INCOME TAX DEDUCTIONS FOR MEDICAL EXPENSES

To assist you in determining if you may have an income tax deduction for your medical expenses, we have prepared a summary of the relevant income tax rules, as follows:

Your claim for medical expenses can be for any twelve month period which ends in the taxation year provided they have not been claimed in a prior year, and a claim for medical expenses can include those of a person's spouse and dependants. Therefore, it is usually best to add all the medical expenses for the family together and claim them on either one of the spouses returns, preferably on the return that has the lower net income.

The reason for claiming these medical expenses on the spouse's return with the lower net income is that the actual tax deduction claimed is the total amount of medical expenses less 3% of the taxpayer's net income or $1,614 whichever is less.

The medical expense deduction results in a reduction of taxes payable by the taxpayer calculated at the low rate of income tax.

Furthermore, if you claimed medical expnses for a dependant (other than your spouse) whose net income was more than $7,044, you have to reduce your medical expenses, according to the following calculation. Subtract the basic personal amount $7,044 from the dependant's net income or the amount that would be the dependant's net income if he or she completed a return. Multiply the result by 4. Complete this calculation for each dependant for whom you claimed medical expenses, add all the amounts together, and subtract the total from your medical expense claim.

Obviously, if the above medical expense adjustment you calculated for a dependant is more than the medical expenses you claimed for that dependant, it is not to your benefit to claim the medical expenses for that dependant.

Finally, if your combined family income is lower than $16,745, you are eligible for a refundable medical expense supplement which is 25% of the medical expenses claimed or $500, whichever is less. If your income exceeds $16,745 this supplement is reduced by 5% of the income in excess of $16,745.

As you can see from the above explanation, the determination of a medical expense deduction can be quite complicated.