A recent decision from the Federal Court of Appeal contains sad news for snowbirds and those who struggle with long, Canadian Winters. In Canada v. Tallon, the Federal Court of Appeal was tasked with determining whether travel to warmer climates could under appropriate conditions be considered a medical service. The taxpayer sought to deduct expenses related to such travel as medical expenses for the purposes of the medical expense tax credit as defined in subsection 118.2(1) of the Income Tax Act (Canada).
The taxpayer hailed from Thunder Bay, Ontario. She suffered from temporomandibular joint dysfunction, a debilitating condition affecting the joints. The disease is aggravated by colder temperatures. The taxpayer and her husband regularly escaped cold, northern winters for gentler climates abroad. In the period from 1988 to 2009, they had travelled to Thailand, Indonesia, Cambodia, Vietnam, Malaysia, Philippines, Burma, Ecuador, Venezuela, Honduras, Mexico and Costa Rica. The decision concerned expenses of over $17,000 for airfare, accommodations and meals for the taxpayer and her husband during a four-month trip to Thailand in 2009.
Travel to a warmer climate was recommended to the taxpayer by her doctor in Texas, who suggested that, given the taxpayer’s condition, the taxpayer had “… no choice but to seek a warmer climate during the coldest six months of the year.” One of the taxpayer’s doctors in Canada recommended that the taxpayer be accompanied by her husband as a companion during these travels.
The Minister disallowed the taxpayer’s claim for expenses related to airfare, accommodations and meals as medical expenses for the purposes of the medical expenses tax credit. The taxpayer objected on the basis that she had been allowed to claim similar expenses in 2008, following a favourable decision from the Tax Court of Canada under its informal procedure. The taxpayer succeeded in challenging the Minister’s continued disallowance of the 2009 travel expenses in the Tax Court of Canada, which followed its 2008 decision.
Don’t plan that trip to Thailand just yet – the Federal Court of Appeal took a different view. It reasoned that in order to qualify as medical expenses for the purposes of the credit, the expenses must have been incurred for the purpose of obtaining a medical service. Based on textual and purposive interpretations of the meaning of “medical services” in the Income Tax Act (Canada), a medical service must be provided by a medical service provider. As a warmer climate was not provided by a medical service provider, it could not qualify as a medical service. The claim for travel expenses was therefore properly disallowed.
