2022-0959251E5 Microprocessor knee prosthesis & the METC

Principal Issues: Whether the cost of a microprocessor knee prosthesis (or C-Leg) would be an eligible expense for the purpose of the medical expense tax credit.

Position: Yes.

Reasons: The wording in paragraph 118.2(2)(i) which provides for amounts paid “for, or in respect of, an artificial limb […].”

Author: El-Kadi, Randa
Section: 118.2(2)(i) of the Act and 5700(i) of the Regulations

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                                                                                       Randa El-Kadi

March 3, 2023

Re: Eligibility of the cost of a microprocessor knee for the medical expense tax credit

Dear XXXXXXXXXX,

We are replying to your email of December 5, 2022, which you had originally sent to the Minister of Employment, Workforce Development and Disability Inclusion, regarding the availability of funding to cover the costs of a microprocessor knee or prosthetic C-Leg. While it is not within the purview of the Canada Revenue Agency (CRA) to address your query, we thought we would provide you with the following comments regarding the eligibility of prosthetic knees and artificial limbs for the medical expense tax credit (METC).

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 IC70-6R12, Advance Income Tax Rulings and Technical Interpretations.

The METC is a 15% non-refundable tax credit that may provide tax relief for individuals who have incurred significant medical expenses for themselves or certain dependants. The CRA’s general views regarding the METC can be found in Income Tax Folio S1-F1-C1, Medical Expense Tax Credit (the “Folio”). Information on how to claim the METC is available on the webpage titled “Lines 33099 and 33199 – Eligible medical expenses you can claim on your tax return.”

Paragraph 118.2(2)(i) of the Act allows as a medical expense, amounts paid for, or in respect of, various items including an artificial limb for the patient. Paragraph 1.73 of the Folio clarifies that, by virtue of paragraph 118.2(2)(i) of the Act, eligible medical expenses include the purchase price or, where applicable, the rental charge or other expenses related to the devices listed in paragraph 118.2(2)(i) of the Act. In addition, paragraph 1.74 of the Folio also clarifies that expenses related to the operation of these devices also qualify as medical expenses, and include the cost of electricity or batteries to operate the device, repairs, replacement, maintenance, warranty contracts and supplies.

Based on the forgoing, it is our view that the cost of a microprocessor knee (or C-Leg) could be considered to be in respect of an artificial limb, and therefore, would be an eligible medical expense as described under paragraph 118.2(2)(i) of the Act.

We trust our comments will be of assistance.

Yours truly,

Chris Brennan, CPA, CA
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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