The medical expense tax credit is one of the most overlooked non-refundable tax deductions. Although most Canadians are aware that the medical expense tax credit exists, many fail to keep the necessary receipts or running tally of expenses.
This tax credit can also be claimed for your spouse, common-law partner, and children under 18 years of age. You can also claim medical expenses for your dependents and your spouse’s or common-law partner’s dependents such as parents, grandparents, siblings, aunts, uncles and nieces and nephews.
A portion of the credit comes from the federal government, and a smaller amount is allowed by the provincial and territorial governments. Claim the corresponding provincial or territorial non-refundable tax credit on line 58689 of your provincial or territorial Form 428.
Canada Revenue Agency (CRA) has compiled a list on its website of allowable deductible expenses. The list is not exhaustive and includes items such as:
- Prescribed medicines
- Health insurance premiums
- prosthetic limbs
- air conditioners
- bathroom aids
- baby-breathing monitors
- environmental control systems
- medical marihuana
- service animals
Along with the list is the back-up documentation you need to be able to use the deduction. This includes receipts, prescriptions, mileage logs, and proof of any disability.
Claiming medical expenses on your return
- If the expenses are for you and your spouse, common-law partner or dependent child under 18 years of age, you can make the claim on line 33099 of your return.
- If they are for any other dependent, they can be claimed on line 33199.
Qualifying dependants include:
- Children or stepchildren 19 or over
- Brothers or sisters
- Aunts, uncles, nieces, and nephews
CRA allows you to use any 12-month period of expenses that is most advantageous to your situation, provided it ends in the tax year. You cannot claim a medical expense this year that you have claimed in the previous returns. You have to use the same start and end date for all members in the family. This allows you to claim those medical expenses you couldn’t claim last year, as long as the last date ends in the tax year.
Linda paid $1,500 for her eye Lasik surgery on May 1st last year, and that was her only medical expenses for the year. Her net income was $60,000 so her 3% threshold is 3% x $60,000 = $1,800. Since her total expenses are less than the threshold, she will not be able to claim the expenses.
This year, she decided to improve her lifestyle and saw a chiropractor regularly until the end of April costing her a total of $1,000. This year she can claim a period from May 1st of last year until April 30 this year (12 months) with of expenses. assuming she has the same net income this year:
Allowable amount of medical expenses will be = ($1500 + $1000) – 3% x $60,000 = $700
There are numerous ineligible deductions for the medical expense tax credit that appears on the CRA website. The more common ones include:
- over-the-counter medications, even with a prescription
- fitness clubs
- cosmetic surgery
- health plan premiums
- diaper services
- personal response systems
There is no penalty for including them. However, they are not deductible so they will be rejected by CRA.
There are some exceptions to the list. For example, if an expense is necessary for reconstructive surgery resulting from a congenital defect, an accident, or disease, it may be allowed.
Completing The Form
The total amount of eligible expenses that you, your spouse or common-law partner paid can be entered on your return. Your tax credit is arrived at, by taking the lesser of the preset percentage or a set amount. You may want to compare your return with your spouse’s or common-law partner’s. In some instances, it may be more advantageous to let that person claim the credit rather than taking it yourself.
Medical expenses that are claimed on line 33099, will be reduced by the lesser of 3% of your net income or by the tax year’s threshold (changes every). Medical expenses claimed for others on line 33199 should already be reduced by the lesser of 3% of the dependents’ net income or the year’s threshold.
On your provincial or territorial form, claim the amount as well. The credit is arrived at and applied using a similar method.
Filing your return electronically or by standard mail
- If you file electronically, keep all the supporting documents in case the CRA asks to see them.
- If you file by mail, attach all supporting documents to your return, including social insurance numbers for individual paid caregivers.
Medical expenses for persons with disability
If you have a T2201 form approved with CRA, you will be able to claim the Disability Tax Credit (DTC) as well as all medical expenses which are eligible for people with prolonged medical conditions only. With this credit claimed, you will be limited to these medical expenses:
· The cost of attendance care in excess of $10,000
· The cost of a nursing home
It is beneficial to calculate the refund you will get on your medical expenses with and without claiming the DTC to choose the best option to lower your tax liability.
Most Missed Deductions
A number of eligible medical expense tax credits are overlooked every year such as medical travel expenses, according to Ronald Watson, a chartered accountant in Fort Erie. “Some of the most common are the travelling costs to and from treatment, especially chemotherapy or other cancer-related therapy,” Watson said.
“You can also claim out-of-pocket expenses, such as mileage, meals, and lodgings for the driver or caregiver.” But be sure to keep a mileage log. “Under certain circumstances, you are allowed a flat rate,” he said.
Other overlooked expenses include:
- food, shelter and veterinary services for service dogs
- air filters for air conditioners
- money paid to a physician to fill out a disability certificate
- disposable briefs or diapers for someone who is incontinent
- gluten-free food for those who are gluten intolerant
How do Turbotax products help?
TurboTax products have medical expenses optimizer. By answering simple questions to complete your profile, you will be asked to list all your medical expenses and choose the period you want to claim. You can either list the medical expenses for you, your spouse, your dependents under 18 under your profile, or split the expense between you and your spouse. The optimizer will choose the optimal situation to give the family the maximum refund. However, you can override the optimizer and split the expenses as you wish.
The software allows you to input the medical expenses for other dependant over 18 and their net income so it automatically calculates how much you can claim.
Consider TurboTax Live Assist & Review if you need further guidance, and get unlimited help and advice as you do your taxes, plus a final review before you file. Or, choose TurboTax Live Full Service and have one of our tax experts do your return from start to finish (not available for Quebec resident).
References & Resources
- Ronald Watson; Ronald Watson Chartered Accountant; Fort Erie; Ontario