Hi tax professionals, I have a question regarding the income tax folio S1-F1-C1 specifically 146.2
1.146.2 For 2022 and subsequent tax years, paragraph 118.2(2)(v) allows as eligible medical expenses, 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 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.
My understanding is this paragraph requires the payment made in Canada rather than the payment had to be received by a clinic in Canada
For example some US clinic registered their business to operate in Canada but the payment will be made to an US address.
Incorporating in Canada makes it an eligible Canadian resident corporation, so the payments made to such Corp should be eligible. Is that correct?
I don’t know what CRA’s policy is in this case, and if they don’t have one, it may take a court case to establish one. But, I would say your argument sounds reasonable. If you don’t want to phone CRA to ask them, I’d just include it and see what happens. The worst CRA can do is deny it, which would happen only if they decide the overall medical expense amount warranted investigation, and your client provides the receipt to them. After that, you or your client could still object, and provide your reasoning.
If you look at the Explanatory Notes for this measure (from the 2022 Budget), they say that
"In addition, to qualify as a medical expense of the individual, the amount must also be
• an amount that would be a medical expense of the individual under subsection (2), if the amount had been paid in respect of a good or service provided to the individual or the individual’s spouse or common-law partner; and
• an expense incurred in Canada.
This measure applies to the 2022 and subsequent taxation years. "
I would interpret the intention to be that the expense is incurred in Canada. Where the payment goes doesn’t seem to matter.
I was in the habit of claiming things like naturopaths, massage therapy, acupuncture, etc., until I thought I’d better check, and found none of them were allowed. That can run into a few thousand every year. But, the claims were never checked, so I lucked out. I was always in the habit of claiming travel & meals on the main page and have only started using the separate page for travel claims in the past few years. Even then, I claim the aggregate rather than enter details for dozens of trips to various destinations. Cost would exceed the benefit. I keep the client’s list of travel in the rare case CRA asks. I scan everything including email correspondence if it relates to a claim. I tell my clients to get a printout of their prescriptions from their pharmacy rather than give me 50 individual 2”x3” receipts.
Not all Provinces are the same regarding allowable medical expenses, but I do know that massage therapy by a Registered Massage Therapist is allowable and in BC at least so are the services of a Naturopathic Doctor. Acupuncture allowed in 5 of the 13 Provinces & Territories. Lots to consider.
Yes, I have to go to the 2 lists every tax season and I keep the tabs open in Google. Some medical insurance plans will reimburse these expenses subject to an annual limit, giving one the impression the expense is also tax deductible. Some groups have never got their shit together in order to be recognized by CRA. That’s the case in N.S. for massage therapists. I always have to check for the **paths. Osteopath, homeopath, naturopath, and on and on. Then there’s the **ists. Podiatrist, psychotherapist, sexologist, marriage & family therapist, acupuncturist, chiropodist. Or a traditional Chinese medical practitioner.
