Medical Expense Deductions

Documentation of your medical expenses are important to support your claims.  While this could be a significant non-refundable credit, CRA does often request support for this deduction.  This credit can provide significant tax relief, but it requires meticulous documentation and an understanding of eligibility criteria. The Canada Revenue Agency (CRA) often requests support for these deductions, underscoring the importance of keeping detailed records.

Whose Expenses Can You Claim?

You are eligible to claim medical expenses for yourself, your spouse or common-law partner, and your children under 18. Additionally, you can claim for other dependents, such as adult children, grandchildren, parents, grandparents, siblings, aunts, uncles, nieces, or nephews, provided they depend on you for support.

What Can You Claim?

Eligible medical expenses are broadly defined and do not necessarily have to be incurred within Canada.  Expenses that can be claimed must be eligible medical expenses (details noted on CRA’s website) and for the most part, these expenses do not have to have been paid in Canada.  However, they should not have been reimbursed or reimbursable – unless the reimbursement is included in your income (i.e. it is included in your T4 slip). However, these expenses must not have been reimbursed or be reimbursable, unless such reimbursement is declared as income (e.g., included in your T4 slip). Notably, private health services plans are deductible if over 90% of the premiums paid are for eligible medical expenses. It’s essential to request detailed receipts to substantiate your claims.

Where Can You Incur the Expense? 

While eligible medical expenses are not limited to those paid in Canada or for services provided in Canada, there are exceptions. For instance, expenses for attendant care and group homes must be incurred within Canada.

When Can You Claim?

A strategic approach involves selecting any 12-month period ending in the tax year for which you’re filing, provided the expenses were not claimed in the previous year. This flexibility allows for optimizing deductions, especially if you anticipate a lower income in the following year.

How Much Can You Claim? 

For the tax year 2023, the claimable amount is the lesser of 3% of your net income or $2,635, subtracted from the total eligible medical expenses incurred. Additionally, provincial deductions may enhance the benefit. Often, it’s advantageous for the spouse with the lower income to claim the deduction to maximize tax savings.

Conclusion

Navigating the medical expense tax credit requires a deep understanding of tax laws and meticulous record-keeping. Shajani CPA, with its team of skilled accountants in Calgary, Edmonton, and Red Deer, is well-equipped to assist families and owners of family-owned enterprises in optimizing their tax filings and leveraging available credits effectively. Our expertise ensures that you not only comply with tax regulations but also maximize your financial health through strategic tax planning.

This information is for discussion purposes only and should not be considered professional advice. There is no guarantee or warrant of information on this site and it should be noted that rules and laws change regularly. You should consult a professional before considering implementing or taking any action based on information on this site. Call our team for a consultation before taking any action. ©2024 Shajani CPA.

Shajani CPA is a CPA Calgary, Edmonton and Red Deer firm and provides Accountant, Bookkeeping, Tax Advice and Tax Planning service.