How do you claim income tax medical expenses?

Posted by K. F. on February 4, 2021

Every tax year, Canadians can apply for the Medical Expense Tax Credit (METC) to claim their personal medical expenses. In this article, we'll explore what you need to know in order to claim these expenses.

 

What medical expenses can be claimed on your tax return?

There is a vast array of eligible medical expenses. Dental, vision, and prescription drugs are the most common categories of expenses.  Paramedical services such as massage and physio therapy are eligible.  Private medical insurance premiums can be claimed as well.  Specialized medical treatment including in-vitro fertilization is eligible.

A general rule of thumb is that most medical expenses are eligible if they are not purely cosmetic in nature.  Keep in mind you will need documentation in the form of receipt, prescription, and / or a certification in writing from a medical practitioner.  Remember to safeguard your original documentation in case the Canada Revenue Agency (CRA) asks to see them during an audit.

 

What is the income tax medical expenses limit?

There is no limit per se.  There is however a specific formula to determine the amount of credit you will receive.  The first step is to take the lesser amount of 3% of your net income or $2,397.  In effect, this number becomes your deductible.  You then apply the lowest marginal tax rate in your province to the amount that exceeds this deductible. 

Here's an example of an individual in Alberta with a net income of $100,000 and $4,000 in medical expenses.  As $2,397is smaller than $3,000 (3% of $100,000), $2,397 becomes the deductible.  In other words, only the expense value that exceeds this amount will be eligible.  Next we determine the amount that exceeds our deductible: $4,000 - $2,397 = $1,603.  We then take $1,603 and apply the lowest marginal tax rate in Alberta (25%).  $400.75 would be the total amount of the credit.  Note that if this individual spent less than $2,397, no credit would be available.   Also, the METC is not a tax rebate for medical expenses - it is a credit towards taxes owed.

Check your credit with our Medical Expense Tax Credit calculator.

 

How much can you claim for medical expense travel mileage?

Meal, vehicle, and accommodation expenses related to medical expenses can be eligible.  Please read this article for more details on how to claim medical travel expenses.

 

Do medical expenses carry forward?

Unfortunately medical expenses cannot carry forward.  You can claim medical expenses for a 12 month period in each year.  You may file a tax amendment to previous returns if you have previous unclaimed medical expenses.

 

Are dependants eligible for medical expense deductions?

You can claim eligible medical expenses for the individuals you file as dependants on your tax return.

 

Are you an incorporated professional?  Discover a Health Spending Account and learn how to deduct 100% of your personal medical expenses.

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