Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.
Principal Issues:
employer paid fees fot treatment & counselling for addiction -is benefit exempt by reason of 6(1)(a)(iv) as couselling
Position TAKEN:no, but it might be exempt as a payment out of a phsp & if it is not, it will be an eligible medical expense for the employee
Reasons FOR POSITION TAKEN:
the description in the brochure made it clear that what was offered was a medical service which included counselling as part of the treatment rather than as a separate service
A. Humenuk
XXXXXXXXXX 943182
Attention: XXXXXXXXXX
March 9, 1995
Dear XXXXXXXXXX:
Re: Addiction Counselling
We are replying to your letter of November 21, 1994 in which you ask whether fees paid to a privately funded facility for the treatment and counselling of an individual addicted to alcohol or other substances would qualify as counselling fees for the purpose of the exemption found in subparagraph 6(1)(a)(iv) of the Income Tax Act (the Act).
A brochure from a licensed private hospital which provides both treatment and counselling services was submitted with your request. You state that the fees paid to such a facility include accommodation, meals, medical treatment including the cost of any medication required as well as psychological, family and follow up counselling. You ask whether all or a portion thereof of the fee paid to a facility offering services such as these would qualify for the exemption under subparagraph 6(1)(a)(iv) of the Act if paid by an employer on behalf of an employee. You also asked for further examples of what fees could be included in the term "counselling".
In our view the treatment of a disease or disorder can be distinguished from counselling services which aid an individual in making appropriate choices. While treatment for addiction to alcohol and other substances will undoubtedly include counselling, the program as described in the brochure offers more than would be available from a counselling service and would thus be treated as a medical service. Accordingly, it is our view that the payment of fees to a hospital by an employer on an employee's behalf for treatment and counselling in respect of an addiction or the reimbursement of such amounts would not be exempt from income by reason of subparagraph 6(1)(a)(iv) of the Act.
However, the payment or reimbursement by an employer of such fees would be exempt from employment income where the benefit is provided through a private health services plan (PHSP). As stated in paragraph 7 of Interpretation Bulletin IT-339R2 "Meaning of "Private Health Services Plan"", an arrangement whereby an employer pays for the cost of an employee's hospital care will normally qualify as a PHSP provided that the employer is obligated to pay for such expenses of its employees by reason of the contract of employment. Where such an amount is not paid pursuant to a PHSP, subsection 118.2(3) of the Act will deem the amount paid by the employer for such services to be a medical expense paid by the employee for the purpose of the medical expense tax credit.
On the other hand, where a hospital or facility provides other services, such as for an employee assistance program, seminars on chemical dependency or lifestyle counselling, amounts paid by an employer on an employee's behalf for such services would be exempt from income by reason of subparagraph 6(1)(a)(iv) of the Act. Neurological assessments or other tests however would not qualify as counselling.
Please note that the above comments represent our views generally and are not intended as commentary on any specific program or service provided by a particular facility.
We trust our comments will be of assistance to you.
Yours truly,
P.D. Fuoco
for Director
Business and General Division
Rulings Directorate
Policy and Legislation Branch
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