Sat Mar 28, 2015 8:55am EDT Canadian
Canadians missing chance for cash with medical tax credit By Gail Johnson | Yahoo Finance Canada
One of the least used tax credits is also one of the murkiest. But by not claiming certain healthcare
costs via the Medical Expense Tax Credit, Canadians could be losing big dollars.
“The opportunity to save money is not used…because you’ve got to keep some records and have some efficient way to
calculate the deduction,” says John Crawford, chartered accountant and chief financial officer of health insurer Pacific
Blue Cross. “There’s a lot of interpretations as to whether something qualifies or doesn’t qualify in relation to the Canada
Revenue Agency. Certain items need qualification and certain items are not quite clear. But things that are not claimed
can all add up.”
A good example is premiums paid to a provincial health plan. These are not eligible. However, premiums you pay to an
insurer through workplace benefits programs generally are.
“Why is one deductible and why is one not? It depends what province you’re in as well,” Crawford says.
Inconsistencies are another reason the Medical Expense Tax Credit is so routinely overlooked, as well as the fact that the
category is so vast.
“Quite often things get missed because this is a rather large umbrella and people don’t know what they’re allowed to
claim,” says Caroline Battista, senior tax professional at H&R Block. “People don’t realize how broad it is.”
Two examples of oversights she sees frequently in her own practice are travel medical insurance (“Most people are
shocked to learn they can claim this,” she says) and the cost of certain alternative healthcare services. In B.C., for example, people can claim costs of traditional Chinese medicine, which is provincially regulated.
People also tend to be unaware that costs of individuals in a family can be grouped together. “Expenses for yourself, your
spouse or partner, and your kids can be all combined,” Battista notes, adding that those grouped medical expenses should
be claimed on the tax return of the person with the lowest net income for the biggest benefit.
Medical expenses are claimed on line 330 of the federal tax return. Only expenses in excess of the lesser of $2,171 for 2014
($2,208 for 2015) or three per cent of your net income can be claimed. Note, too, that medical expenses can fall into any 12month
period and don’t have to be limited to the calendar year. Other key costs people commonly overlook include:
Amounts that medical benefits programs don’t cover. Let’s say your workplace benefit covers 80 percent of your healthcare
costs. “The 20 percent they didn’t pay can go into your medical expense tax bucket,” Crawford says.
Travel for treatments. If you have to go more than 40 kilometres to access certain medical care or therapy, your public transport
or fuel costs can be claimed. If you have to travel more than 80 kilometres, things like meals and
accommodation can also be claimed. “Chemo is a good example,” Crawford notes. “Most people don’t have chemo next
door to their home, so the costs of getting to and from would be deductible.”
Whirlpool bath treatments. If a medical practitioner prescribes this, the costs can be claimed. “We get calls asking if
people can deduct that cost of their hot tub. Unfortunately the answer is no. But if you have a referral to go for herbal bath
treatments, those are deductible,” Crawford says. Vaccines, Vitamin B12 injections for those with pernicious anemia.
Renovation or construction expenses to accommodate people with mobility impairments within their own dwellings,
such as installing outdoor or indoor ramps, enlarging doorways, or lowering counters or cabinets.
Expenses that people may to try to claim but that aren’t deductible include:
Athletic or fitness club fees. Nonprescription birth control devices. Over the counter medications, vitamins, or supplements, even if prescribed by a medical practitioner. Diaper services. Organic food. Personal response services such as Lifeline or Health Line Services.
Elective cosmetic surgery. Expenses for purely cosmetic procedures including any other costs such as travel incurred
after March 4, 2010 cannot be claimed. Costs for surgical or nonsurgical reconstructive procedures as a result of an
illness, accident, trauma, or disfiguring disease, however, can be claimed.
Even in the era of electronic filing, people need to keep all receipts and documentation to support their claims, Crawford
notes. He suggests having a separate envelope for those papers and tucking them away throughout the year so that you’re
not scrambling come tax time.
CRA’s list of eligible deductions is always being revised, so Crawford suggests to keep checking in case an ineligible
medical expense you’re incurring now becomes deductible in the future.