Health Care in Canada: Medical Expenses, Often Forgotten Tax Breaks

Medical expenses mean that you or someone in your family has had to deal with health issues over a short or long period of time. The good news is there is some financial relief available to you in the form of often “forgotten” tax credits for medical expenses. Let's make sure you don't “forget” them by taking a closer look at the Medical Expense Tax Credit and the ways you can get the most from it.

The Medical Expense Tax Credit…

Is available to all Canadians and may be claimed for health-related expenses incurred by an individual, spouse (including common-law and same-sex spouses) or dependant.
You may claim allowable medical expenses paid in any 12-month period ending in 2005 and not previously claimed by you or anyone else – so it can pay to choose the 12-month period during which your medical expenses were highest.
Your total expenses have to be more than either 3% of your net income, or $1,844, whichever is less. In addition, there is a refundable tax credit (up to $750) for working individuals with low incomes and high medical expenses called the Refundable Medical Expenses Supplement.
Either spouse may claim expenses paid by the other and there may be a tax advantage to having the lower - income spouse claim all of the medical expenses.
You may also claim allowable medical expenses paid for specified relatives (children, grandchildren, parents, grandparents, siblings, aunts, uncles, nieces and nephews) who were dependant (even if not wholly dependant) on you for support at any time during the year.

Reasonable travel costs to and from medical treatment…

Can be included as medical expenses if the medical treatment is not available locally and you must travel more than 40 km. each way.
You can claim the cost of using your own vehicle, or charges for taxi, bus, train and other transportation services. If claiming for the cost of using your own vehicle, you may not include any amount for depreciation.
You may also claim for meals and, in some cases, accommodation.
If you require the assistance of an attendant when traveling (as certified by a medical practitioner), that person's travel costs can also be claimed. Receipts are required for all travel expenses, other than vehicle and meal expenses.
You have the option of choosing a detailed or simplified method to calculate your travel and meal expenses.

The simplified method allows you to claim:

Vehicle expenses by multiplying the number of kilometres by the rate specified by the Canada Revenue Agency (CRA) for the province or territory in which the travel begins.
Meal expenses at a flat rate of $15 a meal to a maximum of $45 per day, per person, without receipts.

If you are employed and a member of a group plan, you may include premiums you paid for private health insurance in your medical expense claim.

If you are self-employed, you can usually deduct premiums paid for a private health service plan for yourself and your family. It's usually more advantageous to deduct these premiums as a business expense rather than claiming them as a medical expense because you will get a higher tax benefit.

You deserve all the tax breaks you can get – so don't forget any of them. Professional advice can help make sure you pay only what you owe while keeping you firmly on the path to a secure financial future.

(Submitted by Damon Smith, Investors Group Financial Services Inc. For more information call 888.335.1362)

This column, written and published by Investors Group Financial Services Inc., is presented as a general source of information only and is not intended as a solicitation to buy or sell investments, nor is it intended to provide professional advice including, without limitation, investment, financial, legal, accounting or tax advice. For more information on this topic or on any other investment or financial matters, please contact your Investors Group Consultant.

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