Are you wondering which medical expenses are tax deductible, or whether certain benefits are taxable?
Other Internet users have asked the very same questions! Here they are, with the answers from our experts. They are grouped by subject:
Medical expenses
Group insurance
Medical expenses
Which medical expenses can I deduct on my income tax return(s)?
At the federal level, you are entitled to a 15% tax credit for medical expenses exceeding either 3% of your net income or $1,962, whichever is lower (2008 taxation year). In Quebec, the tax credit is 20% of total expenses exceeding 3% of family income.
This credit is calculated on any medical expenses incurred for you, your spouse, or your dependents and paid over a twelve-month period ending the year for which you are filing the return(s). Most expenses incurred outside Canada can be included.
The main eligible expenses are fees incurred in consulting physicians, dentists, psychologists, chiropractors, and naturopaths (including acupuncturists); fees paid to home healthcare workers; the cost of staying at a health care facility; contributions to Quebec prescription drug insurance.
Also included are premiums paid for a private health insurance plan. In Quebec, premiums paid by the employer are also deductible since they are considered a taxable benefit. This is not the case at the federal level.
Can I deduct premiums for my private health insurance?
Private health-plan premiums are considered medical expenses, as are expenses not reimbursed by your insurer (such as the deductible and co-insurance). Eligible expenses are equal to your total medical expenses less 3% of your net income. In Quebec, net family income is used, i.e., the income of both spouses combined, whereas federally, the income of the person claiming the credit is used.
For federal tax purposes, because net income is considered that of the person claiming the tax credit, it is better for the spouse with the lower income to claim the credit. In some cases, self-employed individuals can deduct their premiums from their business income.
Can I deduct my disability insurance premiums?
As a private individual, you cannot deduct disability insurance premiums. However, if you receive benefits from the insurer, they are nontaxable provided that your employer did not pay any portion of the premiums for this insurance. But if your employer pays a portion of the premiums, that portion is deductible for your employer and nontaxable for you. However, should you receive any benefits, the difference between the amount you received and the premiums you paid is taxable.
Can I deduct my travel expenses? I have to take my daughter to the ophthalmologist 100 kilometres away three or four times a year.
Reasonable travel expenses can be deducted as medical expenses if they meet the following criteria:
- If medical treatment is not available to you within 40 kilometres of your home, you may be able to claim the cost of travelling to get the treatment somewhere else.
- If you had to travel at least 80 kilometres from your home, you can deduct accommodation and meal expenses in addition to your travelling expenses.
- If the services are unavailable in the patient's immediate area.
- If the travel is reasonable and a direct route is taken.
- If the doctor certifies that someone must accompany the patient to the appointment, this person's travel expenses are also are deductible.
Since 1999, there have been two ways of calculating such expenses. The first method, called the simplified method, does not require you to provide any supporting documents. You just multiply the number of kilometres traveled by the prescribed rate for your province. You can get this rate from the Canada Customs and Revenue Agency. The second method is based on the actual expenses incurred.
The expenses described above do not include any fees paid to a transportation company. These are also eligible medical expenses, but are subject to different terms.
We suggest that you consult the Travel Expenses for Medical Expense section of the Canada Revenue Agency website for more information.
Group insurance
My employer pays a portion of my health insurance premiums. Am I taxed on this?
Depending on the level of government and the type of insurance, different employment benefits are considered taxable. The following charts list the tax treatment of the various types of insurance an employer may offer.
Federal income tax treatment (for all provinces and territories, including Quebec)
Provincial tax treatment (Quebec only)
1. For mental health assistance provided by a healthcare professional, including counseling for stress management or the use of tobacco, drugs, or alcohol, but excluding counseling services related to a new job or retirement.
2. Provided that the critical illness insurance is offered under a group illness or accident insurance plan but with premiums billed separately. The federal government does not consider critical illness insurance premiums paid by the employer to be taxable for the employee.