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Normandin Beaudry

Non-refundable tax credits for medical expenses

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There, in black and white

Bulletin NB Vol. 11 N. 1, February 2008

Once again this year, Normandin Beaudry is informing Canadian taxpayers about non-refundable tax credits for medical expenses that can be claimed on income tax returns. This document is a complement to our March 2005 bulletin (Vol. 8, No. 4). As with the Information Bulletins issued in previous years, this bulletin presents the annual updates applicable to the parameters used to calculate the tax credit. It also highlights the key changes that will impact expenses that qualify for this tax credit.

Modifications to eligible expenses

The Ministère du Revenu du Québec amended section 7 of its reference document, which deals with transportation and travel expenses. Reasonable expenses incurred for operating a vehicle now qualify as medical expenses if the transportation service is not readily available. The distance to travel to obtain medical services unavailable within the locality where the patient lives must be at least 40 kilometres.

No other major changes have been made to the federal and provincial lists of eligible medical expenses that were used for 2006 tax returns. Minor changes, introduced only to facilitate understanding, have been made to some portions of the Quebec reference document.

Some examples of eligible medical expenses are listed in our bulletin issued in March 2005 (Vol. 8, No. 4). Please visit the websites mentioned at the end of this bulletin for a complete list of eligible expenses.

Federal Tax Return and Provincial Tax Return - provinces other than Quebec

Taxpayer, spouse and dependent children under 18 years of age
(line 330 of the federal tax return, line 5868 of the provincial tax return)

To qualify for a tax credit, the total eligible medical expenses must exceed the lesser of the following amounts:

  • Federal:
    • 3% of net income (line 236); and
    • $1,926 ($1,884 in 2006).
  • Provincial:
    • 3% of net income (line 236 of the federal tax return); and
    • A fixed amount that varies between $1,630 and $1,994 according to the province or territory of residence (difference of $69 or less from 2006 depending on the province or territory).

Because net income is determined individually for each spouse both federally and provincially, it may be advantageous to claim all of the eligible medical expenses on the tax return of the spouse with the lower net income.

Other dependents

(line 331 of the federal tax return, line 5872 of the provincial tax return)

You can also claim a tax credit for medical expenses paid by yourself or your spouse for the following individuals, provided that the individuals are your dependents or the dependents of your spouse:

  • Your or your spouse's children over 18 years of age and grandchildren;
  • Your or your spouse's parents, grandparents, brothers, sisters, uncles, ants, nephews and nieces who resided in Canada at any time during the year.

Unlike the calculation in the previous section, a separate calculation must be done for each of these dependents, using the particular dependent's net income. An example illustrating the calculation method is provided on page 44 of the federal General Income Tax and Benefit Guide.

It is important to note that the maximum credit for each dependent is $10,000 at the federal level and varies at the provincial level based on the province of residence. Thus, the maximum credit for New Brunswick and the Northwest Territories is $5,000, the maximum for Alberta is $10,577 and the maximum for Ontario is $10,435. The maximum credit for all other provinces is $10,000.

Provincial Tax Return - Quebec

(line 381)

A single tax credit calculation applies to all eligible dependents, as described above for lines 330 and 331 of the federal tax return.

To qualify for a tax credit, the total eligible medical expenses must exceed 3% of the family income. Family income is defined as the sum of the amounts on line 275 of the taxpayer's and the spouse's tax returns. Thus, unlike the federal tax return, there is no tax benefit in claiming all of the medical expenses on the tax return of the spouse with the lower income.

Additional Information

To be considered eligible by any government authority (including the Government of Quebec), the medical expenses must have been paid over a 12-month consecutive period ending in 2007. Therefore, expenses paid in 2006 can be considered provided that the period separating the payment date for the first expenses submitted and the payment date for the last expenses submitted does not exceed 12 months. Of course, all expenses for which a credit claim is submitted must not have been submitted for the 2006 tax return and must have a payment date of December 31, 2007 or before. Please note that the portion of medical expenses that is reimbursed under an insurance plan does not qualify as an eligible expense. The health insurance premium paid by the employee, as well as the portion paid by the employer in Quebec, can, however, be included in the eligible expenses.

 Please note that the information presented in this bulletin does not constitute an official opinion for tax purposes. For more information on tax returns, please consult a tax professional or visit the following government websites:

Canada Revenue Agency: www.cra-arc.gc.ca
Ministère du Revenu du Québec :www.revenu.gouv.qc.ca

 

Please feel free to contact us for additional information.

514.285.1122
 
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Montreal, Quebec, H3B 1S6