Maximizing the Medical Expenses Tax Credit

One commonly overlooked nonrefundable tax deduction is the medical expenses tax credit. While many Canadians are aware of its existence, a significant number fail to maintain proper records or stay updated on their medical expenditures.

It’s important to note that, in addition to yourself, you can claim this tax credit for your dependent children under the age of 18. Moreover, if you have a spouse or common-law partner, they too can claim eligible medical expenses. The scope of potential beneficiaries extends beyond immediate family members and includes parents, grandparents, siblings, aunts, uncles, nieces, and nephews.

The medical expense tax credit consists of two components: a portion provided by the federal government and another portion offered by the provincial or territorial government. To claim the nonrefundable tax credit specific to your home province or territory, you need to record the amount on line 58689 of Form 428.

To make the most of the medical expense tax credit, ensure that you maintain proper documentation of your medical expenses and consult with a tax professional to ensure you are claiming all eligible expenses and maximizing your tax benefits.

Medical Expenses

Allowable Deductions for Medical Expense

The Canada Revenue Agency (CRA) has compiled a list of allowable deductible expenses for medical purposes. It’s important to note that this list is not exhaustive and may include the following:

  1. Prescribed medicines
  2. Health insurance premiums
  3. Prosthetic limbs
  4. Air conditioning systems for medical purposes
  5. Bathroom accessories for medical needs
  6. Baby breathing monitors
  7. Assistive devices
  8. Environmental control systems
  9. Medical use of cannabis
  10. Service animals
  11. Oxygen supplies
  12. Reconstructive or medical cosmetic surgery (e.g., artificial teeth, reconstructive surgery on the nose)
  13. Out-of-country cancer treatment facilitated by a licensed physician
  14. Communication aids such as speech synthesizers and bliss boards
  15. Gluten-free food costs for individuals with celiac disease
  16. Acoustic coupler
  17. Doctor-prescribed birth control pills
  18. Treatment for drug addiction, including boarding and meals at a drug rehab facility
  19. Specialized computer peripherals for the visually impaired
  20. Elastic hosiery for blood circulation problems
  21. Non-cosmetic eye surgeries like Lasik when performed for medical reasons
  22. Fees for mental illness treatment authorization
  23. Prepaid payments for lifelong care
  24. Travel expenses for medical care received away from home
  25. Long-term care insurance premiums and associated costs (subject to limitations)
  26. Moving cost reimbursements for individuals with severe and long-term mobility issues relocating to more accessible housing (up to $2,000 per person)
  27. Nursing care services
  28. Total medical care costs, including meals and lodging, in a nursing home where medical care is the primary reason for residency
  29. Orthopedic footwear, boots, and inserts

To claim these deductions, you’ll need to provide supporting documentation such as receipts, prescriptions, mileage records, and proof of disability when applicable. Keep in mind that it’s always advisable to consult with a tax professional to ensure you meet the eligibility criteria and claim the deductions correctly.


Claiming Medical Expenses on Your Tax Return

When claiming medical expenses on your tax return, you can do so on specific lines based on who the expenses are incurred for:

  1. Line 33099: This line is used to claim medical expenses for yourself, your spouse, common-law partner, or dependent child under the age of 18.
  2. Line 33199: If the medical expenses pertain to another dependent, such as a child or stepchild who is 19 years of age or older, grandchildren, grandparents, siblings, uncles, aunts, nieces, or nephews, they can be claimed on this line.

It’s important to note that the tax year for claiming medical expenses can be any 12-month period ending in the tax year. If you have previously claimed a specific medical expense, you cannot claim it again in the current year. Additionally, all family members must share the same start and end date for their tax year. However, if the last date of your tax year falls within the tax year, you can claim medical expenses that were previously unclaimed.

It’s recommended to keep proper records and documentation of your medical expenses to support your claim. If you have any questions or uncertainties, consulting with a tax professional is advisable to ensure you accurately claim your eligible medical expenses.


Ineligible Deductions for the Medical Expense Tax Credit

The Canada Revenue Agency (CRA) provides a list of deductions that are not eligible for the medical expense tax credit. Some of these deductions include:

  1. Medications available without a prescription, including over-the-counter drugs.
  2. Membership fees for fitness clubs or gyms.
  3. Cosmetic surgeries performed solely for aesthetic purposes.
  4. Premiums paid for health plans.
  5. Diaper service providers.
  6. Personalized response systems (such as medical alert devices).

Including these deductions in your claim is not permitted, as the cost of these items is not deductible. The CRA will reject such claims. However, there are exceptions to this list. For instance, reconstructive surgery may be eligible if it is necessary to address a specific deformity, injury, or disease.

It’s important to review the CRA’s guidelines and consult with a tax professional if you have any uncertainties or specific questions regarding eligible deductions for the medical expense tax credit.


Completing the Form for Medical Expenses

When filing your tax return, you can enter the amount you or your spouse paid for eligible medical expenses. The tax credit is calculated based on the lesser of the percentage or the amount of the credit, divided by the lesser of the two. It’s worth considering comparing your returns with those of your spouse or common-law partner. In certain situations, it may be more advantageous for the person with the higher income to claim the credit.

If you claim medical expenses on line 33099, the deduction will be reduced by the lesser of 3% of your taxable income or the threshold for the tax year (which varies annually). For medical expenses claimed for other dependents on line 33199, you should apply 3% of their net income or the year’s threshold.

Make sure to also claim the amount on the provincial or territorial form. Similar methods are used to calculate and apply the credit.

Filing Electronically or by Mail

If you file electronically, keep all the supporting documents together so that you can provide them to the Canada Revenue Agency (CRA) if requested.

If you choose to file by mail, include all the necessary supporting documents, such as social security numbers, along with your return.

It’s important to keep accurate records and retain all supporting documentation related to your medical expenses in case the CRA requires verification.

Medical Expenses

Claiming Medical Expenses for Individuals with Disabilities

Individuals with disabilities can claim the Disability Tax Credit (DTC) by obtaining an approved T2201 form from the Canada Revenue Agency. In addition to the DTC, eligible individuals can also seek reimbursement for various medical expenses incurred due to chronic medical conditions. The following medical expenses are eligible for reimbursement under this credit:

  1. Attendance care expenses exceeding $10,000.
  2. Expenses related to residing in a nursing home.

To maximize your tax savings, it is advisable to calculate the potential refund on your medical expenses both with and without claiming the DTC. This comparison will help you determine the most beneficial approach for your situation.