In today’s economy, many people are feeling the strain of rising costs of basic necessities, while earnings remain relatively unchanged. It’s even more stressful when out-of-pocket medical costs become a part of daily life due to poor health. While many Canadians are aware they can claim medical expenses on their tax return, there are still others who are not aware, some who forget to keep track of their expenses or don’t think claiming it will be helpful. This is a potentially costly mistake and familiarizing yourself with the available options is crucial.
The Canadian Income Tax Act allows Canadians to claim out-of-pocket medical expenses in the form of a credit called the Medical Expense Tax Credit (METC). You can access the guide to Medical Expenses Tax Credit here. Currently, the METC lists more than 100 eligible expenses and, as a bonus, treatment and purchases made outside of Canada are also eligible.
Common eligible medical expenses include:
- Medications not covered by insurance plans (provincial or private)
- Medical appointments
- Hospital stays
- Some medical equipment and accessories, and
- Medically necessary home renovations
- Medical marijuana
Claiming the Medical Expense Tax Credit works for you by reducing your taxable income which could result in less taxes due or a larger refund. This potentially puts money back into your pocket, easing the financial burden on you and your family.
Calculating How Much Medical Expense to Claim
To effectively claim out-of-pocket medical expenses on your tax return, the total expense must exceed either (a) 3% of your net income (Line 23600 of your return) or (b) a fixed amount set by the tax act each year ($2,759 for 2024). The lesser of the two will be deducted from your total medical expense and the difference, entered on Line 33099 or Line 33199 of your tax return.
Example: When claiming medical expenses for yourself, spouse, or common-law partner – Line 33099
- 2024 Total Medical Expense: $4,200
- 2024 Net Income: $60,000
- 3% of $60,000 = $1,800
- Set amount for 2024 = $2,759
$4,200 – $1,800 = 2,400
In this example, you will use the lesser amount of $1,800 in your calculation and claim the difference of $2,400 on Line 33099 of your return.
**Pro Tip: If you have a spouse or common-law partner, compare the amount you can claim with the amount your spouse or common-law partner can claim. It may be better for the spouse or common-law partner with the lower net income to claim the eligible medical expenses.
Example: When claiming medical expenses for a dependent child 18 years or older, parent, grandparent, sibling or other relative resident of Canada anytime during the year – Line 33199
- 2024 Total Medical Expense: $4,200
- 2024 Net Income of the dependent: $60,000
- 3% of $60,000 = $1,800
- Set amount for 2024 = $2,759
$4,200 – $1,800 = $2,400
In this example, you will use the lesser amount of $1,800 to calculate the medical expense amount and claim the difference of $2,400 on Line 33199 of your return.
Period of eligibility
Medical expenses paid for within any 12-month period ending in the current tax year, and not claimed in the prior year, are eligible. Expenses cannot be claimed twice.
Example:
When filing a return for the 2024 tax year, you can claim medical expenses paid between January 1, 2024, and December 31, 2024, or expenses paid between June 1, 2023, and May 31, 2024, provided the period ends in the current tax year.
If a person is deceased, a claim can be made for expenses paid in any two-year-period (24 months) which includes the date of their death. Again, the claim cannot include expenses previously claimed in another year.
Additional Medical Related Tax Resources
In addition to the METC, the Canadian Disability Tax Credit (DTC), disability supports deduction, and the refundable medical expense supplement are other resources available to qualifying taxpayers under the Canadian Income Tax Act. Speak with your tax professional and medical practitioner about potential eligibility for these resources.
October: Breast Cancer Awareness Month & Brain Cancer Awareness Day (October 24th)
October marks Breast Cancer Awareness Month, and Brain Cancer Awareness Day on October 24th is just around the corner. This is an opportune time to focus on medical expenses related to cancer treatments that you or a loved one can claim for the 2024 tax year. Cancer treatments often involve significant out-of-pocket expenses. For example, some “take-home” cancer drugs, which are not covered by provincial health plans, can cost an average of $6,000 per month. Additional costs include transportation, accommodations for out-of-town patients or support persons, nutritional supplements, anti-nausea medications, and special foods due to dietary restrictions.
Key Cancer-Related Medical Expenses You Can Claim for 2024
- Cancer Treatment (In or Out of Canada):
Treatment delivered by a medical practitioner in Canada or abroad is eligible, and no prescription is required.
- Travel Expenses:
Travel expenses for medically necessary appointments, including parking, mileage, food, and accommodations, are claimable.
- Wigs/Hairpieces & Breast Prosthesis:
These items are claimable with a prescription.
- Attendant Care:
Care provided by an attendant for personal tasks, which the patient cannot do themselves, is eligible. This includes care in certain facilities.
- Equipment and Assistive Devices:
Items such as catheters, wheelchairs, hospital bed (for rent or purchase) , and other specialty devices are eligible. A prescription is required, except for catheters and wheelchairs.
- Home Renovations for Accessibility:
Necessary home modifications like wheelchair ramps, wider doorways, and grab bars in bathrooms are claimable.
- Prescription Medications:
Any prescription medications required as part of cancer treatment are eligible, including associated costs.
Disability Tax Credit (DTC): Cancer patients may also be eligible to apply for the Disability Tax Credit while receiving treatment and for a portion of the recovery period. Speak with your healthcare provider and your tax specialist for personalized advice
Tracking and Documenting Your Medical Expenses
It is not necessary to submit receipts with your return. However, you must keep all receipts, prescriptions, and invoices related to your treatment along with detailed logs of travel expenses or attendant care services. This is essential to for the purpose of correctly calculating your return and in the event the CRA requests the information.
Conclusion
Navigating the complex world of tax deductions can be daunting, especially when your health is in jeopardy. If you or a loved one is undergoing cancer treatment, be sure to keep thorough records of all relevant expenses and reach out to a tax professional for personalized advice.
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