Out-of-pocket medical expenses can be claimed as a non-refundable tax credit on your personal tax return, which is used to reduce the total tax payable. Non-refundable tax credits save tax at the lowest personal tax rates (15% federal and 5% in Ontario).
An individual is eligible to claim medical expenses for themselves, their spouse/common-law partner, and children under the age of 18, as well as medical expenses paid for certain family members that rely on the individual for support (children over 18, parents, grandparents, brothers, sisters, uncles, aunts, nephews, or nieces provided they are Canadian residents at any time during the year).
The total amount of medical expenses is reduced by 3% of net income for the year from line 23600, up to a maximum of $2,397 (for 2020). For example, if your net income is $100,000 and you have $5,000 of medical expenses, the actual amount eligible for a non-refundable tax credit is $5,000 - $2,397 = $2,603. This non-refundable tax credit would apply at the rate of 20% (for an individual in Ontario) or $520.
Some of the more common medical expenses consist of:
Only the amount paid out of pocket can be claimed (for example, if a company group benefits plan reimburses the expenses, they cannot be claimed).
Medical expenses do not have to be incurred in Canada to be eligible, however there are certain restrictions with respect to what can be claimed if the medical treatments were received in a foreign country and what travel expenses can be claimed.
* If an individual requires attendant care and/or lives in an assisted living facility, there are certain conditions including the individual’s eligibility for the disability tax credit that would impact the amount of expenses eligible that can be claimed.
Lines 33099 and 33199 – Eligible medical expenses you can claim on your tax return
Income Tax Folio S1-F1-C1, Medical Expense Tax Credit
Ward & Uptigrove