2016 Tax Credit for Medical ExpensesLinkedIn
There, in black and white
NB Bulletin Vol. 20 N. 6, February 2017
For the 2016 tax year, a tax credit ranging from 4% to 20% of incurred medical expenses(1) could be granted to Canadian taxpayers. The credit is subject to certain conditions and depends on the province or territory of residence.
Compared with 2015, besides the indexing of the minimum threshold to qualify for a tax credit in certain provinces and territories, and the credit rate increase in Newfoundland and Labrador, no changes have been made in relation to the tax credit calculation or to the eligible expenses.
To consult the information bulletin published by Normandin Beaudry in 2016, click here.
Below are a few examples of eligible medical expenses (maximums may apply). Please note that tax credits cannot be claimed for the portion of eligible expenses that is reimbursed through an insurance plan.
For a complete list of eligible expenses, consult Document RC4065 "Medical Expenses 2016" issued by the Canada Revenue Agency. For residents of Quebec, consult Brochure IN-130 "Medical Expenses" issued by the provincial government.
Taxpayers can claim tax credits for eligible medical expenses for themselves and for their spouse and their dependent children under 18 years of age. If applicable, taxpayers may also include medical expenses for their other dependents, i.e. individuals that they supported and that lived with them, or were dependent on them because of a disability. A dependent can be a child of 18 years of age or older, a parent or almost any other individual related to the taxpayer.
To qualify as eligible expenses, the medical expenses must have been paid during a period of 12 consecutive months ending in 2016. Medical expenses paid in 2015 can thus qualify as long as the time between the payment of the first expenses claimed and the payment date of the last expenses does not exceed 12 months. Expenses submitted for a tax credit must not have been used in the 2015 tax return and must have been paid no later than December 31, 2016.
(A) 3% of the taxpayer's net income for the tax year
It is important to note that credits in excess of the amount of the income tax to be paid are not reimbursed (non-refundable credits).
We invite you to read the next section to learn about aspects specific to each province and territory, especially Quebec.
Specific aspects by province and territory
At the federal level and in the rest of Canada, excluding the province of Quebec, taxpayers must declare separately their medical expenses (including medical expenses for their spouse and dependent children under 18 years of age), and their medical expenses for other eligible dependents. The total eligible medical expenses for other dependents must therefore exceed the lesser of the previous amounts of each dependent's net income.
Other aspects pertaining to eligible expenses and the tax credit calculation are specific to the taxpayer's province or territory of residence. Therefore, it is important to always consult the appropriate income tax guide.
For example, the threshold to qualify for a tax credit in 2016 (see B of the previous section) is $2,237 at the federal level and varies between $1,637 and $2,384 for provinces and territories. Although expenses incurred by dependents other than the spouse and dependent children under 18 years of age are no longer subject to a maximum (at the federal level and in most provinces and territories), a maximum continues to apply in Ontario ($12,214) and in the Northwest Territories ($5,000). Moreover, medical expenses used to calculate the amount claimed for medical expenses on a taxpayer's tax return cannot be used on the spouse's tax return. Please note that it may be advantageous to claim all of the medical expenses on the tax return of the spouse with the lower income.
Quebec tax credit calculation
Unlike elsewhere in Canada, in Quebec, a single tax credit applies to the taxpayer and all of his or her eligible dependents.
To qualify for a tax credit, the total eligible medical expenses must exceed 3% of the family income. There is no maximum credit for each dependent. Thus, in Quebec, there is no tax benefit to claiming all of the medical expenses on the tax return of the spouse with the lower income. Moreover, medical expenses used to calculate the amount claimed for medical expenses on a taxpayer's tax return cannot be used on the spouse's tax return.
The information presented in this bulletin does not constitute an official opinion for tax purposes. For more information regarding tax returns, please consult a tax professional or visit the Canada Revenue Agency website at cra-arc.gc.ca and the Ministère du Revenu du Québec website at revenuquebec.ca.
(1) Lines 330 and 331 of the federal tax return, line 381 of the Quebec tax return and lines 5868 and 5872 of the other provincial and territorial tax returns.
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