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David A. Townsend, CPA, CFP Professional Corporation

"Medical & Disability Income Tax Credits"
an article by David A. Townsend

Although I wouldn't call these rules complicated, they are extremely detailed. CRA 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 upside (if there is such a thing when dealing with medical problems) is that the 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:

  1. 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 medical plan premiums are an allowable medical expense it may actually be more advantageous to write these off as business expenses if you are self-employed.
  2. 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.

    CRA is also extremely picky at times as to what constitutes a proper receipt. Although this is frustrating for the taxpayer (and for me), it is usually more productive to just give them what they want, rather than arguing.
  3. Are all your family medical expenses combined in one claim? This maximizes the credit if you have a spouse or dependants with medical expenses.
  4. Are you paying medical expenses for a low-income dependant? Note that dependants do not necessarily have to live with you. Prior to 2011, this claim was limited to $10,000 but this is no longer the case.
  5. 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.
  6. 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.
  7. 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.
  8. 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!).
  9. 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.
  10. Do you have a child who qualifies for Disability Credit? If so, there are some programs that may assist you, such as the Child Disability Credit and the Registered Disability Savings Plan. Details are available on the CRA website  (visit my links page).

The above list is not intended to be exhaustive but may give some ideas for income tax medical claims.

Contributing Editor to Canadian Money Saver Magazine