Table of Contents
- 💊 Claiming Medical Expenses: Rules and Eligibility
- 🧮 Medical Expenses Credit Calculation
- 👨👩👧👦 Medical Expenses for Other Dependants
- 🧾 Example: Claiming Medical Expenses for Other Dependants in Canada
💊 Claiming Medical Expenses: Rules and Eligibility
The Medical Expense Tax Credit (METC) is one of the most common tax credits in Canada. It allows individuals and families to claim a portion of their out-of-pocket medical costs as a non-refundable tax credit, reducing the amount of tax they owe.
While this credit seems straightforward, there are several important rules about who can claim, which expenses qualify, and how to choose the best 12-month period to maximize the claim. Let’s break it down step by step.
🧾 1. What Is the Medical Expense Tax Credit?
The Medical Expense Tax Credit helps Canadians reduce their income taxes by recognizing certain medical expenses that were paid out of pocket — meaning they were not reimbursed by insurance or another plan.
It is a non-refundable credit, which means it can reduce the taxes you owe to zero, but it won’t create a refund by itself.
📅 2. The 12-Month Period Rule
This is one of the most flexible (and sometimes confusing) features of this credit.
You can claim any 12-month period of medical expenses, as long as the final month of that 12-month period falls within the tax year you’re filing for.
👉 Example:
If you’re preparing a 2024 tax return, you can claim medical expenses for any 12-month period that ends in 2024.
That could be:
- February 1, 2023 – January 31, 2024
- October 2013 – September 2024
- Or even March 15, 2023 – March 14, 2024
This rule allows you to pick the most beneficial 12-month window — the one that gives you the highest total of eligible medical expenses.
This is especially helpful when large medical costs occur late in the year and might otherwise get split between two tax years.
👨👩👧 3. Whose Medical Expenses Can Be Claimed?
You can claim eligible medical expenses paid for:
- Yourself (the taxpayer),
- Your spouse or common-law partner, and
- Your children under the age of 18 at the end of the tax year.
All these expenses can be combined on one tax return, usually whichever spouse provides the best tax benefit.
There are also rules for dependents who are over 18 (such as elderly parents or adult children with disabilities). We’ll cover those separately, but in short: if someone depends on you for support, you may be able to claim their medical expenses too.
💡 4. Which Spouse Should Claim the Credit?
Although either spouse can claim medical expenses, it’s usually best to claim them on the lower-income spouse’s return.
Here’s why:
When calculating the credit, you must subtract a deductible equal to 3% of the person’s net income, or a fixed limit set by the CRA (whichever is lower).
✅ For example:
If one spouse earns $40,000:
- 3% × $40,000 = $1,200 deductible.
If the other spouse earns $100,000:
- 3% × $100,000 = $3,000 deductible.
The lower-income spouse would have a smaller deduction, allowing more of the medical expenses to count toward the credit.
However, this isn’t a hard rule — if the lower-income spouse doesn’t have enough taxable income to benefit, it may make sense to claim the credit on the higher-income spouse’s return instead.
💰 5. The 3% Rule and Deduction Limit
The credit amount is based on the total eligible medical expenses minus the lesser of:
- 3% of your net income, or
- A maximum threshold set by the CRA (usually around $2,600, adjusted yearly).
You then receive a 15% federal tax credit on that amount (plus a similar provincial credit).
👉 Example:
Let’s say your net income is $50,000, and your family’s eligible medical expenses total $5,000.
- 3% of net income = $1,500
- Subtract the lesser amount ($1,500) from $5,000 → $3,500
- Federal credit: 15% × $3,500 = $525 tax reduction
🧠 6. Choosing the Best 12-Month Period
Since you can pick any 12-month window, part of your role as a tax preparer is to help clients find the most beneficial period.
Here’s how:
- Gather all receipts for medical expenses paid over the past two years.
- Add them up in different 12-month ranges.
- Choose the period where the total eligible expenses are the highest — that’s the one to claim.
This can make a big difference for clients with ongoing or large medical costs that don’t align neatly with the calendar year.
🏥 7. Common Eligible Medical Expenses
The CRA has a long list of allowable expenses, but here are the most common ones:
| Category | Examples |
|---|---|
| Prescriptions | Prescription medications prescribed by a medical practitioner and bought at a pharmacy. |
| Dental and Vision | Dental surgery, dentures, eyeglasses, contact lenses, and laser eye surgery. |
| Medical Equipment | Wheelchairs, hearing aids, pacemakers, crutches, braces, and hospital beds. |
| Professional Services | Fees for doctors, dentists, nurses, chiropractors, physiotherapists, psychologists, etc. |
| Travel Costs | Transportation (and sometimes meals and lodging) if medical treatment was not available locally. |
| Medical Insurance Premiums | Premiums paid for private health or dental insurance plans (excluding government plans). |
Always verify that an expense appears on the CRA’s list of eligible medical expenses before including it.
🚫 8. Expenses That Do Not Qualify
Not every health-related cost is eligible. Some common examples that do not qualify include:
- Over-the-counter medications (even if recommended by a doctor),
- Gym memberships or fitness equipment,
- Cosmetic surgery (unless medically necessary),
- Vitamins or supplements, and
- Non-prescription dental hygiene products.
When in doubt, check the CRA’s “Eligible Medical Expenses” guide before claiming.
🧾 9. Documentation and Receipts
The CRA often reviews medical expense claims, so it’s essential to:
- Keep all original receipts and invoices,
- Retain prescriptions or doctor’s notes if required,
- Save travel records (mileage, tickets, hotel bills) for out-of-town medical trips.
If a return is filed electronically, you do not send receipts upfront — but be ready to provide them if the CRA requests proof.
📄 10. Summary: Key Rules at a Glance
| Rule | Description |
|---|---|
| Claim Period | Any 12-month period ending in the tax year |
| Eligible Claimants | Taxpayer, spouse/partner, and children under 18 |
| Calculation | (Total eligible expenses – lesser of 3% of income or CRA limit) × 15% |
| Typical Deduction Limit | Around $2,600 (changes annually) |
| Best Person to Claim | Usually the lower-income spouse |
| Documentation | Keep all receipts and supporting documents |
💬 Final Thoughts for Beginners
The Medical Expense Tax Credit is one of the most practical credits you’ll work with as a tax preparer.
Even though the rules seem simple, maximizing it requires:
- Knowing who to claim it for,
- Picking the most beneficial 12-month period, and
- Understanding the 3% rule and how it affects the deduction.
For many clients — especially families, seniors, or those with ongoing medical needs — this credit can provide significant tax savings each year.
🧮 Medical Expenses Credit Calculation
Once you’ve determined which medical expenses qualify, the next step is understanding how the Medical Expense Tax Credit (METC) is calculated. This credit reduces the amount of income tax an individual owes by recognizing medical costs paid out of pocket.
Although the CRA’s online forms and tax software will handle the math, as a tax preparer, it’s essential to understand how the calculation works behind the scenes — and how to help clients maximize their benefit.
1. 🧾 Where the Credit Appears on the Tax Return
The medical expenses credit is claimed on Schedule 1 of the federal tax return (and on a similar schedule for provincial tax).
This is part of the non-refundable tax credits section — meaning it can reduce the amount of tax owed, but it cannot create a refund on its own.
The calculation is based on the total eligible medical expenses for the taxpayer, their spouse or common-law partner, and their children under 18.
2. 💰 Step-by-Step Calculation
The basic formula is:
Total eligible medical expenses
– the lesser of (3% of net income OR the annual CRA limit)
= Amount eligible for the federal tax credit
Then:
Federal medical expense tax credit = 15% × eligible amount
There is also a provincial credit, calculated using a similar method with the province’s own percentage rate.
3. 📉 Example 1 – Single Individual
Let’s look at a simple example:
Randy has:
- Net income: $60,800
- Medical expenses: $2,500
Now, calculate step by step:
- 3% of net income → 3% × $60,800 = $1,824
- Compare that with the CRA’s annual limit (for example, about $2,700, depending on the year).
- The lower of these two amounts is $1,824.
- Subtract this from the total medical expenses:
- $2,500 – $1,824 = $676
- Multiply by the federal rate (15%):
- 15% × $676 = $101.40
✅ Randy’s federal medical expense tax credit is $101.40.
He would also get a provincial credit, calculated similarly.
4. 👩❤️👨 Example 2 – Couple with Different Incomes
Now let’s look at a married couple — James and Francis — who have combined medical expenses of $3,663 for the year.
Their net incomes are:
- James: $26,691
- Francis: $80,989
Let’s compare what happens when each spouse claims the medical expenses.
Option A – Claimed by Francis (higher income)
- 3% of $80,989 = $2,430 (rounded)
- $3,663 – $2,430 = $1,233 eligible amount
- Federal credit = 15% × $1,233 = $184.95
Option B – Claimed by James (lower income)
- 3% of $26,691 = $800.73
- $3,663 – $800.73 = $2,862.27 eligible amount
- Federal credit = 15% × $2,862.27 = $429.34
✅ James should claim the medical expenses, because his lower income results in a smaller 3% deduction and therefore a larger credit.
5. ⚖️ Why the Lower-Income Spouse Often Claims
As the examples show, the 3% rule means that the higher the income, the higher the threshold that must be subtracted before claiming the credit.
That’s why it’s usually better for the lower-income spouse to claim all family medical expenses — but not always.
If the lower-income spouse has little or no tax payable, the credit might not provide any benefit (since it’s non-refundable). In those cases, it may make more sense for the higher-income spouse to claim it instead.
As a preparer, your job is to compare both spouses’ results and see which one leads to the best overall tax savings for the couple.
6. 💡 Can Medical Expenses Be Split Between Spouses?
Yes — although it’s not usually optimal, it can be done.
Each spouse could claim their own medical expenses separately, but this means each one will have to subtract their own 3% of income (or the CRA limit).
That generally reduces the total claim.
However, if a couple keeps their finances separate, or if each has different medical expenses and incomes, they can each claim their own.
7. 🧾 Recordkeeping and CRA Verification
When preparing a tax return for a client:
- Keep a summary list of all receipts, showing the date, provider name, type of service, and amount paid.
- The CRA does not receive this list with the tax return, but they may request proof later during a review.
- Organizing receipts clearly helps the CRA easily match expenses if an audit or review occurs.
If multiple family members are included, make sure each expense shows who the patient was.
8. 📋 Quick Reference Table
| Step | Description | Example |
|---|---|---|
| 1 | Find total eligible medical expenses | $2,500 |
| 2 | Calculate 3% of net income | $60,800 × 3% = $1,824 |
| 3 | Compare with CRA annual limit | Lower of $1,824 or limit |
| 4 | Subtract smaller amount from total expenses | $2,500 – $1,824 = $676 |
| 5 | Multiply by 15% (federal rate) | $676 × 15% = $101.40 |
9. 🧠 Tips for New Tax Preparers
- Always check both spouses’ net incomes before deciding who should claim the expenses.
- Remember that this is a non-refundable credit — so it only helps if there’s tax to reduce.
- Keep all receipts and supporting documents organized and labeled by family member.
- Know the CRA limit for the year you’re preparing (it changes annually).
- Avoid splitting expenses unless there’s a clear reason or both spouses file independently.
🧩 Summary
The Medical Expense Tax Credit is one of the most common non-refundable credits you’ll encounter as a tax preparer.
Understanding the calculation — especially the 3% of income rule and the choice of who claims — is key to maximizing the client’s benefit.
By practicing a few examples and comparing results, you’ll quickly get comfortable calculating this credit and explaining it confidently to clients.
👨👩👧👦 Medical Expenses for Other Dependants
So far, we’ve learned how medical expenses can be claimed for yourself, your spouse or common-law partner, and your children under 18.
But what about other family members who depend on you?
The Canadian tax system allows you to claim medical expenses for certain other dependants — as long as they rely on you for support. This is helpful in situations like adult children in school, elderly parents, or relatives living with you who need care.
Let’s break down how this works.
✅ Who Counts as an “Other Dependant”?
You can claim medical expenses for:
- Children over 18
- Parents or grandparents
- Brothers or sisters
- Aunts and uncles
- Nieces and nephews
Important: The dependant must rely on you for support (financially or day-to-day living assistance).
🛑 You cannot claim medical expenses for someone who is not related to you (for example, a friend or roommate), even if you help support them.
🧠 Key Difference: Separate Calculation for Each Dependant
When claiming for a dependant over 18, their medical expenses are not added into the family’s main medical claim.
Instead, you perform a separate medical expense calculation for each dependant.
Think of it as calculating the credit as if the dependant were claiming it themselves, but you’re claiming it on your return because you support them.
This means:
You must subtract 3% of the dependant’s net income (or the annual CRA limit, whichever is less) from their medical expenses.
So if your adult child earns money from a part-time job, that income affects the claim.
💡 Example: Adult Child in University
Your daughter is 20 years old and still depends on you. She earns $8,000 from a part-time job and has medical expenses of $2,200 (paid by you).
Calculation:
- 3% of dependant’s income:
3% × $8,000 = $240 - Subtract from medical expenses:
$2,200 − $240 = $1,960 - You claim the resulting amount and receive the medical tax credit on your return.
✅ You benefit from the credit
✅ Your daughter does not need to file or claim anything for this expense, unless it benefits her more (rare in student situations)
👵 Example: Elderly Parent You Support
Your mother lives with you and has $0 income and $4,500 in medical expenses.
Since her net income is zero:
3% of $0 = $0
So you may claim the full $4,500, resulting in a larger credit.
📌 Are There Limits?
There used to be a $10,000 limit for medical expenses claimed for other dependants — but this limit no longer exists.
💯 You can now claim any amount of eligible medical expenses for qualifying dependants, as long as the 3% rule is applied to their income.
👀 Important Points to Remember
| Rule | Explanation |
|---|---|
| You must support the dependant | Financially or in daily living |
| Dependant must be a listed family member | Not for friends / unrelated individuals |
| 3% calculation applies to the dependant’s own income | Done separately from your own medical credit |
| No $10,000 limit anymore | Full eligible expenses can be claimed |
🧾 Who Actually Paid the Expenses?
Ideally, the supporting person (you) pays the medical expenses directly.
But even if the dependant paid them, you may still claim them if you provide support.
However, always check whether it benefits the dependant more to claim it themselves first — especially if they owe tax.
🎯 Quick Tip for New Preparers
When preparing returns for families:
✅ Ask if they support any adult family members
✅ Check each dependant’s income
✅ Calculate the medical claim separately for each dependant
✅ Decide who benefits more — the dependant or the main taxpayer
This ensures you maximize your client’s tax savings.
🧩 Summary
You can claim medical expenses for certain adult family members who depend on you, including adult children and elderly parents.
The claim is calculated separately using 3% of the dependant’s income, and there is no limit to the claimable amount.
Understanding this rule helps you support clients who care for extended family — which is common in many households today.
🧾 Example: Claiming Medical Expenses for Other Dependants in Canada
To fully understand how medical expenses work for dependants over 18, let’s walk through a realistic example. This will help you see how the tax rules apply in real-life situations.
👩👧👦 Scenario: Single Parent With Two Children
Meet Miranda, a single mother with two children:
| Family Member | Age | Income | Dependant Status |
|---|---|---|---|
| Miranda (Parent) | Adult | Earns income | Main taxpayer |
| Christopher | Adult child in university | Earned part-time income | Dependant over 18 |
| Amanda | Minor child | No income | Dependant under 18 |
Miranda pays medical expenses for herself and both children.
🧮 Step-by-Step Breakdown
✅ 1. Medical expenses for Miranda & child under 18
| Person | Type of medical expense | Amount |
|---|---|---|
| Miranda | Physiotherapy | $1,812 |
| Amanda (under 18) | Dental braces | $3,841 |
Total medical expenses for Miranda & minor child:
$1,812 + $3,841 = $5,653
These expenses are grouped together because:
- The child is under 18
- Medical expenses for dependants under 18 are added to the taxpayer’s own medical claims
✅ 2. Medical expenses for adult dependant (Christopher)
| Person | Expense category | Amount |
|---|---|---|
| Christopher (over 18) | Chiropractor + glasses | $678 |
Christopher earned $4,864 from a part-time job.
Because he is over 18, a separate calculation is required:
3% of his net income
= 3% × $4,864
= $145.92
Now subtract this from his medical expenses:
$678 − $145.92 = $532.08
This $532.08 is the amount Miranda can claim for Christopher as a dependant over 18.
✅ Final Result So Far
| Category | Eligible Amount |
|---|---|
| Medical expenses for Miranda + minor child | $5,653 |
| Medical expenses for adult dependant | $532.08 |
| Total added to Miranda’s medical credit calculation | $6,185.08 |
👵 Adding Another Dependant Example: Elderly Parent
Now imagine Miranda also supports her elderly mother, Alison, who lives with her.
| Person | Age | Income | Medical Expenses |
|---|---|---|---|
| Alison (mother) | Senior | $21,530 | $8,400 |
Calculation:
- 3% of Alison’s net income:
3% × $21,530 = $645.90 - Subtract deductible:
$8,400 − $645.90 = $7,754.10
So Miranda can claim $7,754.10 for Alison.
✅ Final Combined Medical Claim
| Source | Eligible Medical Amount |
|---|---|
| Miranda + minor child | $5,653 |
| Christopher (adult dependant) | $532.08 |
| Alison (mother dependant) | $7,754.10 |
| Total medical expenses claimed | $13,939.18 |
📌 Key Takeaways
| Rule | Explanation |
|---|---|
| Dependants under 18 | Grouped with the taxpayer’s medical expenses |
| Dependants over 18 | Calculated separately using their own income |
| You subtract 3% of dependant’s income | Applies to each dependant over 18 |
| No limit on medical expenses for dependants | Full eligible expenses can be claimed |
| Dependant must rely on taxpayer | Financially or for daily living support |
💡 Why This Matters
Many families support:
- Adult children in university
- Elderly parents
- Relatives who live with them
Understanding these rules helps you maximize medical credits for clients and ensures dependants are claimed correctly.
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