Medical Expense Tax Credit

Written by:  Gwyneth James MBA CPA, CGA

In our busy lives, it is easy to forget to set aside information that will be needed in the new year when our tax returns are due again. One example is receipts from a wide range of medical, dental, and related expenses such as health care services, travel expenses for appointments and treatments (>40 KM), medications, glasses, hearing aids, accessibility-related home renovations, dental services, health insurance premiums, and the cost of moving to and living in a Long-Term Care facility.

The CRA Folio S1-F1-C1, Medical Expense Tax Credit, provides extensive information of what is and is not eligible for this tax credit.

As with most tax credits and deductions, the Medical Expense Tax Credit is intended to benefit lower income taxpayers – the total expenses are reduced by 3% of net income (to a maximum of $2,208 for 2015) before being added to the non-refundable tax credits section of Schedule 1. A similar credit exists for provincial income taxes.

Unfortunately, in many cases the benefit of this credit is lost because the taxpayer does not have enough tax owing to apply the tax credits against.

This issue is somewhat remedied by the Refundable Medical Expense Supplement – one of the most overlooked tax deductions. It is available to any adults with eligible medical expenses or disability supports expenses AND employment or self-employment income over $3,421 (in 2015). It differs from the Medical Expense Tax Credit in that it is “refundable”.

The maximum credit for 2015 was $1,172. It is an indexed figure and is reduced if the total of your net income and your spouse’s net income exceed $25,939. It is eliminated if that total exceeds $49,379. If in doubt, keep all your health-related receipts and sort through them later to see what is valid. It’s not a great tax credit, but every little bit counts!