Are Medical Expenses Tax Deductible in Canada?

With the end of the year fast approaching, we thought it would be timely to discuss the medical expense deduction on your tax return.

In General, all eligible medical expenses can be claimed on your personal tax return, regardless of where they were incurred. If your insurance plan has reimbursed expenses, you can only claim the portion that was not compensated.

The only time criteria for expenses is that they can be claimed if paid within any 12-month period that ends in the current tax year and were not claimed in the prior year. Expenses for eligible dependants must be claimed for the same period.

The Medical Expense Tax Credit requires well-thought-out planning to get the most benefit. The first step in planning is to make sure you keep all medical receipts.

Can you receive credit for unreimbursed medical expenses?

You may receive credit for unreimbursed medical expenses exceeding a threshold. In 2022 that threshold was 3% of net income or $2,479, whichever was less.

What is the credit rate the government gives the Medical Expense Tax Credit?

The CRA allows the credit at the lowest marginal tax rate, which is 15%.

Provincially, tax rates will vary. In Ontario, the lowest rate is 5.05%. When added together, the lowest marginal tax rate in Ontario is 20.05%.

Can either spouse claim the credit?

Either spouse can claim the entire family’s medical expenses. Usually, the spouse with lower earnings would claim the credit because of their lower threshold.

Can you use the credit to reduce your taxes for the year?

As long as the expenses are from any 12-month period that ends in the tax year, you can.

Can you claim out-of-pocket medical expenses?

All eligible medical expenses you have not been reimbursed for may be claimable. Costs not covered by a health insurance plan would be a good example.

Can you claim out-of-pocket health insurance premiums?

Yes, providing:

• the plan is a private health services plan, and
• the plan pays for expenses not covered by your provincial government

You can claim only the portion you must pay for the premiums yourself. If your employer covers any amount, you cannot claim that amount.

What if I have to travel for medical treatment?

If you must travel more than 40 km to receive the medical treatment you are entitled to deduct travel costs.

Is cannabis deductible?

Yes, but it must be prescribed to be deducted.

The medical expenses credit is intended to help those with substantial medical claims. Over the years, the amount you save in taxes can add up.

Other times you can make a claim including expenses for a Deceased Person or other eligible dependants.

You can refer to and search the CRA website for eligible medical expenses.

If you have questions on what is eligible and what is not, you should contact our office for assistance when it comes time to file your tax return.