Tub deductions can land you in hot water: But installation fees OK: To be deductible, tub must be mainly used to help mobility

National Post

2004-10-16


It's expensive to stay in shape. Just consider the costs of joining a health
club. Sure, there are the monthly fees associated with membership, but the
bigger cost is the time commitment required to get to the club, change,
exercise, perhaps soak in the hot tub afterwards, shower, change again and
return home.

It certainly would be more convenient to exercise at home and then retreat to
your own, personal hot tub, but even the cost of purchasing a modest piece of
home exercise equipment can be prohibitive, not to mention the cost of
installing a hot tub. But what if the costs could be partially offset by the
availability of the medical expense tax credit?

This question arose recently in a Tax Court of Canada case decided last
month. The case involved a taxpayer who purchased an elliptical trainer as well
as a hot tub and claimed both as medical expenses.

The taxpayer was on long-term disability and suffered from numerous serious
medical conditions including clinical depression, bi-polar disorder, obesity and
chronic hip pain. He had been treated by various specialists, both with respect
to his hip as well as his psychiatric problems.

He purchased an elliptical trainer on the advice of his orthopedic surgeon
who recommended "no impact" exercise, which could be provided by an elliptical
trainer. He also purchased a hot tub on the recommendation of his psychiatrist
who recommended hydrotherapy which would provide "deep relaxation for depression
and anxiety."

Under the Income Tax Act, a medical expense tax credit can be claimed for
various medical expenses, including "for any device or equipment ... prescribed
by a medical practitioner ... that is designed to assist an individual in
walking where the individual has a mobility impairment."

So, the first question that needed to be answered was whether the doctors
actually "prescribed" the elliptical trainer and the hot tub. The doctors
prescribed "non-impact" exercise and hydrotherapy as opposed to specific
devices.

The judge concluded that since an elliptical trainer is only one of many
devices that might be used for non-impact exercise, it was not specifically
prescribed and thus the cost did not qualify for the medical expense credit. On
the other hand, since there are not that many devices available for hydrotherapy
other than a hot tub, the judge concluded that the hot tub could be considered
to be prescribed by a medical practitioner.

Before allowing the hot tub expense, however, a second question needed to be
answered: Was the hot tub purchased to assist the taxpayer in walking, a
requirement of the Tax Act?

Interestingly, this case is only the latest among nearly a dozen "hot tub
cases" heard by the Tax Court in the past five years, including one heard last
summer where the taxpayer attempted to deduct both the cost of the hot tub as
well as the accompanying gazebo.

These cases have reached various conclusions. Summarizing the hot tub
jurisprudence, the judge wrote: "One could say that the cases are irreconcilable
or one could say that they each turn on their own facts -- sometimes a hot tub
is designed to assist an individual in walking and sometimes it is not. If I can
find a consistent thread in all of these cases -- and perhaps I am being overly
optimistic -- it is this: if on the evidence the judge finds that a significant
purpose and use of the hot tub is to assist in the mobility of the individual,
the courts seem inclined to allow the expense. I would also observe that in the
majority of the cases this court has held that the cost of a hot tub does not
qualify."

While the hot tub "may have helped to alleviate the hip and back pain and the
... depression," the judge felt that there was insufficient evidence to conclude
that the hot tub was purchased to assist the individual in walking.

The judge was, however, willing to allow the cost of the installation of the
hot tub (as opposed to the cost of the hot tub itself) under a separate section
of the Act which permits a deduction "for reasonable expenses relating to
renovations or alterations to a dwelling ... to enable the patient to gain
access to, or to be mobile or functional within, the dwelling."

So, I guess it's back to the health club. And, no, those monthly health club
dues don't qualify for the medical expense credit, either.

GRAPHIC: Black & White Photo: Peter Redman, National Post; The view from the hot
tub at A Snug Harbour Inn, in Ucluelet, B.C. A common thread in recent decisions
seems to indicate that taxpayers may deduct the cost of a hot tub only if it
improves their mobility.