Tax and Estate Planning
Are diets tax deductible?By Jamie Golombek
In certain cases, it’s possible to write off the bills for getting in shape
Put on some extra weight over the long winter and rainy spring? Would you like to take it off this summer? Well, you may be able to get some tax relief to help you shed those pounds, depending on the approach you take.
The general rule is that medical expenses you incur for yourself, your spouse or partner or your minor kids are eligible for a non-refundable credit provided they are listed as an "eligible" medical expense under the Income Tax Act. Medical equipment must be prescribed by a medical practitioner.
Last week, the Canada Revenue Agency was asked specifically about whether fees for a weight loss program, the cost of exercise equipment and the cost of a gym membership, all of which were incurred for the treatment of obesity, would qualify as medical expenses for purposes of the medical expense tax credit (METC).
Under the Tax Act, for an amount to qualify, it must be paid to a "medical practitioner in respect of medical services."
A "medical service" is defined as "a service relating to the diagnosis, treatment or prevention of disease performed by a medical practitioner acting within the scope of his or her professional training." Diagnostic procedures or services must be either for maintaining health, preventing disease or assisting in the diagnosis or treatment of any injury, illness or disability.
The CRA concluded that fees paid for a weight-loss program for the treatment of obesity would indeed qualify for the METC, provided the program was for therapeutic or rehabilitative purposes and was provided by a provincially licensed medical practitioner.
As for the gym membership, the CRA concluded that since such membership "would not normally have a diagnostic purpose," it would not qualify as a medical expense.
Finally, the CRA said the exercise equipment could only qualify if it was prescribed by a medical practitioner and specifically listed in the Income Tax Regulations, which would generally not be the case for exercise equipment.
Parents looking to keep their kids active during the summer months are reminded of the children's fitness tax credit which allows you to claim up to $500 of registration fees per child under the age 16 for participating in various fitness activities towards this non-refundable credit.
Dr. Barbara von Tigerstrom, a law professor at the University of Saskatchewan, just published a report titled "Using the Tax System to Promote Physical Activity: Critical Analysis of Canadian Initiatives" in the latest issue of the American Journal of Public Health.
In her report, Dr. von Tigerstrom critically assesses both the potential benefits and limitations of using tax measures, and in particular, the children's fitness tax credit, to promote physical activity. She concludes that "careful design could make these measures more effective, but any tax-based measures have inherent limitations, and the costs of such programs are substantial. Therefore, it is important to consider whether public funds are better spent on other strategies."
Jamie Golombek is Managing Director of Tax and Estate Planning, CIBC Private Wealth Management.