Tax time: medical expenses to consider
Things you should know, may know and perhaps some surprises
Time to gather medical expense receipts. (RA Hickey) Many people don’t even bother to add up and claim their medical expenses because they don’t think the effort will pay off. After all, the tax credit is the least of all the tax credits in all the provinces.
Further, the expenses must be more than three per cent of net income or $2,024 — whichever figure is lower. So for a person with a $40,000 net income, the first three per cent or $1,200 of allowable medical expenses, is excluded from the calculation.
As well, the tax department requires receipts.
Nevertheless, there may well be money to keep in your pocket. Over the years, tax rules have grown to include more than 400 separate tax credits and deductions across the country that can significantly reduce the amount of tax individuals pay. Many people miss out on the medical expenses tax break because they’re just unaware of the vast array of expenses that qualify.
“Although the CRA has been tightening rules in this area recently (such as eliminating expenses from strictly cosmetic procedures) people still tend to miss some eligible payments,” says chartered accountant James Gustafson of Victoria-based Gustafson Accounting.
Don't tax programs catch all those tax breaks?
While most tax software programs do a good job of prompting you about available credits and deductions, they don't know the specifics of your particular situation. So, they will ask you about medical expenses but you still have to know what to claim.
As one example, Gustafson points out that premiums paid to a private health insurance plan qualify as medical expenses, as long as your employer didn’t pay them on your behalf.
“There is, in fact, a very long list of medical expenses that people miss every year — common items like batteries for hearing aids, glasses, and treatments from naturopaths,” says Evelyn Jacks, president of the Winnipeg-based Knowledge Bureau.
"Even modifications to the family van required to accommodate a person in a wheelchair may be claimed on a limited basis.” Jacks adds that people with a gluten allergy can claim the higher cost of gluten-free products if a doctor prescribes them. The difference between the cost of the gluten-free product and a similar non-gluten-free product is the allowable medical expense.
For example, a loaf of gluten-free bread can cost as much as $9.99. A regular loaf costs around $2.99. The claim would be for the seven-dollar difference.
The Disability Tax Credit
The disability tax credit is the most lucrative non-refundable tax credit offered in Canada — worth more than $1,500 a year in real money, depending on the province. Our experts both cited this as an often-overlooked break. The credit is intended for those with severe and prolonged physical or mental impairments. To be eligible, the disability must significantly restrict activities of daily living. A physician or licensed practitioner must complete and certify the medical section on form T2201.
"In my experience, the disability tax credit has been frequently missed by Canadians who may otherwise qualify, particularly when they are infirm themselves, as another relative will typically have to become involved to obtain the necessary medical certification,” says James Gustafson. The disability tax credit is often forgotten. (CRA)
Evelyn Jacks adds that people who don’t qualify for the tax credit in one year, may qualify in subsequent years with progressive illnesses like cancer or Alzheimer’s disease. So it’s worth it to re-apply.
She also points out that people can go back and adjust previously-filed tax returns for the 2001 to 2009 tax years if they feel they could have qualified years ago but never filed. A doctor needs to certify that the disability was present earlier and then file a T-1 adjustment request for each year you’re seeking to change.
“Missing this [credit] over a 10-year period — and many families do — [can] leave you $15,000 short,” she says.
More credits
It appears the CRA has dealt with every possibility for health care expenses which has made for a wide range of products and procedures that can be claimed. Some you may know, some you should know and some may be surprising. Below is a partial list.
Air conditioner — the lesser of $1,000 and 50 per cent of the amount paid for the air conditioner for an individual with a severe chronic ailment, disease, or disorder — prescription required.
Attendant care expenses — Attendant care expenses are amounts you or your spouse or common-law partner, paid for attendant care or care in any of the following places: ·
Self-contained domestic establishments.
Retirement homes, homes for seniors, or other institutions.·
Nursing homes (full-time care).
Special schools, institutions, or other places (providing care or care and training).
Group homes in Canada.
Bathroom aids — to help a person get in or out of a bathtub or shower or to get on or off a toilet — prescription required.
Bone marrow transplant — reasonable amounts paid to locate a compatible donor, to arrange the transplant including legal fees and insurance premiums, and reasonable travelling costs including board and lodging for the patient, the donor, and their respective companions.
Cancer treatment — in or outside Canada, provided by a medical practitioner or a public or licensed private hospital.
Cosmetic surgery — generally, expenses for purely cosmetic procedures are eligible only if incurred before March 4, 2010. An expense will continue to qualify as a medical expense if it is necessary for medical or reconstructive purposes, such as surgery to address a deformity related to a congenital abnormality, a personal injury resulting from an accident or trauma, or a disfiguring disease.
Eyes — eyeglasses, contact lenses or other vision devices for the treatment of vision correction, and artificial eye — prescription required.
Furnace — the amount paid for an electric or sealed combustion furnace to replace a furnace that is neither of these, where the replacement is necessary because of a person's severe chronic respiratory ailment or immune system disorder — prescription required.
Hospitals services — public or private, that are designated as hospitals by the province, territory or jurisdiction where they are located.
International Treatments — The personnel doing the procedure have to be practitioners and be licensed under the jurisdiction, a tax expert interviewed by CBC News said. The procedure has to be performed in hospital or the fees paid to a hospital.
Call the CRA beforehand with the facts of who is doing the procedure, and where you're getting this procedure done and you can get an advanced tax ruling on whether the treatment can be claimed as a medical expense.
In vitro — fertility program, not including donations to a sperm bank.
Laser — eye surgery
Medical marijuana or marijuana seeds — the amount paid to Health Canada or a designated producer for a person authorized under the Marihuana Medical Access Regulations or exempt under section 56 of the Controlled Drugs and Substances Act to possess or use the drug for medical purposes.
Orthodontic work including braces — expenses for purely cosmetic procedures are not eligible.
Scooter — the amount paid for a scooter that is used in place of a wheelchair.
Tests — the cost of medical tests such as cardiographs, electrocardiograms, metabolism tests, radiological services or procedures, spinal fluid tests, stool examinations, sugar content tests, urine analysis, and x-ray services. Also claim the cost of any related interpretation or diagnosis — prescription required.
Travel Expenses — if medical treatment is not available to you within 40 kilometres from your locality, you may be able to claim the cost of public transportation (for example, taxi, bus, or train) to get the treatment somewhere else.
However, if public transportation is not readily available, you can claim vehicle expenses to get medical treatment. In addition, if you have to travel more than 80 kilometres from your locality for medical treatment, you may be able to claim the cost of your meals and accommodations.
You can also claim travel expenses for someone to accompany you if a medical practitioner certifies in writing that you are unable to travel without assistance.
Keep all your receipts for filing or use the simplified method: you may claim a flat rate of $17 a meal, to a maximum of $51 per day (Canadian or US funds), per person, without receipts.
Vaccines — prescription required.
Walking aids — the amount paid for devices designed exclusively to help a person who has a mobility impairment to walk — prescription required.
Water filter, cleaner, or purifier — the amount paid for a person to cope with or overcome a severe chronic respiratory ailment, or severe chronic immune system disregulation — prescription required.
Whirlpool bath treatments — the amount paid to a medical practitioner. A hot tub that you install in your home, even if prescribed by a medical practitioner, is not eligible.
Wigs — the amount paid for a person who has suffered abnormal hair loss due to a disease, accident, or medical treatment — prescription required.
The full list can be found at the CRA site. It's user-friendly and there is a search function in the upper right of the page.
No, noes
There are a number of expenses that are commonly claimed as medical expenses but don't qualify.
Here is the complete non-eligible expenses list from the CRA.
Athletic or fitness club fees.
Birth control devices (non-prescription).
Blood pressure monitors.
Cosmetic surgery — expenses for purely cosmetic procedures including any related services and other expenses such as travel, incurred after March 4, 2010, cannot be claimed as medical expenses. Both surgical and non-surgical procedures purely aimed at enhancing one's appearance are not eligible.
These non-eligible expenses include the following:
Liposuction.
Hair replacement procedures.
Botulinum injections.
Teeth whitening.
An expense, including those identified above, may qualify as a medical expense if it is necessary for medical or reconstructive purposes, such as surgery to address a deformity related to a congenital abnormality, a personal injury resulting from an accident or trauma, or a disfiguring disease. ·
Diaper services.
Health plan premiums paid by an employer and not included in your income.·
Health programs. ·
Organic food. ·
Over-the-counter medications.
Vitamins, and supplements, even if prescribed by a medical practitioner.·
Personal response systems such as Lifeline and Health Line Services. ·
The following provincial and territorial plans:
Alberta Health Care Insurance Plan.
Manitoba Health Plan.
Medical Services Plan of British Columbia.
New Brunswick Medicare Division of Provincial Department of Health.
Newfoundland Medical Care Plan.
Northwest Territories Health Insurance Services Agency of Territorial Government.
Nova Scotia Medical Services Insurance.
Ontario Health Insurance Plan.
Prince Edward Island Health Services Payment Plan.
Quebec Health Insurance Board (including payments made to the Health Services Fund).
Saskatchewan Medical Care Insurance Plan.
Yukon Territorial Insurance Commission.
Or ·travel expenses for which you can get reimbursed.
(Source: Canada Revenue Agency )
Things you should know, may know and perhaps some surprises
Time to gather medical expense receipts. (RA Hickey) Many people don’t even bother to add up and claim their medical expenses because they don’t think the effort will pay off. After all, the tax credit is the least of all the tax credits in all the provinces.
Further, the expenses must be more than three per cent of net income or $2,024 — whichever figure is lower. So for a person with a $40,000 net income, the first three per cent or $1,200 of allowable medical expenses, is excluded from the calculation.
As well, the tax department requires receipts.
Nevertheless, there may well be money to keep in your pocket. Over the years, tax rules have grown to include more than 400 separate tax credits and deductions across the country that can significantly reduce the amount of tax individuals pay. Many people miss out on the medical expenses tax break because they’re just unaware of the vast array of expenses that qualify.
“Although the CRA has been tightening rules in this area recently (such as eliminating expenses from strictly cosmetic procedures) people still tend to miss some eligible payments,” says chartered accountant James Gustafson of Victoria-based Gustafson Accounting.
Don't tax programs catch all those tax breaks?
While most tax software programs do a good job of prompting you about available credits and deductions, they don't know the specifics of your particular situation. So, they will ask you about medical expenses but you still have to know what to claim.
As one example, Gustafson points out that premiums paid to a private health insurance plan qualify as medical expenses, as long as your employer didn’t pay them on your behalf.
“There is, in fact, a very long list of medical expenses that people miss every year — common items like batteries for hearing aids, glasses, and treatments from naturopaths,” says Evelyn Jacks, president of the Winnipeg-based Knowledge Bureau.
"Even modifications to the family van required to accommodate a person in a wheelchair may be claimed on a limited basis.” Jacks adds that people with a gluten allergy can claim the higher cost of gluten-free products if a doctor prescribes them. The difference between the cost of the gluten-free product and a similar non-gluten-free product is the allowable medical expense.
For example, a loaf of gluten-free bread can cost as much as $9.99. A regular loaf costs around $2.99. The claim would be for the seven-dollar difference.
The Disability Tax Credit
The disability tax credit is the most lucrative non-refundable tax credit offered in Canada — worth more than $1,500 a year in real money, depending on the province. Our experts both cited this as an often-overlooked break. The credit is intended for those with severe and prolonged physical or mental impairments. To be eligible, the disability must significantly restrict activities of daily living. A physician or licensed practitioner must complete and certify the medical section on form T2201.
"In my experience, the disability tax credit has been frequently missed by Canadians who may otherwise qualify, particularly when they are infirm themselves, as another relative will typically have to become involved to obtain the necessary medical certification,” says James Gustafson. The disability tax credit is often forgotten. (CRA)
Evelyn Jacks adds that people who don’t qualify for the tax credit in one year, may qualify in subsequent years with progressive illnesses like cancer or Alzheimer’s disease. So it’s worth it to re-apply.
She also points out that people can go back and adjust previously-filed tax returns for the 2001 to 2009 tax years if they feel they could have qualified years ago but never filed. A doctor needs to certify that the disability was present earlier and then file a T-1 adjustment request for each year you’re seeking to change.
“Missing this [credit] over a 10-year period — and many families do — [can] leave you $15,000 short,” she says.
More credits
It appears the CRA has dealt with every possibility for health care expenses which has made for a wide range of products and procedures that can be claimed. Some you may know, some you should know and some may be surprising. Below is a partial list.
Air conditioner — the lesser of $1,000 and 50 per cent of the amount paid for the air conditioner for an individual with a severe chronic ailment, disease, or disorder — prescription required.
Attendant care expenses — Attendant care expenses are amounts you or your spouse or common-law partner, paid for attendant care or care in any of the following places: ·
Self-contained domestic establishments.
Retirement homes, homes for seniors, or other institutions.·
Nursing homes (full-time care).
Special schools, institutions, or other places (providing care or care and training).
Group homes in Canada.
Bathroom aids — to help a person get in or out of a bathtub or shower or to get on or off a toilet — prescription required.
Bone marrow transplant — reasonable amounts paid to locate a compatible donor, to arrange the transplant including legal fees and insurance premiums, and reasonable travelling costs including board and lodging for the patient, the donor, and their respective companions.
Cancer treatment — in or outside Canada, provided by a medical practitioner or a public or licensed private hospital.
Cosmetic surgery — generally, expenses for purely cosmetic procedures are eligible only if incurred before March 4, 2010. An expense will continue to qualify as a medical expense if it is necessary for medical or reconstructive purposes, such as surgery to address a deformity related to a congenital abnormality, a personal injury resulting from an accident or trauma, or a disfiguring disease.
Eyes — eyeglasses, contact lenses or other vision devices for the treatment of vision correction, and artificial eye — prescription required.
Furnace — the amount paid for an electric or sealed combustion furnace to replace a furnace that is neither of these, where the replacement is necessary because of a person's severe chronic respiratory ailment or immune system disorder — prescription required.
Hospitals services — public or private, that are designated as hospitals by the province, territory or jurisdiction where they are located.
International Treatments — The personnel doing the procedure have to be practitioners and be licensed under the jurisdiction, a tax expert interviewed by CBC News said. The procedure has to be performed in hospital or the fees paid to a hospital.
Call the CRA beforehand with the facts of who is doing the procedure, and where you're getting this procedure done and you can get an advanced tax ruling on whether the treatment can be claimed as a medical expense.
In vitro — fertility program, not including donations to a sperm bank.
Laser — eye surgery
Medical marijuana or marijuana seeds — the amount paid to Health Canada or a designated producer for a person authorized under the Marihuana Medical Access Regulations or exempt under section 56 of the Controlled Drugs and Substances Act to possess or use the drug for medical purposes.
Orthodontic work including braces — expenses for purely cosmetic procedures are not eligible.
Scooter — the amount paid for a scooter that is used in place of a wheelchair.
Tests — the cost of medical tests such as cardiographs, electrocardiograms, metabolism tests, radiological services or procedures, spinal fluid tests, stool examinations, sugar content tests, urine analysis, and x-ray services. Also claim the cost of any related interpretation or diagnosis — prescription required.
Travel Expenses — if medical treatment is not available to you within 40 kilometres from your locality, you may be able to claim the cost of public transportation (for example, taxi, bus, or train) to get the treatment somewhere else.
However, if public transportation is not readily available, you can claim vehicle expenses to get medical treatment. In addition, if you have to travel more than 80 kilometres from your locality for medical treatment, you may be able to claim the cost of your meals and accommodations.
You can also claim travel expenses for someone to accompany you if a medical practitioner certifies in writing that you are unable to travel without assistance.
Keep all your receipts for filing or use the simplified method: you may claim a flat rate of $17 a meal, to a maximum of $51 per day (Canadian or US funds), per person, without receipts.
Vaccines — prescription required.
Walking aids — the amount paid for devices designed exclusively to help a person who has a mobility impairment to walk — prescription required.
Water filter, cleaner, or purifier — the amount paid for a person to cope with or overcome a severe chronic respiratory ailment, or severe chronic immune system disregulation — prescription required.
Whirlpool bath treatments — the amount paid to a medical practitioner. A hot tub that you install in your home, even if prescribed by a medical practitioner, is not eligible.
Wigs — the amount paid for a person who has suffered abnormal hair loss due to a disease, accident, or medical treatment — prescription required.
The full list can be found at the CRA site. It's user-friendly and there is a search function in the upper right of the page.
No, noes
There are a number of expenses that are commonly claimed as medical expenses but don't qualify.
Here is the complete non-eligible expenses list from the CRA.
Athletic or fitness club fees.
Birth control devices (non-prescription).
Blood pressure monitors.
Cosmetic surgery — expenses for purely cosmetic procedures including any related services and other expenses such as travel, incurred after March 4, 2010, cannot be claimed as medical expenses. Both surgical and non-surgical procedures purely aimed at enhancing one's appearance are not eligible.
These non-eligible expenses include the following:
Liposuction.
Hair replacement procedures.
Botulinum injections.
Teeth whitening.
An expense, including those identified above, may qualify as a medical expense if it is necessary for medical or reconstructive purposes, such as surgery to address a deformity related to a congenital abnormality, a personal injury resulting from an accident or trauma, or a disfiguring disease. ·
Diaper services.
Health plan premiums paid by an employer and not included in your income.·
Health programs. ·
Organic food. ·
Over-the-counter medications.
Vitamins, and supplements, even if prescribed by a medical practitioner.·
Personal response systems such as Lifeline and Health Line Services. ·
The following provincial and territorial plans:
Alberta Health Care Insurance Plan.
Manitoba Health Plan.
Medical Services Plan of British Columbia.
New Brunswick Medicare Division of Provincial Department of Health.
Newfoundland Medical Care Plan.
Northwest Territories Health Insurance Services Agency of Territorial Government.
Nova Scotia Medical Services Insurance.
Ontario Health Insurance Plan.
Prince Edward Island Health Services Payment Plan.
Quebec Health Insurance Board (including payments made to the Health Services Fund).
Saskatchewan Medical Care Insurance Plan.
Yukon Territorial Insurance Commission.
Or ·travel expenses for which you can get reimbursed.
(Source: Canada Revenue Agency )
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