Every year, my accountant gently berates me: “There, Daniel, did you keep your medical bills? At my repentant grimace, she responds with a sigh.
Like most taxpayers, I am convinced that there is nothing to be gained from medical expense tax credits, and often is. So why bother with dentist and physio bills?
It takes a lot of “medical” expenses to take advantage of this credit. But don’t do like me and assume that you won’t get anything because you will end up leaving money on the table (like me).
A federal and provincial credit
The credit exists at both levels of government, federal and provincial. In both cases, we must accumulate a certain amount of expenses to benefit from this tax measure.
“The federal tax credit is much easier to obtain”, underlines the accountant Sylvain Fontenelle, partner in charge of the tax department at the firm MTA.
To qualify, medical expenses must exceed the LOWER of these two amounts over a 12-month period: $ 2,397 or 3% of net income.
If you report $ 50,000 in income, for example, the medical expense threshold to take advantage of the credit must exceed $ 1,500 ($ 50,000 x 3% = $ 1,500). If our income rises to $ 100,000 instead, then we should use the cap of $ 2,397.
The federal credit represents 15% of spending over this limit. In Quebec, it is a little lower (12.5%) because of the tax abatement.
For a taxpayer who earns $ 50,000 and has spent $ 5,000 on medical care, the credit entitles him to $ 375 ($ 5,000 – $ 1,500 = $ 3,000; $ 3,000 x 12.5% = $ 375).
If his income had been $ 100,000, he would have received $ 325.37 ($ 5,000 – $ 2,397 = $ 2,603; 2,603 x 12.5% = $ 325.37).
More difficult in Quebec
No, we are not talking here about a very generous tax gift given the expenses. However, one can consolidate the family’s medical expenses and apply the credit on the individual income of one of the spouses, ideally the one who earns the least.
“This is the big difference with the provincial credit, notes Sylvain Fontenelle. In Quebec, we can collect all the family expenses, but the credit will be calculated on the household income. “
Another difference is that the threshold beyond which the credit applies is not capped at the provincial level, it is 3% of family income, regardless of the latter.
On the other hand, when it takes effect, the Quebec credit is more generous, at 20% (instead of 12.5% at the federal level).
Dental care, vision care, physio, examination fees, orthopedic device, crutches, travel expenses … the list of eligible expenses is still very extensive. It also includes group insurance premiums and drug insurance premiums paid to the RAMQ.
On the site canada.ca, the federal government lists more than 100 eligible medical expenses. Revenu Quebec for its part published a document of about thirty pages detailing the expenses accepted.
When you never deign to keep your invoices for your kind accountant because every year it doesn’t work, you end up forgetting the existence of this credit. And we miss the year when we would be entitled to it. This is the danger.