Can You Claim Medical Expenses on Your Taxes?
Many clients forget to claim medical expenses and that they can be a valuable tax credit which helps reduce the amount of federal tax you pay each year. In this article, we look at what can and cannot be included in this category and include some useful tips.
Medical expenses incurred inside Canada get included in Line 332 on your tax return. Federal tax credits are applied to tax payable at the rate of 15% of the total credits. Therefore, if you have $1,000 of allowable medical expense you get a $150 federal tax reduction. The “Allowable” portion is calculated by taking the total of all medical expenses and deducting 3% (to a maximum of $2,237) of your net income (Line 236). Couples can add the expenses for the whole family and decide which individual will make the claim. In terms of who should claim the expenses for married or common-law couples it is a matter of trial and error.
We have software that optimizes the claim but unless you use a professional tax preparer you must try various iterations to arrive at the best solution. Clearly, the lower income partner will have a smaller reduction of the total expenses (and therefore a higher tax credit) but they may not benefit as much as the partner who has more tax to pay.
There is also an Ontario medical expense supplement which is not provided to persons who (or their spouse) earn more than $50,017.
What Medical Expenses Can You Claim?
CRA has an extensive list of the items that can be included. Just Google “CRA Medical Expenses”. Items commonly forgotten include:
·Casts for broken bones
· CPAP machines and supplies
· Hearing aids and replacement batteries
· Vision care – includes contact lenses and supplies for them
· Health and out of country travel insurance premiums
· Massage therapy (by RMTs only)
Claiming Travel Expenses to Medical Services
Mileage to/from medical services may be claimed when there is no public transportation available AND where the taxpayer has to travel at least 40 km to the location where the required medical services are provided. This only applies as long as substantially equivalent medical services are not available in the taxpayer’s locality. If the taxpayer has been certified by a medical practitioner to be incapable of travelling without the assistance of an attendant, then the transportation service costs of the attendant may also be claimed. If the taxpayer must travel at least 80 km (one way) for the medical services, then reasonable travel expenses (meals, lodging, vehicle expenses including parking) may also be claimed. The travel costs can be calculated by keeping all receipts, or by using the CRA meal expense allowance and vehicle cost per kilometre amounts.
General Guide RE: Medical Practitioners
CRA has a detailed guide in the Income Tax Act on which practitioners qualify as a medical expense and which do not. The general rule is that if the speciality has a college in the province where the patient resides and seeks treatment then the practitioner qualifies for the medical expense claim. Medical matters are under provincial domain. For example, until recently, psychologists in Ontario did not have a college but they did in Alberta. Now psychologists are recognised professionals everywhere in Canada except the Yukon.
TIP: If the bill from your practitioner includes HST then they are likely NOT a medical professional for income tax.
Time-Period for Claim
The maximum period for medical expenses is 12 months ending on any month in the tax year. You cannot claim any expenses in one year that were previously claimed the year before.
TIP: If you have a period in any year where you incurred a high amount of expenses and they do not correspond to the calendar year, adjust the period for the claim to include the highest amount of expenses.
Example: George is very ill from an infection and requires full-time attendant care and expensive drugs. This condition started in October of 2016 and continued until July of 2017. If he has not claimed the 2016 portion in 2016 he can choose his year period to be from August 1, 2016 to July 31, 2017 or whatever other period (so long as it ends in 2017) for his 2017 medical expense claim.
Until next time,