Medical Expenses and Deductions in Canada

Let's be real: no one enjoys paying medical bills. Whether it's a new prescription, a trip to the physio after a weekend warrior mishap, or just a routine dental cleaning, those expenses can add up faster than you can say "co-pay."

But here's a little secret from someone who spends a lot of time poring over tax forms (and who's firmly in their late 20s, navigating the joys of adulting with its occasional health hiccups): Canada has a pretty sweet system to help ease that financial burden through the Medical Expense Tax Credit (METC).

You might have heard whispers about "medical tax deductions," but it's more accurately a tax credit. And trust me, understanding the difference (and how to claim it!) can put some serious cash back in your pocket.

What Exactly Is the Medical Expense Tax Credit (METC)?

First things first: it's a non-refundable tax credit. What does that mean? It doesn't give you money back directly, but it reduces the amount of income tax you owe. So, if you owe $2,000 in taxes and your METC calculates to $500, you'd only pay $1,500. Pretty neat, right?

The federal credit is calculated at the lowest federal tax rate (currently 15%) on the portion of your eligible medical expenses that exceeds a certain threshold. Each province and territory also has its own version, layered on top, boosting the total credit.

Who Can Claim These Expenses?

This is where it gets interesting! You can claim eligible medical expenses for:

1. Yourself.

2. Your spouse or common-law partner.

3. Your dependent children under 18 at the end of the tax year.

4. Other eligible dependants, which can include your (or your spouse's/partner's) parents, grandparents, siblings, or adult children who were dependent on you for support.
   

Okay, So What Counts as an "Eligible" Medical Expense?

This is the big one! The CRA (Canada Revenue Agency) has a very specific list. Generally, if it's medically necessary and prescribed/administered by a healthcare professional, it's likely on the list.

Here are some of the most common ones that people often overlook:

• Prescription Medications: This is a no-brainer, but make sure you keep those pharmacy receipts!

• Dental Services: Braces, fillings, cleanings, extractions – as long as it's not purely cosmetic (think teeth whitening, veneers unless for specific medical reasons).

• Vision Care: Eyeglasses, contact lenses, eye exams, laser eye surgery.

• Practitioner Fees: Payments to doctors, dentists, nurses, physiotherapists, chiropractors, osteopaths, dietitians, psychologists, registered massage therapists (RMTs), and more. Make sure they are registered practitioners in their field.

• Hospital Services: Like a semi-private room, or specific medical procedures.

• Medical Devices: Things like crutches, hearing aids, wheelchairs, blood glucose monitors, insulin pumps, and even some specialized medical beds.

• Laboratory Tests: If they're not covered by your provincial health plan.

• Ambulance Services.

• Certain Travel Expenses: If you have to travel a minimum distance (e.g., 40 km) for medical care not available near your home, and certain conditions are met, you can claim public transportation or vehicle expenses.

Pro-Tip: Always check the CRA's comprehensive list (search "eligible medical expenses CRA"). It's surprisingly extensive, covering everything from attendant care to pacemakers!

What Doesn't Count (Common Mistakes!):

It's just as important to know what you can't claim to avoid disappointment:

• Over-the-Counter Medications: Unless they are prescribed by a doctor.

• Cosmetic Procedures: Unless they are medically necessary (e.g., reconstructive surgery after an accident).

• Health Plan Premiums: Provincial health premiums (like BC's MSP or Ontario's OHIP) are generally not eligible. Private health insurance premiums might be if they are specifically for medical or dental care.

• Gym Memberships or "Wellness" Programs: Unless prescribed by a doctor as treatment for a specific condition.

• Most Vitamins and Supplements: Unless prescribed by a medical doctor for a specific condition.
  

The "Threshold" & Optimizing Your Claim

Here's the tactical part: You can only claim the METC on the portion of your expenses that exceeds one of two amounts, whichever is lower:

1. 3% of your (or your family's) net income.

2. A specific maximum dollar amount set by the CRA for that tax year (for 2023, this was $2,635; it adjusts annually).

This threshold can be a bit tricky. For example, if your net income is $60,000, 3% is $1,800. If you only had $1,500 in medical expenses, you wouldn't hit the threshold, and thus wouldn't get the credit.

Strategic Grouping: You can claim medical expenses for any 12-month period ending in the tax year. This is HUGE! If you had a lot of expenses in late 2023 and early 2024, you can choose the 12-month period that maximizes your claim. For instance, you could choose a period from July 1, 2023, to June 30, 2024, and claim those expenses on your 2024 tax return.

Who Should Claim? In a family unit, it's usually beneficial for the spouse with the lower net income to claim all the eligible medical expenses for the family (themselves, their spouse, and their dependants). This is because the 3% threshold will be lower, meaning more of your total expenses will be eligible for the credit.

Your Best Friend: Receipts, Receipts, Receipts!

I cannot stress this enough: KEEP ALL YOUR RECEIPTS! The CRA absolutely can (and sometimes does) ask for proof of your medical expenses, even years after you've filed.

• Digital copies are fine – take a photo with your phone or scan them.

• Organize them by person and year. A simple spreadsheet tracking expenses as they happen can save you a ton of headache come tax time.
  

Don't Leave Money on the Table!

Medical expenses are often unavoidable. But by understanding the Medical Expense Tax Credit, you can soften the blow and ensure you're getting every dollar back that you're entitled to.

Take a few minutes, gather those receipts, and consult the CRA's official guides. If your situation is complex, or you have significant expenses, it might be worth talking to a tax professional.

Happy claiming! Your future self (and your wallet) will thank you.