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TAXFlash News from IncomeTaxCanada.net
:: Know what qualifies as a medical expense credit
:: Maroney on Money for April 13, 2002 In my last article, I stressed the importance of understanding how the medical expense credit works in order to make the most of your medical expenses. Equally important, of course, is to know what is and isn’t a qualifying medical expense. The most obvious medical expenses include payments to medical practitioners, dentists and nurses. In addition to medical doctors the term medical practitioner can include the services of a chiropractor, osteopath, optometrist, audiologist, physiotherapist, psychiatrist, psychologist, speech therapist and others provided they are licensed to practice according to the laws of the jurisdiction in which the service is rendered (i.e., B.C. in our case). Equally obvious is the fact medical expenses include the cost of prescriptions. But notice the operative word here is prescription. This means the item purchased must be prescribed by a medical practitioner or dentist and purchased from a pharmacist who has recorded the prescription in a prescription record. This rules out most, if not all, of the herbal type remedies that are so popular these days. If, whatever it is you’re taking, wasn’t prescribed by a medical practitioner, then it’s not a qualifying medical expense no matter how spectacular the results may be. On the testing side, medical expenses include payments made for laboratory exams and medical tests including blood tests, cardiographs, urine analysis and x-rays. On the treatment side you can include blood transfusions, hydrotherapy, injections, insulin treatments, pre and post-natal treatment and speech pathology or audiology. Payments for physical things like eyewear, hearing aids (including the numerous batteries these devices devour), crutches, braces, artificial limbs and even diapers required by persons who are incontinent by virtue of illness, injury or affliction (in other words, big people diapers and not diapers for babies). Other medical devices prescribed by medical practitioners can also qualify including: heart monitoring devices, hospital beds if required in the home, orthopedic footwear, wigs, speech synthesizers, television closed caption decoders for the deaf and a whole host of mobility aids including devices designed to assist a person in walking, to get into a tub or shower, on or off a toilet, into or out of a vehicle and so on. Still on the topic of mobility, conventional arm-powered or battery-powered wheelchairs are qualifying medical expenses, so too are the increasingly popular scooters that come in all shapes and sizes. Where scooters are concerned, CCRA has seen fit to draw the line at all terrain vehicles (ATV) as witnessed in a recent request by a taxpayer to have his ATV considered an allowable medical expense. The costs of acquiring and the care and maintenance (including food and veterinary care) of an animal qualify as medical expenses provided the cost is be paid on behalf of a patient who is blind, profoundly deaf or who has a severe and prolonged impairment that markedly restricts the use of the patient's arms or legs. Not any old mutt will do - the animal must be specially trained to assist a patient in coping with his or her impairment and the animal must be provided by a person or organization one of whose main purposes is the training of animals for this purpose. Also included in this category are reasonable expenses incurred to attend a training facility to learn how to handle the animal. Alteration type expenses can be qualified medical expenses. These include reasonable expenses relating to renovations or alterations to a dwelling inhabited by person with a severe and prolonged mobility impairment. Likewise, incremental expenses incurred in the construction of a new principal residence of such a person will also qualify as a medical expense.
Medical Expenses vary with access to facilities and type of treatmentAt least for the time being, we’re fortunate here in Maple Ridge to have our own, readily accessible hospital. For those less fortunate, the cost of commercial transportation (taxi cabs, buses, trains etc.) can be included as a medical expense where the patient has to travel more than 40 kilometres to obtain medical services. If public transportation is not readily available and you make use of your own vehicle, CCRA publishes prescribed mileage rates to calculate your transportation expense claim. For 2001, the rate applicable to B.C. is 42 cents per kilometre. Not surprisingly, you’re expected to take a “reasonably direct route”. A trip via Hawaii won’t pass mustard. Where the distance traveled exceeds 80 kilometres, you can include the cost of meals and accommodation for the patient and even an accompanying individual if certified as necessary by a physician. Medical expenses are not restricted to those paid in Canada. Expenses incurred outside of Canada can also qualify, a fact you’ll appreciate if you’ve ever needed medical treatment in the U.S. or elsewhere during holidays, for example. I recall back in the 1980s dealing with a situation where a taxpayer racked up a bill of $15,000 US for two days of treatment after suffering a stroke gambling (no kidding!) in the US – clearly he wasn’t on the winning side of the table. On the “fat chance” list you’ll find expenses such as toothpaste, non-prescription birth control devices, maternity clothes (for those who didn’t use such devices), funeral related expenses, illegal operations, treatments and drugs (no taxpayer assistance to support a drug habit), health clubs, fitness clubs, sports clubs and spas. The list of allowable medical expenses is long and constantly evolving. If you’ve paid for a something out of the ordinary that you think may qualify as a medical expense you may want to check CCRA’s Interpretation Bulletin IT-519R2 accessible on their website or you can obtain a copy by calling the general enquiry line. Be warned that this bulletin is out-of-date even though it was last updated one year ago. If in doubt, a direct call to CCRA may be your best bet. And remember, you must have receipts to support your medical expense claim so make an effort to establish some semblance of a filing system.
Free Tax Advice Article Submitted to Income Tax Canada.net exclusively by Jim Maroney Official details about this and other topics on income taxes can be found in English & Francais at www.ccra-adrc.gc.ca Income tax information offered by www.IncomeTaxCanada.net is done so without endorsement by Canada Revenue Agency (CRA) - l'Agence du Revenu du Canada (ARC) (formerly Canada Customs and Revenue Agency - l'Agence des Douanes et du Revenu du Canada CCRA-ADRC and formerly Revenue Canada – Revenu du Canada) or any Canadian government agency. The free advice is of a general nature for Canadian taxpayers seeking legal ways to reduce their personal and small business income taxes payable to the federal and provincial (or territorial) governments in Alberta, British Columbia, Manitoba, New Brunswick Newfoundland-Labrador, Northwest Territories, Nova Scotia, Nunavut, Ontario, Prince Edward Island, Quebec, Saskatchewan or Yukon. Specific taxation situations vary from taxpayer to taxpayer, province to province, territory to territory. The free tax advice here is only a general guide. Canadians should always seek individual guidance on accounting rules and tax laws from knowledgeable accountants and lawyers. To prepare your income tax return online and NetFile your Canadian income taxes electronically in English or Francais, please visit www.ufile.ca or www.impotexpert.ca websites. Additional information on financial products and services for Canadians can be found at www.CanadianCreditCenter.com. |
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Jim Maroney