Plan your medical expense claims and maximize tax savings in Canada.

Medical expense claims can make a big difference on your tax return. But many Canadians, especially Albertans, don’t take full advantage of these potential savings. This guide will help you understand if claiming medical expenses is worth your time, what expenses qualify, and how to maximize your tax credits.

Let’s tackle the question head-on: is it worth claiming medical expenses on taxes in Canada? For many Albertans, the answer is yes – but it depends on your specific situation.

Understanding Medical Expense Claims in Canada

Medical expenses are costs you pay for healthcare services that aren’t covered by provincial health plans or private insurance. The Canadian tax system allows these expenses to be claimed as non-refundable tax credits, reducing the amount of tax you owe.

For Albertans, this can be particularly valuable. Alberta’s healthcare system, while comprehensive, doesn’t cover everything. Dental care, prescription medications, and many specialized services come out of pocket.

The medical expense tax credit exists to help offset these costs and provide some financial relief when health issues arise.

Eligibility Criteria for Claiming Medical Expenses

To claim medical expenses on your Canadian tax return, the expenses must be:

• Paid within a 12-month period ending in the tax year
• Not claimed in the previous tax year
• Paid by you or your spouse for yourself, your spouse, or your dependents
• Not reimbursed or eligible for reimbursement
• Supported by receipts

Eligible expenses include:

• Prescription medications and vaccines
• Dental services
• Eye exams and glasses
• Hospital services
• Medical devices and equipment
• Travel expenses (if you must travel more than 40km for treatment)
• Home renovations for medical purposes

For Alberta business owners, you can claim medical expenses for yourself and your family members, even if your business structure is incorporated.

The Thresholds and Limits in Medical Expense Claims

Here’s where things get technical. Medical expenses are subject to a threshold based on your net income. You can claim the total eligible expenses minus the lesser of:

• 3% of your net income, or
• $2,759 for 2024 (this amount is indexed annually)

For example, if your net income is $70,000, your threshold would be $2,100 (3% of $70,000). This means you can only claim medical expenses that exceed $2,100.

For Alberta business owners: If you’re self-employed, you can choose the 12-month period that gives you the largest claim. This flexibility can be valuable for tax planning.

Is It Worth Claiming Medical Expenses on Taxes in Canada?

The answer depends on several factors:

Your total medical expenses: If your expenses barely exceed the threshold, the benefit may be minimal. But if you have significant medical costs, the tax savings can be substantial.

Your income level: The threshold is tied to your income, so higher-income Albertans need more expenses to benefit.

Your tax situation: The medical expense tax credit is non-refundable, meaning it can reduce taxes owed but won’t generate a refund if you don’t owe taxes.

Let’s look at an Alberta example:

Sarah from Calgary has a net income of $80,000 and $5,000 in medical expenses. Her threshold is $2,400 (3% of $80,000). She can claim $2,600 in medical expenses ($5,000 – $2,400). At Alberta’s combined federal/provincial tax rate, this could save her approximately $650 in taxes.

For many Albertans with ongoing medical needs or one-time significant expenses, claiming medical expenses is definitely worth it.

Maximizing Potential Tax Credits on Medical Expenses

To get the most from your medical expense claims:

• Choose the right person to claim: Usually the lower-income spouse should claim all family medical expenses to maximize the credit.
• Pick the optimal 12-month period: You can choose any 12-month period ending in the tax year.
• Bundle expenses: Consider scheduling elective procedures in the same 12-month period to exceed the threshold.
• Keep detailed records: Maintain an organized file of all medical receipts and documentation.

Alberta residents should also check if they qualify for additional provincial programs like the Alberta Adult Health Benefit or the Alberta Child Health Benefit, which can provide coverage for some expenses.

Tips and Strategies for Albertan Business Owners

If you own a business in Alberta, consider these strategies:

• Health Spending Accounts (HSAs): These allow incorporated business owners to convert personal medical expenses into tax-deductible business expenses.
• Private Health Services Plans (PHSPs): Similar to HSAs, these plans can be set up by business owners to provide tax-effective health benefits.
• Timing of income and expenses: Coordinate your income recognition and medical expenses to maximize tax benefits.

For example, an Alberta business owner with a corporation can set up an HSA that covers $5,000 in family medical expenses. The corporation deducts this amount as a business expense, and the owner receives the benefit tax-free – a much better outcome than claiming the expenses personally.

Common Pitfalls and How to Avoid Them

Watch out for these common mistakes:

• Missing eligible expenses: Many Albertans don’t realize items like gluten-free food (for celiac disease) or air purifiers (with prescription) can qualify.
• Incorrect time period: Failing to optimize your 12-month claim period.
• Claiming reimbursed expenses: You can only claim the portion you paid out of pocket.
• Poor documentation: Keep all receipts and medical documentation organized.
• Overlooking travel expenses: If you travel more than 40km for medical treatment, track those costs.

Many Albertans miss out on claiming attendant care expenses or home renovation costs related to medical needs – these can be significant.

Conclusion: Making Informed Tax Decisions in Alberta

So, is it worth claiming medical expenses on taxes in Canada? For most Albertans with significant medical costs, yes. The savings can be substantial, especially when you understand how to maximize your claims.

The key is keeping good records, understanding the thresholds, and planning your medical expenses strategically. For business owners, exploring options like Health Spending Accounts can provide even greater tax advantages.

Remember that tax rules change, and your situation is unique. Contact our team at Myers Tax for personalized advice on optimizing your medical expense claims and overall tax strategy. We specialize in helping Alberta businesses and individuals minimize their tax burden while staying fully compliant with CRA requirements.

With proper planning, your medical expenses can do more than support your health – they can improve your financial well-being too.