Not all medical treatments are completely free under Canada’s health care system. In fact, many people incur sizable medical expenses each year. The federal medical expense tax credit, and its provincial equivalents, provide some relief from the burden of medical expenses. The credit is wide-reaching and you may be surprised at some of the expenses you can claim.
The Medical Expense Tax Credit
The federal credit is found on lines 330 and 331 of your federal tax return. You can claim an amount for the eligible medical expenses incurred in any 12-month period ending in the previous year. In other words, you do not have to make a claim for expenses from Jan. 1 to Dec. 31. Rather, you can choose whatever 12-month period that maximizes your credit. You can include fees paid for yourself, your spouse, and your minor children.
The credit is limited to expenses above 3% of your income or $2,208 for tax year 2015, whichever is lower. It is often a good idea for the lowest-earning spouse to claim the entire family’s expenses to take advantage of the 3% threshold.
The Income Tax Act, and its regulations, defines eligible medical expenses. The Canada Revenue Agency publishes a list of what it considers eligible, but since medical technology evolves, the list is not necessarily always up to date.
A first important element to note is that medical insurance, whether private or governmental, along with insurance to cover medication, is an eligible expense, even if it is mandatory in some provinces. The cost of this insurance alone often exceeds the medical expense credit minimal threshold.
In general, all fees paid to medical practitioners, such as doctors, dentists, nurses, and physicians, are eligible for the credit. Likewise, fees paid to public or private hospitals are usually eligible for the credit. Fees paid for the cost of attendant care at home or in facilities such as nursing homes, group homes, and schools are also eligible.
Eligible fees are defined quite broadly and can include costs that are peripheral to the actual medical condition. For example, reasonable transportation and travel fees incurred to receive medical treatment can be eligible for the credit. Likewise, fees incurred outside of Canada, such as while vacationing, are eligible.
The CRA has determined that if a patient is authorized to possess marihuana for medical purposes under the Marihuana Medical Access Regulations, then the cost of the medical marihuana may qualify as medical expenses for the purpose of the tax credit.
The medical expenses tax credit is quite generous, but there are some expenses that are not eligible. As a rule, fees paid for elective medical procedures are not eligible. For example, these could include fees related to purely cosmetic surgeries that are not considered medically necessary. In general, noneligible expenses include the following: liposuction, hair replacement procedures, filler injections for removing wrinkles, and teeth whitening.