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Why CRA denied taxpayer's medical expense claims related to moving because of disability

Living room with moving boxes
Living room with moving boxes

With mere days to go before the Canada Revenue Agency‘s May 1 general personal tax filing deadline, this weekend is your final chance to gather all those slips and backup documentation you’ll need to file your return on time. Among the receipts you’ll want to track down are those for medical expenses, which, if large enough, may allow you to claim the medical expense tax credit (METC).

The non-refundable METC can be claimed for medical expenses that were not covered by your provincial, group or private health insurance plan. For your 2022 return, the METC is available provided your family’s total medical expenses exceed a minimum threshold equal to the lesser of three per cent of your net income or $2,479 (for 2022). You can also claim a provincial/territorial credit, with the minimum income thresholds varying by jurisdiction. Qualifying expenses include those you paid for yourself, your spouse or partner, and your kids under age 18.

A recent tax case shows the challenges one Vancouver-area taxpayer faced when trying to claim various medical expenses on his 2018 tax return. The taxpayer and his wife claimed the METC for expenses related to his mobility disability arising from conditions that existed, and have deteriorated, since he contracted polio as a child. This disability necessitated a move from the couple’s two-storey, century-old home to a single-storey, grade-level home that could accommodate the taxpayer’s increasing mobility limitations.


The CRA permitted the taxpayer to claim medical expenses of $31,598, including renovations of $26,282 to their new home, and $2,000 for moving expenses related to moving supplies and the cost of a mover. The CRA, however, disallowed his claim for a property transfer tax (PTT) payment of $17,600 on the purchase of the new home, on the basis that the $2,000 limit, specified in the Income Tax Act for claiming moving expenses as a medical expense, had already been reached.

In the taxpayer’s case, financial constraints prevented him from renovating his 100-year-old home or from building a new home. The most viable option for him was to buy another home and move. Consequently, he argued that the PTT payment was not a moving expense, but rather part of the cost of the new residence. If he had not made the PTT payment, he could not have purchased his new home.

The taxpayer readily acknowledged that the limitations in the Tax Act do apply to his case, but he felt the tax provisions violate his equality rights under the Canadian Charter of Rights and Freedoms because they are, in his words, “under-inclusive, leading to adverse impact discrimination on the ground of disability.” Furthermore, he said the tax rules, as drafted, “infringe his right to equality under … the charter … because Parliament failed to consider the needs and circumstances of people with disabilities.”

The charter prohibits discrimination on the basis of “race, national or ethnic origin, colour, religion, sex, age or mental or physical disability.” But as the Supreme Court of Canada concluded in a 1995 case, “discrimination will not result from every distinction or difference in treatment. The Income Tax Act makes distinctions through various statutory requirements, in an attempt to generate government revenue while balancing various economic and social policies. In this context, the right to the equal benefit of the law does not mean that each taxpayer has an equal right to receive the same amounts, deductions, or benefits.”

In other words, just because the Income Tax Act has various rules that benefit certain individuals, the rules do not violate a taxpayer’s charter rights because they do not discriminate on the basis of any of the conditions listed in the charter, since they apply to all taxpayers.

The judge also noted, citing a prior case, that the METC “being a large-scale benefit program, cannot take into account every taxpayer’s needs … (it) does not allow the (taxpayer) to deduct all medical expenses that relate to (their) individual needs. However, this was never the intended purpose of (the METC).”

The judge concluded that the taxpayer’s challenge “cannot succeed because no taxpayer is permitted to claim the (METC) for the purchase of a new residence.” In effect, the taxpayer was seeking a benefit that is not provided to anyone under the Income Tax Act.

The taxpayer then argued that if the PTT didn’t qualify as a medical expense, it should be allowed under the general moving expense deduction. But the CRA disallowed this because the taxpayer didn’t move 40 kilometres closer to a new work or school location, which is a required condition in the act to deduct moving expenses.

The taxpayer took issue with this distance requirement on the basis that there is no consideration of whether 40 kilometres is an appropriate distance. He stated that people with disabilities may encounter difficulties that are not connected to distance, such as the time it may take to travel between locations and access to appropriate transportation services. In overlooking this consideration, the taxpayer argued that Parliament indirectly discriminated against individuals with disabilities.

Again, the judge disagreed, noting the taxpayer’s failure to qualify for the moving expense deduction was not based on his disability, but on the particular facts of his case. Simply put, there was no new work or school location, and his new home was only 13 kilometres closer to his place of work.

In the end, the judge concluded that there was “no discrimination within the meaning … of the charter because there is no distinction based on disability, either directly or indirectly. The provisions at issue apply to all taxpayers based on their specific, individual circumstances. Parliament is not required to provide tax benefits that meet the needs of all taxpayers.”

The taxpayer also claimed $50.39 for heating pads and $64.96 for wheelchair gloves. The judge dismissed the claim for heating pads since they are not a listed medical device under the list of qualifying medical expenses, but in a minor victory for the taxpayer, did allow the METC for the wheelchair gloves on the basis that the taxpayer uses the gloves in respect of a listed medical device, namely, his wheelchair.

Jamie Golombek, CPA, CA, CFP, CLU, TEP, is the managing director, Tax & Estate Planning with CIBC Private Wealth in Toronto.


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