2023-0974871E5 METC-Interocular lens & prepaid medical expenses.

Principal Issues: Whether the amount paid for an interocular lens would qualify as an eligible medical expense for the purposes of the medical expense tax credit (METC). If yes, what 12-month period can the expense be claimed in and what documentation is needed to support the claim?

Position: Yes, the amount paid for an interocular lens as part of cataract surgery would qualify as an eligible medical expense under paragraph 118.2(2)(a) of the ITA. Eligible medical expenses may qualify for the METC in the taxation year of payment since only amounts paid qualify for the METC. Under the Act, an individual can choose any 12-month period ending in the year, provided the expenses have been paid during the period chosen.

Reasons: Under paragraph 118.2(2)(a), amounts paid to a medical practitioner for cataract surgery, including interocular lens are generally considered eligible medical expenses. Paragraph (d) of variable B in subsection 118.2(1) provides that medical expenses must have been paid within any 12-month period ending in the calendar year.

Author: Underhill, Cynthia
Section: Section 118.2, subsection 118.2(1), paragraphs 118.2(2)(a), 118.2(3)(b) and 118.2(2)(j)

XXXXXXXXXX                                                                   2023-097487
                                                                                           C. Underhill, CPA, CGA

December 19, 2023

Dear XXXXXXXXXX:

Re: Amounts paid for interocular lens & prepaid medical expenses

We are writing in response to your correspondence received on February 14, 2023, asking whether the cost you incurred for an interocular lens as part of cataract surgery qualifies as an eligible medical expense for the purposes of the medical expense tax credit (METC). If yes, what year can the expense be claimed in and what documentation is needed to support the claim? We apologize for the delay in our response.

You advised us that during two cataract surgeries, an ophthalmologist inserted interocular lenses. The first surgery was paid for on September 9, 2021 and the surgery was performed on September 8, 2022. The second surgery was paid for on October 12, 2022 and the surgery performed on December 15, 2022. You have receipts and a statement from your ophthalmologist confirming that you had the surgery.

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 70-6R12, 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”) which can be found on the Government of Canada website at www.canada.ca.

Medical expenses which are 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 will not qualify for purposes of the METC, even though the expenditure may have been incurred for medical reasons.

Paragraph 118.2(2)(a) of the Act allows as an eligible medical expense of an individual, an amount paid to a medical practitioner, dentist, or nurse or a public or licensed private hospital for medical or dental services provided to a patient. As explained in paragraphs 1.26 and 1.27 of the Folio, medical services are diagnostic, therapeutic or rehabilitative services that are performed by a medical practitioner acting within the scope of his or her professional training. Generally, a payment to a medical practitioner is an eligible medical expense when made in respect of a medical service or procedure that relates to an existing condition or illness of the patient. Therefore, in our view, the amount paid to an ophthalmologist for the cost to implant the interocular lenses would likely qualify as an eligible medical expense under paragraph 118.2(2)(a) of the Act.

Paragraph 1.9 of the Folio discusses a number of conditions that must be satisfied for an individual to claim the METC for amounts paid in respect of a patient for a particular tax year, which states, in part:

“c) The medical expenses must have been paid within any 12-month period ending in the calendar year, except where the person in respect of whom the expenses were paid died in the year, in which case the medical expenses must have been paid within any 24-month period that includes the date of death;

d) The medical expenses must not have been used in calculating the individual’s medical expense tax credit under section 118.2, a disability supports deduction under section 64 or the refundable medical expense supplement under section 122.51 for a previous year;

e) The medical expenses must not have been used in calculating a medical expense tax credit under section 118.2, a disability supports deduction under section 64 or a refundable medical expense supplement under section 122.51 for any other taxpayer for any tax year;”

Therefore, if a medical expense qualifies as an eligible expense, then for the purposes of calculating the METC for a given year, an individual can choose any 12-month period ending in the year, provided the expenses have been paid during the period chosen. The 12-month period chosen by a taxpayer for a particular taxation year does not have to be retained for subsequent taxation years.

Based on the information you have provided, you can claim in 2022, eligible medical expenses paid in any 12-month period ending in 2022 and not claimed by you or anyone else. This would mean an amount paid on September 9, 2021 could be included in a 2022 METC claim where the 12-month period selected for 2022 includes September 9, 2021, and ends in 2022. For example, if a 12-month period of September 1, 2021 to August 31, 2022 was selected for a 2022 claim, all eligible medical expenses paid during that period, including the September 9, 2021 costs, could be included in the 2022 claim. Whereas the September 9, 2021 amount could not be claimed in 2022 if the selected 12-month period for 2022 was from January 1, 2022 to December 31, 2022.

As noted in paragraph 1.16 of the Folio, qualifying medical expenses of an individual do not include any expense for which the individual or certain other persons are entitled to be reimbursed (for example under a public or private medical or hospitalization plan), except to the extent that the amount of the reimbursement is required to be included in income.

Paragraph 1.147 of the Folio explains that if you are filing your tax return electronically or on paper, do not send any supporting documents. Keep them in case the CRA asks to see them. Receipts should show the purpose of the payment, the date of payment, the name of the patient, and, if applicable, the medical practitioner who prescribed the purchase or gave the service. In addition to receipts, the CRA may ask to see proof of payment, such as bank or credit card statements.

Generally, an individual can only request a change to a T1 Tax Return for a tax year ending in any of the 10 years from filing the actual tax return. For example, a request made in 2023 must relate to the 2013 or a later tax year to be considered. An individual can make a request to the CRA by completing Form T1-ADJ, T1 Adjustment Request (https://www.canada.ca/en/revenue-agency/services/forms-publications/forms/t1-adj.html) or through My Account (https://www.canada.ca/en/revenue-agency/services/e-services/digital-services-individuals/account-individuals.html).

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

Yours truly,

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

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