Establishing if it is worth claiming medical expenses in your tax return.
Can you claim medical expenses in your personal or business Canadian tax filing?
The short answer is, yes.
Most medical expenses are deductible. You can source a list for common eligible medical expenses on the CRA website here (scroll down mid-way on the page for the interactive list). For a more comprehensive list, visit this page.
This can be a helpful way to reduce the amount of taxes you are responsible for paying.
Amounts you can claim
The CRA has set a threshold for claiming medical expense at either 3% of your net income or $2,635 (for the 2023 tax filing year) – whichever is lower. This means that once you have determined the full amount of eligible medical expenses you paid during the tax year you are filing for, you subtract either 3% of your net income OR $2,635 – whichever is lower.
For Example. If you had a net income of $50,000 and $3,500 in medical expenses, you would calculate the following:
A) Eligible medical expenses $3,500
B) 3% of Net Income is… $50,000 * .03 = $1,500
C) Amount in deduction you can claim …. $3,500 - $1,500 = $2,000
Since 3% of the net-income was less than the CRA threshold of $2,635 you would want to calculate your deduction based on the 3%.
For a comprehensive step-by-step guide to filling out Line 33099 and Line 33199 on your Federal Tax filing visit here.
What documents do you need?
While you do not need to include these documents within your tax filing, you do need to keep them in case the CRA asks for proof at a later date. They will also be helpful in calculating your eligible amount of medical expenses.
Receipts (detailing to whom the expense was paid)
Prescriptions (a medical practitioner can provide you with this)
Certification in writing (some medical expenses require written certification to support your claim)
Form T2201- Disability Tax Credit Certificate (for more information about this, visit here)
How do you claim eligible medical expenses?
This can be done on line 33099 or line 33199 of your tax return (Step 5 – Federal tax).
Line 33099 is utilized for medical expenses for:
yourself,
a spouse/common-law partner,
any dependant children under 18 years of age at the end of the tax year.
Line 33199 is utilized for medical expenses for other dependants:
children who were 18+
you or your spouse/common-law partner’s: parents, grandparents, brothers, sisters, uncles, aunts, nephews or nieces who were residents of Canada at any time in the tax year.
But is it all worth it??
Essentially this is decided by how large your eligible medical expenses were and your total net income for the year. By doing a quick bit of math prior to contacting your tax preparer, you can establish if the amount you paid is great enough to be financially beneficial for you.
Remember, if you are outsourcing your tax preparation and filing, the cost of their time spent calculating this could negate any deductions you receive. Or, your tax preparer could spend time to ultimately find out you don’t actually qualify for any deductions, which would then just be a negative cost to you in the end.
Things to keep in mind:
You can only claim the part of the expense that you are not reimbursed for (ie from a private health insurance)
Confirm your expenses qualify as eligible before sharing receipts or documentation to your tax preparer (if outsourcing your tax prep)
Either you or your spouse/common-law partner can claim the medical expenses for your family. The person with a lower net-income would be better placed to claim the eligible medical expenses.
Some helpful links relating to this topic:
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