2024-1006981E5 METC - Costs to obtain reproductive material

Principal Issues: Whether amounts paid to a fertility clinic or donor bank, not in Canada, as a fee or other amount paid or payable, to obtain reproductive material would be an eligible medical expense for purposes of the medical expense tax credit.

Position: No.

Reasons: Legislation. Paragraph 118.2(2)(v) specifies that the amounts must be paid to a fertility clinic or donor bank in Canada.

Author: Brennan, Christopher
Section: 118.2(2)(v)

XXXXXXXXXX                                                                 2024-100698
                                                                                        Chris Brennan, CPA CA

February 29, 2024

Dear XXXXXXXXXX:

Re: Costs to obtain reproductive material

We are writing in response to your request for our views on whether certain amounts paid to obtain donor sperm or ova could be an eligible medical expense for purposes of the medical expense tax credit (METC).

Two scenarios have been presented for our consideration:

* In the first scenario, an individual pays an amount to donor bank in the United States to obtain donor ova.

* In the second scenario, an individual pays an amount to donor bank in the United States to obtain donor sperm. The donor sperm is shipped to a fertility clinic in Canada from the donor banks facility in Canada.

You have asked us whether amounts paid to a donor bank in the United States, to obtain the donor sperm or ova, could be considered an eligible medical expense pursuant to paragraph 118.2(2)(v) of the Income Tax Act (the Act).

This technical interpretation provides general comments about the provisions of the Income Tax 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.

Our comments

For the 2022 and subsequent tax years, paragraph 118.2(2)(v) of the Act allows as an eligible medical expense amounts paid to a fertility clinic or donor bank, in Canada as a fee or other amount paid or payable, to obtain sperm or ova (new proposed legislation adds embryos to the types of reproductive material included under 118.2(2)(v)) to enable the conception of a child by the individual, the individual's spouse or common-law partner or a surrogate mother on behalf of the individual. Through these amendments, expenses for the acquisition of sperm, ova or embryos for use by an individual in order to become a parent would be an eligible medical expenses for purposes of the METC.

In each of the scenarios provided, the individual pays an amount to a donor bank in the United States to obtain donor sperm or ova. For purposes of the METC, paragraph 118.2(2)(v) of the Act explicitly specifies that the amount must be paid to a fertility clinic or donor bank, in Canada. Therefore, amounts paid to a donor bank or fertility clinic, not in Canada (such as the United States), would not be an eligible medical expense for purposes of the METC, pursuant to paragraph 118.2(2)(v) of the Act.

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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