Whether you do your own taxes or enlist professional help, you want to avoid leaving money on the proverbial table. Yet, a number of medical expenses are commonly overlooked by taxpayers when filing their tax returns.
Medical expenses may be eligible for a federal non-refundable tax credit on your tax return. To be eligible, expenses must exceed a limit of 3% of your net income, subject to a maximum threshold of $2,397 for 2020 (applies to income of $79,900 and above). Provincial and territorial non-refundable tax credits have maximum thresholds ranging from $1,637 to $2,503.
Here are some common medical expenses you may be able to claim on your 2020 income tax return:
Premiums you pay for medical and dental plans, as well as the out-of-pocket (co-pay) portion of medical expenses submitted to the plan are eligible. Premiums paid by payroll deduction may be reported on your T4 slip in the “other information” section in box 85 or on your final pay stub for the year.
For those with celiac disease, the incremental cost of gluten-free products for that person (not their whole family) is a medical expense. The eligible expense is the product cost minus the cost for a comparable product with gluten, so takes a bit of work to calculate.
The cost of driving or taking public transportation to obtain medical services is eligible, if the required travel is at least 40 kilometres one way. In order to qualify, substantially equivalent services must not be available closer to your home.
For a person who has a severe and prolonged impairment of their mobility, up to $2,000 for a move to housing that is more accessible or allows them to be more functional or mobile is eligible. The provincial limit is $2,982 for Ontario residents.
Foreign medical services
Medical services provided outside Canada, including amounts paid to a medical practitioner at a public or private hospital may qualify.
Costs for a school that has special staff, facilities or equipment that is necessary due to a child’s physical or mental impairment may qualify. A medical practitioner or the principal must certify the need.
A tutor’s services for someone with a learning disability or impaired mental function can be claimed if the expense is paid to someone not related to the person. A medical practitioner must certify in writing that the services are necessary.
Renovation or construction costs
The costs must relate to changes that give someone better mobility or functioning within their home due to a severe and prolonged impairment in their mobility. The costs must be reasonable, not normally incurred by someone with normal physical development, and not normally expected to increase the value of the home.
Specifically, the cost of installing an electric or sealed combustion furnace to replace a furnace that is neither of these, due to a taxpayer’s severe chronic respiratory ailment or immune system disorder, may be permitted.
Medical expenses Canadians cannot claim
Some common expenses that do not qualify are:
- Parking or other travel costs to go to an appointment less than 40 kilometres from your home
- Over-the-counter medications
- Supplements and vitamins (other than vitamin B12 when prescribed for pernicious anaemia)
- Cosmetic surgery (unless related to congenital abnormality, injury resulting from an accident or trauma, or a disfiguring disease)
For more information about eligible medical expenses you can claim on your tax return, the Canada Revenue Agency provides a list of common medical expenses here.
Jason Heath is a fee-only, advice-only Certified Financial Planner (CFP) at Objective Financial Partners Inc. in Toronto. He does not sell any financial products whatsoever.
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