Medical expenses for tax purposes

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An individual may claim a medical expense tax credit for the amount determined by the formula in subsection 118.2(1) in Income Tax Act. Under the formula, the lowest tax rate percentage (15% for 2019) is multiplied by the total of two calculated amounts. The first calculated amount relates to medical expenses paid in respect of the individual, the individual’s spouse or common–law partner and children under 18 years of age. The second calculated amount relates to medical expenses paid in respect of other dependents of the individual.

Say for example, that you have incurred $3,000 in total eligible medical expenses and your total income on line 236 is $51,000 from all the sources so according to the formula:
Medical expenses                                                                         $3,000
Minus lesser of 3% of 51,000 or $2,109 (annual threshold)                  -1,530
Subtotal                                                                                     1,470
Allowable medical expenses credits 15% of 1,470 = $220.50
Subsection 118.2(2) describes the types of medical expenses that are eligible for the medical expense tax credit. Additional requirements for paragraphs 118.2(2)(m) and (n) are provided in sections 5700 and 5701 of the Regulations, respectively. If a particular expenditure is not described in subsection 118.2(2) (or does not satisfy the additional requirements in sections 5700 or 5701 of the Regulations, here paragraphs 118.2(2)(m) or (n) as applicable, are relevant), the expenditure is not eligible for purposes of claiming a medical expense tax credit, even though the expenditure may have been incurred for medical reasons.
Gluten-free food
The incremental cost of acquiring gluten-free food products compared to the cost of comparable non-gluten free food products may be eligible medical expenses under paragraph 118.2(2)(r). The cost must be incurred on behalf of a patient who has celiac disease and who has been certified in writing by a medical practitioner to be a person who, because of that disease, requires a gluten-free diet.
Medical marihuana
If a patient is authorized to possess marihuana for medical purposes under the Marihuana Medical Access Regulations orsection 56 of the Controlled Drugs and Substances Act, the cost of the medical marihuana or marihuana seeds may qualify as medical expenses under paragraph 118.2(2)(u).
Cosmetic Procedures
An amount that may otherwise be an eligible medical expense described under subsection 118.2(2) may be denied pursuant to subsection 118.2(2.1) if the service was provided purely for cosmetic purposes.
Generally, all expenses claimed as eligible medical expenses must be supported by proper receipts. A receipt should indicate the purpose of the payment, the date of the payment, the patient for whom the payment was made and, if applicable, the audiologist, dentist, medical doctor, medical practitioner, nurse, occupational therapist, optometrist, pharmacist, physiotherapist, psychologist, or speech-language pathologist who prescribed the purchase or gave the service. A cancelled cheque is not acceptable as a substitute for a proper receipt. In addition to receipts, proof of payment or proof of support may be required in situations where an individual claims the medical expenses tax credit for amounts paid in respect of a dependant who is 18 years of age or older at the end of the year.

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Nafees Chaudhry

Nafees Chaudhry is the founder of CNC. Providing accounting, tax, and consulting services to small businesses and individuals for 23+ years.

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