CRA changes its mind on medical travel expenses

Canadians who needed to travel for medical treatment had until recently been stuck with a very limited interpretation from the Canada Revenue Agency on which expenses they were permitted to claim. For the past several years, the CRA had restricted claims to expenses incurred to get to and from the place where the medical treatment is supplied (which they refer to as “en route expenses”). Expenses incurred for the duration of the medical treatment had been disallowed.

We have always disagreed with this interpretation and have advised clients to continue claiming the entire costs of their medical travel until this issue is satisfactorily resolved. We have also assisted those clients who were reassessed on this issue to file Notices of Objection and, where necessary, Tax Court of Canada appeals.

So we were pleased to learn recently that the CRA abandoned its position on this issue. In a technical interpretation dated March 24, 2011, the Rulings Directorate stated taxpayers who travel to a different location for medical treatment are no longer restricted to en route expenses, but can also claim the cost of meals, accommodation and parking incurred while at that location. If someone is required to accompany the taxpayer, that person’s accommodation and meal expenses can also be claimed for the duration of the treatment. Clients for whom we filed Tax Court of Canada appeals on this issue are in the process of having their appeals settled without having to attend a hearing.

If you were reassessed on this issue on your 2009 return, the deadline for filing a Notice of Objection is the later of April 30, 2011 or 90 days after the date of the Notice of Reassessment. If you miss the deadline, you have an additional year in which to request an extension. However, extensions are not granted automatically.

The CRA’s recent change of heart is especially good news for Canadians in remote communities who incur considerable expenses travelling away from home for medical treatment, especially when they have a child or other dependant in hospital for an extended period.

Peter Coles
Tax research guru with 25 years of experience