How the medical tax deduction can save you money


coût des soins de santé 6Medical expenses for you, your spouse or common-law partner, and dependent children under 18 are claimed on line 330 of the federal tax return.

I don’t know anybody who wants to pay more taxes than they have to, but medical expenses are one area where many Canadians of all ages may be leaving money on the table.

There are several reasons why this may occur. First of all, only expenses in excess of the lesser of $2,171 for 2014 ($2,208 for 2015) or 3% of net income can be claimed for the federal tax credit.  The lowest tax rate is applied to the medical expenses to determine the amount of the tax credit.

With government health programs paying for most doctor and hospital bills, many people do not keep track of small amounts like deductibles and co-insurance on drug bills throughout the year as they believe they don’t spend enough to be eligible for this tax credit.

Also, over over-the-counter drugs are not deductible even if they are prescribed by a physician and since 2010 since March 5, 2010 cosmetic procedures have been excluded unless the procedure is necessary for medical or reconstructive purposes.

But there are still many health-related costs that are on the federal government’s list of eligible medical expenses, and they can quickly add up. Some examples are:

  • The cost of an air conditioner, air filter, cleaner or purifier if you have a sever chronic respiratory ailment
  • Assisted breathing devices (CPAP machines) frequently prescribed for patients with sleep apnea.
  • A breast prosthesis required due to a mastectomy.
  • A stair-lift if you cannot climb stairs on your own.
  • Dental services including orthodontics, if the procedure is not for purely cosmetic reasons.
  • The incremental cost of gluten-free products if you have celiac disease.
  • The cost of laser eye surgery paid to a doctor or a public or licensed private hospital.
  • Medical marijuana if you are authorized to possess or use the drug for medical purposes.
  • Depending on the province, a wide range of medical practitioners including: acupuncturist, chiropractor, dentist, dietician, marriage and family therapist, optometrist, physiotherapist, registered massage therapist, naturopath and traditional Chinese medicine practitioner.
  • Walkers and other walking aids designed to help if you have a mobility impairment.

Medical expenses that are not eligible include fitness fees, personal response systems such as Lifeline and Health Line services and blood pressure monitors.

Health and dental insurance premiums are deductible but travel health insurance premiums are only deductible if they do not include any other non-deductible services such as trip interruption or trip cancellation insurance, according to a 2007 CRA Tax Ruling. Once the premium also covers expenses that do not qualify as a medical expense, the whole premium is tainted.

With fewer companies offering retiree medical benefits, you may be surprised at how many medical expenses previously paid for by your employer you will now be responsible for.

Understanding what services are eligible for the medical expense tax credit and retaining all receipts so you can justify your eligibility to claim appropriate amounts is one way you can keep more money in your pocket.

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