When wood floors are a valid medical expense
While most of us are familiar with common medical expenses such as unreimbursed prescription drugs and dental fees, depending on the situation, medical expenses can also include certain home renovation costs.
The Income Tax Act has historically defined these as “reasonable expenses relating to renovations… to a dwelling of the patient who lacks normal physical development or has a severe and prolonged mobility impairment, to enable the patient…to be mobile or functional within, the dwelling.”
In the 2005 federal budget, the definition of eligible renovation expenses became somewhat more restrictive to curb what the government perceived as abuse by certain taxpayers who were writing off the cost of a hot tub or hardwood flooring installation as a medical expense. Two conditions were added to the definition to ensure that a taxpayer, in claiming the medical expense credit for renovations, was not “subsidizing personal consumption and personal choices.”
These conditions are that the expenses “are not of a type that would typically be expected to increase the value of the dwelling” and that they “are of a type that would not normally be incurred by persons who have normal physical development or who do not have a severe and prolonged mobility impairment.”
But does this mean that the cost of installing hardwood floors can never be a valid medical expense?
That was the issue in a tax case decided last month involving a taxpayer who spent $3,675 in 2010 to install engineered hardwood flooring in her home to assist her husband, who suffers from Parkinson’s disease, “which makes walking on surfaces that offer friction like carpets both difficult and unsafe due to risks from falling.”
The taxpayer visited a flooring centre and on the advice of the dealer, replaced the relatively new carpeting in their home, which was only five years old, with “very modestly priced engineered smooth laminate flooring to eliminate the resistance and hence reduced the physical effort and resulting fatigue as well as the risk of fall.”
She claimed the amount as a medical expense but the Canada Revenue Agency denied it saying that the installation of laminate flooring “is a type of renovation that would typically be expected to increase the value of the dwelling unit and that the installation of laminate floors is a type of expense normally incurred by persons who have normal physical development or who do not have a severe and prolonged mobility impairment.”
Fortunately, the judge was sympathetic to the taxpayer’s argument and allowed the medical expense, concluding that the expense of installing the flooring was not an expense “reflecting an element of personal consumption or personal choice” but rather the taxpayer had “no choice if she wished to address her husband’s medical impairments due to Parkinson’s.”
Valid medical expenses qualify for a 15% federal tax credit as well as a provincial credit provided they exceed a minimum threshold equal to the lesser of 3% of your net income or $2,109.