Category Archives: Medical Expense Credit

118.2(2), Federal Court of Appeal, Medical Expense Credit

Travel & Medical Expense Tax Credit – Sas Ansari

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Travel Expenses’ Eligibility for the Medical Expense Tax Credit

Canada v Tallong, 2015 FCA 156

At issue was whether the travel, accommodation, and food costs of traveling to a warm climate destination to alleviate negative effects of Canadian winters on her “debilitating condition”, supported by a doctor’s note, is eligible for the medical expense tax credit.

The Federal Court of Appeal interpreted Income Tax Act section 118.2 textually and contextually, holding that medical services to be eligible for the tax credit must be provided to the patient by a person or hospital from a medical service provider.  The warm climate at the destination was not a service that is provided  by a medical service provider and therefore cannot qualify for the credit.

The FCA notes that the Tax Court of Canada level jurisprudence dealing with the medical expense tax credit (paragraphs 118.2(g) and (h)) are inconsistent in their interpretation, with exceptions being made in sympathetic circumstances.  However, the correct approach to interpretation, laid out in Canada Trustco Mortgage Co. v. Canada, 2005 SCC 54, when applied to the provisions, does not allow for an interpretation that would allow for the deduction in these circumstances.

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118.2(2), 118(6), Income Tax Act, Medical Expense Credit, Tax Court of Canada, Tax Credit

Surrogacy Expenses and the Medical Expense Tax Credit

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Surrogacy Expenses and the Medical Expense Tax Credit

Zanatta v The Queen, 2014 TCC 293

Pearen v The Queen, 2014 TCC 294

The Court once again confirmed that medical expenses that relate to the surrogate or surrogacy do not qualify for the medical expense tax credit under paragraph 118.2(2)(a) or subsection 118(6) of the Income Tax Act.

Specifically, fees paid to the surrogate to carry an embryo and deliver the baby do not qualify as eligible medical expenses under 118.2(2)(a), and expenses paid on behalf of the surrogate are not medical expenses in respect to services provided to the taxpayer, the taxpayer’s spouse or common-law partner, or the taxpayer’s dependent as defined in 118(6).

However, the expenses related to the in-vitro process are allowable medical expenses.

The court stated that the informal decision in Zieber v. The Queen, 2008 TCC 328 is not good law when it qualified expenses related to surrogacy arrangements as qualified as an organ transplant under 118.2(2)(l.l).  See also Warnock v. The Queen,  2014 TCC 240 and Carlson v. The Queen, 2012-3063 (IT)I, unreported oral reasons for judgment dated June 13, 2013.

Sas Ansari, BSc BEd PC JD LLM PhD (exp) CPA In-Depth Tax 1, 2 &3

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