Lucrative Tax Claims: Medical Travel and Home Modification Costs

Tax season is officially over for most individuals, and that signals the start of tax audit season. 

One of the most common problem areas is medical expenses, especially because claims incurred for medical travel and modifying your home to accommodate a disabled person can be quite lucrative.  But you’ll need to know what documentation to keep to satisfy the tax auditor.

Travel Expenses for Medical Reasons

A taxpayer may claim travel expenses for the patient and one attendant who must travel 40 km or more to receive medical services not available in their community. If the taxpayer is required to travel more than 80 km from their place of residence, then travel expenses may include hotel and meal costs. Actual receipts can be used for costs of travel including gas, hotel and meals. 

Alternatively, you can claim vehicle expenses using a simplified method based on a rate per kilometre. This method does not require receipts to be kept for vehicle expenses, only a record of the number of kilometres driven.  Interesting tax trivia:  If more than one province is involved, the rate is calculated based on the province in which the trip began.

Home Modifications as Medical Expenses

The incremental costs of building a new home, or modifying an existing home, for a patient who is physically impaired or lacks normal physical development can be claimed, but only where those costs are incurred to enable the patient to gain access to, or be functional within, the home. However, the CRA does provide a pre-cautionary note:  the expenditure must not be of a type simply intended to increase the value of the home, or include an expense that would not typically be incurred by someone who was not impaired.  There are three other types of claimable expenses you may wish to take note of:

• Driveway Alterations - If a person with a mobility impairment alters the driveway of their residence to facilitate access to a bus, those costs can be claimed.
• Van Adaptations - An individual who requires a wheelchair can claim the lesser of $5,000 or 20% of the cost of a van that has to be adapted for transportation.
• Moving Expenses - For a disabled person to move to a more suitable dwelling, to a maximum of $2,000.

In the latter instance, don’t forget that the disabled  person becomes a “first time” homebuyer for the purposes of the RRSP Home Buyers' Plan; that is,  if alternative accommodations must be acquired as a result of the disability.  This will allow the family to tap into RRSP funds tax-free if they have to move from a two-storey house to a bungalow, to accommodate new mobility needs, for example

When it doubt, consult with a DFA - Tax Services Specialist. This is a wise move that can unlock the door to new money to help pay for some of these expensive costs of lifecycle change.

Evelyn Jacks is President of Knowledge Bureau, a national educational institute focused on excellence in financial education and professional development in the tax and financial services.