Medical Expense Tax Credit (METC) for Surrogacy and Other Expenses

Currently, many of the costs related to the use of reproductive technologies are eligible expenses for the METC when they are paid in respect of the taxpayer, their spouse or common-law partner or a dependant of the taxpayer. For example:

• payments to a medical practitioner or a public or private hospital for a medical service (e.g., generally certain medical procedures within the in-vitro fertilization (IVF) process);
• prescription drugs (e.g., prescribed fertility drugs); and
• payments for certain lab or diagnostic procedures (e.g., ultrasounds).

However amounts paid to fertility clinics and donor banks in order to obtain donor sperm or ova, and amounts paid for medical expenses of a surrogate mother or donor are not currently eligible medical expenses for the METC.

For 2022 and subsequent years, the Budget proposes to expand the list of eligible medical expenses to include amounts paid to fertility clinics and donor banks in Canada in order to obtain donor sperm or ova to enable the conception of a child by the individual, their spouse or common-law partner, or a surrogate mother on behalf of the individual.

For 2022 and subsequent years, where an eligible medical expense is paid in respect of a surrogate or a donor, the Budget proposes that those expenses be considered to be a medical expense of the individual (for the purposes of the METC), if the expenses meet ALL of the following requirements:

• The expense is paid by the individual or their spouse or common-law partner;
• The expense is an amount described under sections 2 to 4 of the Reimbursement Related to Assisted Human Reproduction Regulations, or is an amount paid in respect of a surrogate mother or donor, that would be an expenditure described under sections 2 to 4 of the regulations if it was paid to the surrogate mother or donor;
• The expense would otherwise be an eligible medical expense for the METC if paid for in respect of the individual or their spouse or common-law partner;
• The expense is incurred in Canada;
• The expense is paid for the purpose of the individual becoming a parent.

If the expenses meet all the conditions and eligibility criteria described in question 3, expenses related to a surrogate or a donor would be eligible medical expenses. The Regulations provide a broad list of acceptable expenditures, including expenditures for medical products and services.

For example, expenditures for prescription medication or diagnostic testing would be eligible medical expenses. However, a payment or reimbursement in respect of services rendered to the surrogate or donor, by a hospital that is not located in Canada, would not be an eligible medical expense. Eligible expenses would also not include things like maternity clothing, food, vitamins, living expenses.

To note, a payment to an individual to be a surrogate or donor is not permitted under Canadian law and would not be eligible for the METC. For more information, refer to the Prohibitions related to Purchasing Reproductive Material and Purchasing or Selling In Vitro Embryos and the Prohibitions related to Surrogacy on Canada.ca.

Amounts paid to fertility clinics and donor banks in order to obtain donor sperm or ova to enable the conception of a child by the individual, their spouse or common-law partner, or a surrogate mother on behalf of the individual, are eligible medical expenses under the proposed changes.

When you file your income tax return, do not send any supporting documentation. Keep them in case we ask to see them.

In addition to receipts for eligible medical expenses, you may also be asked to send us proof that you reimbursed or paid for the surrogate’s or donor’s eligible medical expenses that would generally qualify under the credit. Proof of reimbursement should also include the surrogate’s or donor’s name and social insurance number.

Only eligible medical expenses incurred in Canada would be eligible.

If you received a provincial rebate, grant or funding to cover treatment costs related to fertility, you need to give us the details. You cannot include medical expenses for which you were or will be reimbursed. For more information see Medical expenses - lines 33099 and 33199 of the return.

To learn more about what expenses would otherwise qualify as medical expenses and to learn how to calculate the METC, refer to Lines 33099 and 33199 – Eligible medical expenses you can claim on your tax return - Canada.ca.

Check online at Canada.ca regularly for updated forms, policies, guidelines, questions and answers, and guidance.

In the meantime, please consult Finance Canada's Budget 2022 documents for details.