Medical, Donation, and Other Tax Credits
Don’t forget to claim your medical expenses on your tax return.
You can claim a tax credit for medical expenses for any 12-month period ending in 2015. Just look for the consecutive 12-month period for which the sum of your medical expenses is the highest. Keep in mind, however, that you cannot claim medical expenses already claimed in the previous year.
You can add the medical expenses of your spouse and minor children to your own medical expenses. In addition, you can also add the medical expenses of certain other dependents subject to certain restrictions. In particular, caregivers are able to claim eligible medical expenses incurred in respect of a “dependent” relative if the caregiver pays medical or disability-related expenses of the dependent relative. For this purpose, a “dependent” relative is defined as a child who is 18 years of age or older, or a grandchild, parent, grandparent, brother, sister, uncle, aunt, niece, or nephew, who is dependent on the taxpayer for support.
In general, medical expenses include payments to private health insurance plans, fees to optometrists, opticians, dentists, medical doctors, and chiropractors, and the cost of prescription eyeglasses, contact lenses, medical lab tests, hospital services and treatments, prescription medicines, and medical devices such as artificial limbs and dentures. The above is not an exhaustive list of acceptable expenses. As well, medical expenses include reasonable renovation costs to an existing residence and incremental construction costs to make a new principal residence suitable for a disabled person, provided such costs would not normally be incurred by persons who are not disabled, and would not be expected to increase the value of the property. They also may include reasonable travel costs to obtain medical services not available where you live. You may not claim the specific portion of any medical expenses that have been reimbursed by a medical plan. Cosmetic procedures which are purely aimed at enhancing one’s appearance, including related expenses such as travel, which were incurred after March 4, 2010, are no longer eligible medical expenses.
For 2015, the tax credit is available only on the portion of the medical expenses that exceeds the lesser of 3% of your net income and $2,208 for federal tax purposes, and $2,066 for BC tax purposes.
As either spouse can claim the medical expense credit, it would generally be more beneficial for the lower income spouse to claim the medical expense and maximize the tax credit.
If you would like more information about claiming medical expenses, seek the advice of a Chartered Professional Accountant.
Where your net family income is less than $49,379 and you have claimed medical expenses on your tax return, you might be entitled to a refundable medical expense supplement of up to $1,172. You must be a resident of Canada throughout the year and 18 years of age or older at the end of the year to qualify.
The supplement is calculated as 25 per cent of your net medical expenses eligible for a non-refundable tax credit on Schedule 1 of your return. The amount of the supplement is reduced by 5 per cent of net family income in excess of $25,939.
No supplement is available where your income from employment and/or self-employment is less than $3,421.
The supplement is considered an amount paid on account of your taxes payable for the year. To the extent the deemed payment is not needed to reduce your taxes otherwise payable for the year to zero, it will be refunded to you.
Consult a Chartered Professional Accountant for more information.
You can claim all of your 2015 donations plus any donations made in any of the previous five years that have not been claimed already to an annual limit of 75% of your net income. The first $200 of donations are eligible for a tax credit calculated at 20.06% (federal and BC combined), and donations in excess of $200 are eligible for a tax credit calculated at 43.7% combined.
If you are married, consider claiming all of your donations on one spouse’s tax return. By claiming donations on only one spouse’s tax return, you avoid having the first $200 of donations subject to the reduced tax credit twice, saving you up to $47 of income tax.
If you are a first-time donor, the federal portion of the tax credit is enhanced by a further 25% for up to the first $1,000 of donations in the year. This “super credit” is only available in the year you make your first donation, so you may wish to consider accelerating next year’s donations into that first year to make sure you maximize the potential super credit. This super credit is also only available until 2017.
You don’t have to claim your donations made in 2015 in 2015. If, for example, you have other deductions sufficient to eliminate your taxes, then there is no benefit to claiming the donations in this year. Instead, carry forward your donations; they can still be claimed in any of the next five years.
You are required to attach the official charitable donation tax receipts to your tax return if you file a paper tax return. If you file your tax return electronically, retain your donation receipts because the Canada Revenue Agency (CRA) may ask for them later. Pledge slips, cancelled cheques, credit card slips, and other proofs of payment are not acceptable proxies for an official donation receipt. However, these documents may be requested by the CRA if your tax return is selected for review. If you have lost your official donation receipt, contact the charity for an official duplicate. Donations to foreign charities generally do not qualify for the charitable donations credit, but there are special rules to allow credits for donations to some US charities and certain other prescribed foreign charities.
Every receipt from a Canadian charity or athletic association must contain a statement that it is an “official receipt” for income tax purposes. The receipt must also conform to the prescribed format, and include the name of the organization, its address, the registration number assigned to it by the Minister of National Revenue, the date, and the amount of the donation.
Note that the Canada Revenue Agency administratively allows a taxpayer to initially choose which spouse or common-law partner will report a donation or gift and allows for the subsequent transfer of any carry forward balances from one spouse to the other spouse.
Consult a Chartered Professional Accountant to maximize your donation tax credit.