawa, Ontario, K1A 0G5.

We trust that these 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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