Medical Expenses: Travel, Moving and More

Ruth Horst

Did you know that total health care spending in Canada is estimated at over $9,000 per person and is estimated by Health Canada to be between 10.9% and 13.4% of the Gross Domestic Product (GDP), and that the average out-of-pocket health care cost was $1,189 per capital in 2022.  With a shrinking GDP on the horizon through a potentially recessionary period ahead, it’s important to know which of the numerous out-of-pocket expenses will qualify for the Medical Expense Tax Credit (METC) claimed on Line 33099 of the T1 General tax return.  Today, we discuss medical travel costs, moving for medical reasons and other medical deductions you don’t want to miss on your tax returns. Here’s an overview:

Medical Travel: If a taxpayer is required to travel more than 40km (one way) for a medical service or treatment which is not available closer to home, the cost of travel may be deducted. This includes travel by taxi, bus, or train. If public transit is not readily available vehicle expenses may be claimed. For medical travel, similar to Moving Expenses, the per kilometer rate set by CRA may be used.

If the taxpayer is required to travel at least 80km (one way) for a medical service or treatment which is not available closer to home, in addition to the travel costs, claims for accommodation, meals and parking may be claimed. The simplified method for meals may be used.

If a medical practitioner certifies that the patient is not able to travel alone, the costs incurred by an attendant may also be claimed.

If the taxpayer also qualifies for the Northern Residents Deduction, they may choose whether to claim their medical travel expenses on Line 25500 or on Line 33099.

It is important to note that Medical Travel Expenses may include travelling outside Canada. If the medical services are not available in Canada or perhaps the wait times in Canada are too long then the travel expenses may be allowed as well as the cost of the procedure.

Medical Moving: Reasonable moving expenses to move someone who has severe and prolonged mobility impairment or who lacks normal physical development to housing that is more accessible or housing that allows the individual to be more mobile or functional are deductible. The claimable amount is limited to $2,000 federally. A person moving into long-term care would qualify for this deduction, given that there is a cost involved in the move.

Health Premiums: Premiums paid to insurance companies for Health & Dental coverage are deductible for any portion paid by the taxpayer. Some employers have plans that require the employee to pay some or all of the cost of the premiums. These will be reported in Box 85 of the T4. Some taxpayers purchase their own plans. Premiums paid for Out of Province or Out of Country Travel Insurance are also deductible.

Remember that those without group medical coverage for dental services might qualify for the Canada Dental Care Plan if family net income is under $90,000.  Check that out!

More Medical Deductions: There are many deductions that are often overlooked; some of the more obscure ones to be discussed next time.

The Bottom Line: There are many expenses that qualify for the METC so make sure to consult with your Tax Services Specialist and ask pointed questions about your out-of-pocket costs so that no deductions are missed.

Audit alert:  High METC claims are routinely audited by the CRA so it is important to have thorough documentation including receipts, letters from medical practitioner and medical records to support the claims. All expenses must be paid out-of-pocket and not reimbursed by insurance.

Every advisor and their client can learn more by taking Knowledge Bureau’s Income Tax Fundamentals Course.  It’s the best 20 hours of online training you’ll take for your financial literacy and it results in a certificate and 20 CE credits, too.  You’ll learn with expert instruction you can listen to as well.