Medical and Disability Income Tax Credits
The above involve some of the most complicated rules in the Income Tax Act. CRA (formerly Revenue Canada) also closely monitors these claims and challenges them frequently. Unfortunately, they often apply to low-income taxpayers without the means to hire professionals to deal with their affairs.
The technical rule is that "qualified medical expenses" must be included on a list of allowable expenses defined by CRA, which are specified on their website. Unfortunately, with the rapid advances in medical research and care, it is difficult for CRA to keep a current list of legitimate expenses. Therefore there have been some horror stories of CRA disallowing huge medical expense claims because the "treatment was not on the list". Recently CRA seems more "sensitive" to this problem so hopefully it is not now as difficult to get a claim approved.
Medical expense claims can save thousands in income tax. If you or anyone in your family is incurring substantial medical costs, make an appointment with your accountant to review the situation. This should be done prior to income tax time - don't wait until March or April!
Consider the following:
- Medical expenses include private health insurance premiums, out-of-country medical insurance, tuition costs for learning disabled, home renovations to allow disabled access, out of country travel for medical treatments not available locally; nursing home costs for the disabled; as well as the more common dental and medical care. Note that although Alberta Blue Cross premiums are an allowable medical expense, Alberta Health Care premiums are not. Don't ask me to explain that one, but that's the way it is.
- You should keep all your receipts for medical expenses. As noted above, CRA regularly challenges these claims and if you do not have a proper receipt, the claim will likely be disallowed.
- Are all your family medical expenses combined in one claim? This maximizes the credit if you have a spouse or dependants with medical expenses.
- Is there a low-income dependant in a nursing home? You may be able to claim their medical expenses - dependants do not necessarily have to live with you. However, as of 2007, medical claims for a relative other than a spouse or child under 18 are limited to $10,000.
- Substantial medical expenses may mean an individual is entitled to a disability credit, which may be claimed with a signed doctor certificate. This may be transferred to other family members.
- Is there a physically or mentally impaired family member (teenagers don't necessarily qualify) staying in your home? You may be eligible for additional credits depending on your marital status and the income of the dependant.
- Does the family have a low earned income (under $30K) and medical expenses? You may be eligible for a refundable medical expense supplement refunding a portion of the expense.
- Are you an employee of a private company? There are medical plans that allow private companies to write-off employee medical expenses (without a taxable benefit to the employee!).
- Are you or a relative paying an attendant for in-home care? If a doctor certifies that a full-time attendant is required, then the home care should qualify as a medical expense.
The above list is not intended to be exhaustive but may give some ideas for income tax medical claims.
"Medical and Disability Income Tax Credits" - written by
David A. Townsend, CA
Permission to reprint/link is freely given with acknowledgement of the source