We are approaching the end of tax filing season and a common issue is coming up again; what to claim for medical expenses? First, a brief history on medical expenses from my perspective.
Over the years medical expenses have stayed much the same, but have also changed in several ways. The basics are: medical expenses during a twelve month period ending during the taxation year, can be claimed to the extent that they exceed the lessor of 3% of net income and a stated amount that increases every year. In 2013 that amount is $2,152. For example, you can, for the 2013 taxation year, make a claim for expenses from February 1, 2012 to January 31, 2013 or any other twelve month period, as long as the ending date is in the calendar year 2013 and no more than twelve months. This allows you some flexibility to take advantage of separate periods where you may have bumps in medical expenses. In a practical sense, I find most clients prefer to use a calendar year for medical expenses.
At one time the claims for medical expenses were the same from province to province, but Canada Revenue was able to successfully appeal and reverse a lower court ruling that said all Canadians were to be treated equally. As a result even the federal portion of the medical claim is limited to the provincial list of approved expenditures. The result is some different deductions in provinces, such as an acupuncturist being allowed in British Columbia but not in Manitoba.
A major issue that I find every year is that clients are not aware of everything they are allowed to claim. For example, medical insurance premiums, prescription glasses, dental expenses, health insurance including travel insurance, flu shots, prescribed apparatus and renovations and mileage for distances of more than 40 kilometres per medically required trip are fairly often missed by clients..
I recommend to my clients that they bring in all medical related expenditures, unless they know it is not acceptable.
Not acceptable expenses include athletic or fitness club fees, birth control devices (non-prescription), blood pressure monitors, cosmetic surgery, expenses for purely cosmetic procedures including any related services. Both surgical and non-surgical procedures purely aimed at enhancing one’s appearance are not eligible. These non-eligible expenses include the following: liposuction, replacement procedures, filler injections (for removal of wrinkles), teeth whitening, diaper services, health plan premiums paid by an employer and not included in your income, health programs, organic food, over-the-counter medications, vitamins and supplements, even if prescribed by a medical practitioner, personal response systems such as Lifeline and Health Line Services.
An expense, including some of those identified above as non-deductible, may qualify as a medical expense, if it is necessary for medical or reconstructive purposes, such as surgery to address a deformity related to a congenital abnormality, a personal injury resulting from an accident or trauma or a disfiguring disease.
Terry Robert B.A., C.M.A., C.G.A.
Robert Accounting LLP
Certified General Accountants
Please note that this column deals with details and circumstances in a general way and comments are meant solely as a guide. For your protection, a professional accountant is recommended and should be consulted before making any decisions regarding anything discussed in this column.