Medical Expenses and Taxes – What Can You Claim?

October 2024

You may claim a tax credit for medical expenses when preparing your income tax return. How much is it worth to you? What qualifies as a medical expense? In my 45 years of doing tax returns, I consider the medical expense credit as the most common tax credit under-claimed by taxpayers, especially the mileage claims, out-of-province travel insurance premiums and assisted living costs for infirm residents.  Although this article is quite complex, we hope it is easier to read than the Canada Revenue Agency  Income Tax Folio – S1-F1-C1 available to you free from the Canada Revenue Agency  (CRA).  I also recommend their publication RC4065, Medical Expenses.  See the CRA Folio index for other medical and disability information.  If you pay someone to do your tax return based on time, read this article on how to Organize your Medical Receipts to save them time in trying to figure out all of your receipts.

If you have missed claims in past years, you are allowed to amend prior year returns for up to 10 calendar years after the error or omission.

First of all, you can only claim medical expenses after they exceed a certain amount. This threshold amount for the federal part of your tax return (Schedule 1) is either 3% of your net income as reported on your tax return, or $2,635 in 2023 ($2,759 in 2024), whichever is lower. For example, if your net income on your tax return is $40,000, you can deduct expenses in excess of $1,200. If your income is over $87,833 in 2023, you can claim any amount over $2,635. Provincial thresholds vary.  For example, for P.E.I. residents, the 3% formula is the same, but there is a different threshold.  For many years, the threshold has been $1,678 for P.E.I., which means that if your income is over $55,933, you can claim any amount over $1,678.  If you are preparing your tax return and you do not qualify to claim expenses on a federal basis because the amount is too low, remember to look at the provincial form also.

The medical expense is deductible based on when it was paid, not when the service was performed. If you pay a bill late, or by instalments (such as many parents do for large dental bills), your tax savings may be reduced. Your tax savings for medical expenses will be the amount of medical claim multiplied by the lowest federal rate of 15%, plus your provincial tax rate.  This will be approximately 20% to 25% of your qualifying expenses. For example, in P.E.I., if you pay $2,000 of medical costs, but the first $1,200 are not deductible, then the $800 that you can claim will save you tax of about $200 (15% + 9.8% = 24.8% of $800).  For certain low income taxpayers, the medical claim may result in a refundable tax credit, meaning that a tax refund is issued even if you have no taxes payable.   You may claim medical costs for you, your spouse or common-law partner or a dependent relative, which may include a child, grandchild, parent, grandparent, brother, sister, uncle, aunt, niece or nephew. I discuss dependants further below.

Note that medical costs for cosmetic procedures will not qualify unless required for reconstructive purposes. These non-qualifying costs include teeth whitening, hair replacement, liposuction and botulinum injections. Other costs that do not qualify include over-the-counter medications, non-prescription birth control devices, vitamins and supplements, health foods, emergency personal response systems and blood pressure monitors. Common expenses that qualify as medical expenses are listed below. In some cases, you need a prescription, and in other cases, you do not.  When in doubt, contact the Canada Revenue Agency for clarification, or visit the Canada Revenue Agency Web page discussing medical costs. Also, to help you organize your receipts, see my article titled Organize your Medical Receipts – Reduce Your Tax Preparation Fee.

1. Payments for prescriptions, minus any amounts refunded by a health insurance plan;
2. Premiums paid to a health insurance plan – whether paid privately or deducted from your wages.  Do not include life or disability premiums, only the medical, dental and vision;
3. Premiums paid for travel health insurance, such as out of country coverage;
4. Payments for vision care, such as checkups, eye glasses, contact lenses or eye surgery;
5. Payments for hearing aids, as well as hearing aid batteries (no prescription required);
6. Payments for dental work, including checkups, cleaning, surgery and other procedures;
7. Payments to qualified medical professionals. A publication by the Canada Revenue Agency (Income Tax Folio – S1-F1-C1 ) provides a sample list of professionals. Do not rely on this list because, as their publication states, the correct definition depends on “the laws of the jurisdiction”. Go to the CRA web site listing of authorized medical practitioners by province or territory for a list of qualified medical professionals for each province. For example, in some provinces, fees paid to a podiatrist, a massage therapist or a naturopathic doctor will not qualify.  However, these can change at anytime, so check annually.
8. Payment for attendant care for a patient who has a severe and prolonged mental or physical impairment.  Depending on your situation, you will need either a doctor’s letter or a Disability Tax Credit Certificate.  See the CRA publication, RC4064, Disability-Related Information.  Generally speaking, if a person qualifies for the disability credit, then you can claim either the disability credit or the attendant care fees for full-time care in the person’s home or for a nursing home, but not both. Note that the Income Tax Act, in paragraph 118.2(2)(b) and (c) says “remuneration for one full-time attendant”, but that phrase also includes multiple people providing care, not just one round-the-clock person.  CRA folio S1-F1-C1, starting at paragraph 1.31, provides more detail than I provide here. In addition, CRA states online in their description of tax return lines 33099 and 33199 for attendant care, “We consider care to be full-time when a person needs constant care and attendance.” A retirement residence, community care home or assisted living facility is not a nursing home.  All costs for a nursing home can be claimed, if applicable, but for people living elsewhere, only salary and wages paid for attendant care will qualify.  There are exceptions to this “either/or” rule.  If you are living at home or in a retirement home, then ITA paragraph 118.2(2)(b.1) in combination with ITA subsection 118.3(c) comes into play.  You can claim the disability credit and the attendant care fees where you claim only salaries and wages for the attendant, and claim no more than $10,000 of these salaries and wages ($20,000 in year of death).  If you pay wages, for example, of $15,000, you can choose to claim only the attendant care, only the disability credit, or $10,000 of wages plus the disability credit. For care paid directly, such as in your own home, you would know these figures.  Where you are claiming attendant care for an assisted living facility, that facility would need to provide you with a breakdown of their fees to allow you to determine the eligible amounts.  I have a more extensive discussion of these rules an my article titled  Caregivers of Parents and Tax Deductible Expenses.  While that article relates to caregivers, the medical descriptions are applicable to you or other dependants.  See the heading, “Attendant care and nursing home costs are medical expenses” in that article.  Finally, patients being cared for in a group home or at a training school may claim both the disability credit and attendant care expenses, if they qualify for both. See  RC4065, Medical Expenses for details and examples about this complex deduction.
9. Payment for the cost of full-time care in a nursing home for a patient who has a severe and prolonged mental or physical impairment. To qualify as a nursing home, there must be appropriately qualified medical personnel in attendance in sufficient numbers on a 24-hour basis. Receipts from the nursing home and a certificate from a medical practitioner (a medical doctor or a nurse practitioner) are required to support a claim for an expenditure of this nature. A letter is sufficient from a  medical practitioner when a patient’s mental capacity is the only issue.  Otherwise, a  Form T2201, Disability Tax Credit Certificate is required, i.e. for mental or physical incapacity.  See the CRA publication, RC4065, Disability-Related Information.  Costs for a community care facility may qualify as a payment for a “full-time attendant” if the institution will not qualify as a nursing home.  Also, see my article on Caregivers of Parents and Tax Deductible Expenses  for more information.
10. Travel to a location that is at least 40 kilometers away in order for the patient to receive medical services. This includes travel expenses for one individual to accompany the patient as long as the patient has been certified by a medical practitioner as being incapable of travelling without an attendant. See more details on qualifying travel expenses below.
11. Cost of purchase or rental of medical appliances, such as crutches, hearing aids and hearing aid batteries, wheelchairs, artificial limbs, products required because of incontinence (e.g., pads and special underwear), ileostomy or colostomy pads including pouches and adhesives used for the same purpose, compression stockings, etc.  Medical prescriptions may be required for some of these items, but not all of them (e.g., no for incontinence supplies but yes for compression stockings).  See the CRA Guide RC4065, Medical Expense to determine which items need prescriptions.
12. Under certain circumstances, the cost of house renovations, chair lifts, moving costs, special vehicles, etc. for individuals with mental or physical disabilities.  Again, I refer you to my article on Caregivers of Parents and Tax Deductible Expenses for a description.

A special “disability supports deduction” also exists for attendant care and long-term disabilities that differ from the medical expense credit, which should be investigated if the circumstances warrant it. This credit is available for personal attendant care and other disability supports expenses that allowed you to go to school or to earn certain income.  See the CRA publication, RC4065, Disability-Related Information.

Travel Costs for Medical Purposes

Patients must often travel to obtain their required services, and special rules relate to travel expenses that can be claimed. First, the travel must be at least 40 kilometers. Then, in order to qualify, equivalent medical services must be unavailable within the patient’s locality. Travel costs must be paid to a person engaged in the business of providing transportation services if one is readily available; otherwise, reasonable expenses incurred for operating a vehicle are accepted. A “per kilometer” amount may be claimed for actual automobile expenses based on a prescribed rate set annually by the government. For PEI, in calendar year 2024, it is expected to be 57.5 cents per kilometer, while in 2023, it was 56.0 cents per kilometer.  It varies by province; for example, NS in 2024 is expected to be 59.5 cents.   The rates are announced publicly by the CRA in mid to late January of the following year.  See the CRA web site for current prescribed rates.

For travel at least 80 kilometers away, other reasonable travel expenses may be claimed such as meals and accommodation for a patient and, where certified medically necessary by the doctor, for an accompanying individual. Receipts must be retained for accommodations, but a flat rate may be claimed for meals. This flat rate for 2023 is $23.00 per meal to a maximum of $69.00 per day.  For many years prior to 2020, it was $17.00 per meal, to a maximum of $51.00 per day.  This information is also available on the web site for current prescribed rates.  Amounts paid for lodging must be necessary because of the distance travelled, or because of the condition of the patient, and not solely for the sake of convenience.

Claims for Dependants

Who is a dependant? Based on Canada Revenue Agency published interpretations:

Generally, a person will be dependent for support on an individual if the individual has actually supplied necessary maintenance or the necessities of life, to the person on a regular and consistent basis. For example, when an elderly parent who is not wholly self-supporting because of mental or physical infirmity lives with a married child, and the child provides the necessary food, lodging, clothing, medical care, etc., the parent may qualify as a dependant of that child. In general terms, support involves the provision of the basic necessities of life such as food, shelter, and clothing. A person may be confined to a hospital for all or substantially all of the year because of mental or physical infirmity and the cost of hospitalization is paid by a provincial government. The latter fact, in itself, does not necessarily mean that the person was not supported by an individual. If expenses such as clothing, comforts, and medical premiums were paid by the individual (e.g. child) on those occasions when the dependant (e.g. parent) was able to be out of hospital, then, ordinarily, it is recognized that the individual supported that person.

 

In Technical Interpretation 2010-0381211I7, CRA clarifies that support must deal with provision of the basic necessities of life such as food, shelter and clothing, and can be financial or non-financial.  They state, “financial support” would involve money to acquire the basic necessities and the term “non-financial support” would refer to directly providing such things as shelter, clothing and food.  The nature and degree of the actions or contributions in each case will determine whether they constitute “support” of another person. However, they state that support does not include “visiting the dependent each day, providing moral support, preparing a meal and doing the person’s laundry and/or shopping.”

What can be claimed? First, medical costs for minor children are combined with those of the parents. For other dependants, you must know that dependant’s net income. You may claim expenses that exceed 3% of that dependant’s income (or above the limits as set earlier) on your tax return.  If your dependant qualifies for the disability tax credit and does not need that credit to eliminate their own income taxes, the unused portion of the credit can be transferred to you for use.

Claim Period

You may claim medical expenses on your tax return for any 12-month period ending in that year. Most people use the calendar year, but that is not necessary. For example, for 2023, if you wanted to do so, you could claim expenses paid from January 2, 2022 to January 1, 2023, which is 12 months. On the other hand, you could claim July 1, 2022 to June 30, 2023, or any other combination of 12 months. Look for the time frame with the biggest expenses, but also consider your expectations for the following year.  If you claim only part of the expenses on a particular day because you have eliminated all of your taxes, you can include that particular day again next year, as long as you never exceed a 12-month period and do not claim the same expense twice.  This sometimes happens when claiming nursing home costs, which are large expenses paid on a particular day.  If you missed some expenses in a prior year, you have up to ten years to ask for a correction.

Of course, I wish you and your family the best of health so you never have a deduction.  If this article was useful to you, or if you have suggestions, a brief email to me from my contact page would be helpful to know whether I should continue publishing it.

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Blair Corkum, CPA, CA, R.F.P., CFP, CFDS, CLU, CHS holds his Chartered Professional Accountant, Chartered Accountant, Registered Financial Planner, Chartered Financial Divorce Specialist as well as several other financial planning related designations. Blair offers hourly based fee-only personal financial planning, holds no investment or insurance licenses, and receives no commissions or referral fees. This publication should not be construed as legal or investment advice. It is neither a definitive analysis of the law nor a substitute for professional advice which you should obtain before acting on information in this article. Information may change as a result of legislation or regulations issued after this article was written.©Blair Corkum