Every individual or corporation classified as a Canadian tax resident under the Income Tax Act is required by the Canadian Revenue Authority (CRA) to file a tax return by April 30 every year. The return paperwork captures the taxable income, tax credits and any other relevant information for tax filing purposes. The form that individuals use to file their taxes is called the T1 General form or the Income Tax and Benefit Return form.
Overview of Medical Expenses and Income Tax Return
Medical expenses whether for self, common-law partner, dependent children aged 18 and below or other qualifying dependents, are classified under non-refundable tax credits. This means that they help reduce your tax liability to zero. However, any amount of credit that remains is forfeited. To be sure you’re claiming you medical expenses properly, the best thing is to consult a tax professional. However, below is an overview that may help understand the process.
People with lower incomes and high medical expenses can claim a refundable tax credit on line 33200 on their tax return form subject to certain conditions. Similarly, the disabled can also claim disability supports deduction on line 21500.
When claiming medical expenses, ensure that you include only those expenses for which you’ve not been
reimbursed. Also, some expenses may require certification by a medical practitioner for them to be eligible.
How to claim medical expenses on your tax return form?
The tax return form has 7 steps with step 5 having three parts -A, B, & C. Medical expenses are claimed on line 33099 or 33199 all of which are in Step 5 Part A.
- Line 33099: On this line, you can claim medical expenses you incur yourself, expenses you pay on behalf of your common-law partner as well as dependent children under the age of 18.
- Line 33199: This line is reserved for medical expenses incurred on behalf of other dependents such as children aged 18 years and above. It may also include your parents, siblings, aunties, uncles, nephews, and nieces who are residents of Canada.
The maximum amount and the period for which you can claim
The maximum you can claim on the tax return for medical expenses on line 33099 is the total expense incurred minus the lesser of $2,352 or 3% of the net income you report on Step 3 line 23600. The same applies to line 33199 only that the net income under consideration here is the dependent’s net income and not yours.
For instance, assume you have net income of $60,000 and your medical expenses are $4,500. Take 3% of $60,000 which gives you $2,000. Since $2,000 is less than $2,352, the claimable expenses will be $2,500 ($4,500-$2,000).
On the other hand, if the net income of your partner is $90,000, 3% would be $3,000. Since $2,352 is less than $3,000, the amount you can claim on your tax return is $2,148 ($4,500-$2,352). In this case, your partner should claim the medical expenses for all of you.
The period for which you can claim must not exceed 12 months to the end of the tax period for which you are filing the return. If you are filing a return for 2019, you can claim expenses incurred but not previously claimed for the 12 months ending 2019. However, for people who die during the tax year, their claim can be made for any 24 months up until the date of death.
Common medical expenses you can claim
Several expenses qualify for a tax credit on your return. Here are some examples:
If you, your spouse, or dependent receive attendant care or care in a facility from an external party, the expenses such as salaries and wages and facility fees incurred are tax-deductible.
Care, treatment, and training
Expenses incurred in treatments such as bone marrow transplant, cancer treatment, fertility-related procedures, organ transplant, and rehabilitative therapy are considered as medical expenses.
Construction and renovation
These are changes made to a home such as alteration of the driveway and renovation to give ease of access to a person with mobility impairment challenges. These can be deducted as medical expenses.
Devices, equipment, and supplies
If you purchase health-related devices such as assisted breathing devices, audible signal devices and baby breathing monitors, you can claim the cost as a medical expense.
Other claimable expenses under the medical expense category include prescribed-drugs, gluten-free food products, service animals to help you cope with impairments, and travel expenses to seek medical services.
Medical Expenses You Cannot Claim
Some expenses are not allowable hence should not be claimed while filing tax returns. Here are some of them.
- Fitness club expenses
- Non-prescription birth control devices
- Monitors for blood pressure
- Cosmetic surgery expenses incurred after March 4, 2010
- Over the counter medications
- Organic food
- Personal response systems like Health Line Services and Lifeline
As the taxpayer, you have to keep supporting documents such as receipts for expenses paid, bank statements, credit card statements, and lease agreements. Whereas they are not required when filing electronically they could be asked for by the CRA officials at one point or the other.
Working through your tax return can be quite complex depending on the number of line items you have to fill. At times you may omit a claim when it is a genuine tax credit thus ending up paying more taxes than you should. Remember, too many red flags and inconsistencies may trigger an audit. You may consider getting expert tax preparation consultants to provide you with the advice and assistance you need to accurately complete your return.