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Individual Tax Series: Medical Expense Tax Credit: Maximizing Your Savings on Health Care Costs
- Rylan Kaliel
- Jul 12
- 14 min read
Updated: Aug 18
Health care costs can significantly impact your finances, but the Canadian government provides relief through the Medical Expense Tax Credit (METC). This non-refundable credit helps taxpayers offset eligible medical expenses, reducing overall tax liabilities. This blog post will guide you through eligibility requirements, expenses that qualify, claiming procedures, and strategies to maximize your medical expense deductions.
What is the Medical Expense Tax Credit?
The Medical Expense Tax Credit provides tax relief to Canadians by allowing deductions for various medical expenses paid for you, your spouse, or dependents. It is designed to ease the financial burden of essential health care services and treatments.
Eligibility for the Medical Expense Tax Credit
To qualify for the METC, the medical expenses must:
Be an Eligible Medical Expense.
Have been paid by the person or their legal representative within any 12-month period ending in the calendar year (see 12-Month Period Rule below).
Was not previously claimed in the calculation of the METC for another year, as a disability support deduction, or as a refundable medical expense supplement.
Is proven by supporting receipts.
Was not reimbursed by insurance or another benefit program.
It is important to note, medical expenses can include your, your spouse or common-law partners, your child, or the child or your spouse or common-law partner, where the child is under 18 years of age at the end of the year.
Additionally, amounts may be claimed for your dependants. A dependent is:
A child, grandchild, parent, grandparent, brother, sister, uncle, aunt, niece, or nephew;
A person dependent on you for support at some time in the year;
Resident in Canada at some time in the year.
What constitutes a person being dependent on you is a question of fact, in general, support involves the provision of the basic necessities of life, such as food, shelter, and clothing, on a regular and consistent basis (i.e., they live with you, or you pay for their shelter, and you provide for their day-to-day costs). This support must be given voluntarily or pursuant to a legal commitment. If it is seen that the dependent has income during the year and this income does not appear to be sufficient to meet their basic needs, this would support them being dependent on you for this support.
For purposes of children, if they are under 18 years of age at the end of the year, they are generally not considered a dependent for the METC.
Medical Expenses Outside Canada
Medical expenses incurred outside of Canada may also be claimed for the METC but are subject to additional considerations. There are, however, certain exceptions to this that would result in the amounts not being included in the METC, such as:
Attendant care must be provided in Canada.
Group home providing care must be located in Canada.
Cost of talking textbooks for use with persons with difficulty seeing must be in connection with the person’s enrollment at an educational institution that is in Canada or is a designated educational institution (what a designated educational institution relates to is outside of the scope of this blog, please contact a tax professional for additional information).
Please note, that for the purposes of a dependent, other than children, medical expenses incurred for these dependents are generally only included in the METC where that dependent is a resident of Canada at some time in the year.
12-Month Period Rule
Medical expenses can be claimed for any 12-month period (or 24-month period where the person died in the year that includes the date of death) that ended in the calendar year. This means that you could claim expenses for July 1, 2024 to June 30, 2025, October 1, 2024 to September 30, 2025, or your standard January 1, 2025 to December 31, 2025 calendar year. The rule is that the 12-month period must end in the calendar year.
Special care should be taken to ensure that the appropriate period is selected and doesn’t overlap with a previous claim. For example, consider the case of a person who makes a standard claim of January 1 to December 31 in the previous year, and then realized that by including September of the previous year to August of the current year would be a better result. As they have already made a claim for September to December of the previous year they cannot claim these amounts in the current year, as they were previously claimed.
This is discussed more in 12-Month Period Considerations, however, for purposes of understanding the importance of this now, there is a minimum threshold you need to cross before you can get an actual tax impact from the METC. As such, you want to select the 12-month period that results in the highest METC. Consider if you had been in great health up to August of the previous year and then incurred significant medical expenses to May of the current year. You may want to ensure that you select the 12-month period that includes all these expenses, such as August to July of the current year.
Eligible Medical Expenses
Eligible medical expenses include (but are not limited to):
Prescription medications.
Medical devices (hearing aids, wheelchairs).
Dental care and orthodontic treatments.
Vision care (eyeglasses, contact lenses).
Medical practitioner fees (doctors, dentists, therapists).
Travel expenses to obtain medical treatment (subject to certain conditions).
Premiums paid for private health insurance plans.
Typically, eligible medical expenses include amounts that are paid to medical practitioner. Generally speaking, a medical practitioner is a person who is authorized by the laws to act as a medical practitioner, provided there is specific laws that enables them to perform medical services. In short, this would mean that they are paid to a dentist, who is authorized to operate as a dentist, doctor who is authorized to act as a doctor, etc. in the area you are receiving the services. For a listing of common medical expenses, see the CRA’s website.
There are a few nuances to these costs.
Typically, GST/HST would be included in the METC if incurred.
Cost of membership fees or access fees paid to a private medical clinic, where this fee is not an eligible medical expense is generally not included in the METC, unless they can be reasonably considered to be a prepayment of services that are provided over the course of the year and are provided, and these services are an eligible medical expense.
Where amounts are paid for purely cosmetic purposes, the amount may not be an eligible medical expense.
Virtual medical services may qualify, but it may be dependent on whether the medical practitioner is licensed in the area in which you are located.
Special care should be taken around services such as attendant care, nursing homes, retirement home, as these costs may be encompass many services being provided. It may be important to fully understand the services provided and the cost of each service provided to determine if all, or a portion of, the services can be included in the METC. It is advised that these be discussed with a tax professional.
Transportation and Travel Expenses
Transportation and travel expenses may also be deductible, despite them not being provided by a medical practitioner. A simple example is transportation by ambulance to or from a hospital is typically included in the METC, despite a portion of it being truly only travel related.
Additional travel expenses may be claimed if they are paid to a person who provides the business of transportation (taxi, airfare, etc.) under the following circumstances:
You travel to a place that is at least 40 kilometres away from where you normally receive medical services;
Similar medical services are not available at, or near the place, the location where you normally receive medical services;
You take a reasonably direct travel route; and
It is reasonable, in the circumstances, for you to travel to the place for medical services.
This could be the case, for example, where you live in a rural area and the local hospital is not equipped to handle your particular situation. It may also apply where you require very specific treatments and need to travel to another major city, or even country, where these treatments are available.
Where a person who provides the business of transportation (taxi, airfare, etc.) is not available, a reasonable expense for operating a vehicle (includes cars, but also those vehicles that travel via land, water, or air) to transport you to and from the location where you normally receive medical services, provided the above conditions are still met.
In addition to these, these expenses may also be claimed by a person who accompanies you, provided that a medical practitioner has certified in writing that you are incapable of travelling without the assistance of an attendant.
Other travel expenses, such as meals, accommodation, parking, etc., may also be deductible if you have to travel at least 80 kilometres away from where you normally receive medical services and the other conditions above are met and it is reasonable that these expenses were incurred.
Accommodation and parking costs must be supported by receipts. You would also need to support the need for these expenses, such as for longer trips why accommodation was needed (i.e. long drive, could not make a round trip in the same day). For meals, these expenses may be claimed using either the direct (retain the receipt and claim the amount) or simplified (fixed amount per meal, per day) method. See our Travel Expense blog post for details on these method.
Other Expenses to Consider
Alterations to your Home or Construction of a New Home
Alterations to your home or construction of a new home may be included in the METC, provided the following conditions are met:
The expenses were paid to enable you to gain access to your home or be mobile within it (i.e., wheelchair ramp, stair lifts, etc.);
The expense would not typically be expected to increase the value of the home; and
The expense would not normally be incurred by a person who did not have particular issues with mobility.
Typical costs, which may include costs to an architect or a contractor, that could be included in the METC, but are not limited to, are:
The purchase and installation of outdoor or indoor ramps where stairways make mobility difficult.
The enlarging of halls and doorways to allow you to access the room.
The lowering of kitchen or bathroom cabinets to allow you to be more functional in these spaces.
Moving Expenses
Moving expenses may be included into the METC, up to $2,000, where they are to move you to a home that is more accessible. See our Moving Expense blog for more details on what may be included.
Premiums Paid to a Private Health Service Plan
Any premium, contribution, or other consideration (including, GST, PST, HST, and other premium taxes) that you have paid to a private health service plan (PHSP) for yourself, your spouse or common-law partner, or a member of your household of whom you are connected to by a blood relationship may be an eligible medical expense. These amounts do not include amounts paid to provincial medical services.
Blood relationship typically includes parents, grandparents, child, grandchild, spouse, common-law partner, adopted child or grandchild, or adoptive parent or grandparent. This typically does not include nieces, nephews, aunts, or uncles, but will typically include step children.
Interaction with Other Tax Credits
Home Accessibility Tax Credit
Expenses that qualify for both the home accessibility tax credit and the METC may be claimed for both credits. This would include renovations or alterations made to your home to allow you to gain access to your home (see Alterations to your Home or Construction of a New Home above). Where the main purpose of incurring the expense is to undertake a qualifying renovation, or a renovation with the purpose of improving the accessibility of the home, the expenses will not cease being eligible where it results in an increase in the value of the home.
Disability Tax Credit
With respect to costs of attendance care or for care in a nursing home, where these amounts are claimed as the METC the disability tax credit may not be available. As such, it may be prudent to review which of the two credits will provide the better benefit and appropriately prepare the return to avoid losing this benefit. It is advised that you discuss this matter with a tax professional to ensure the appropriate credit is claimed and reported correctly on the tax return.
Multigenerational Home Renovation Tax Credit
Expenses are not eligible for the multigenerational home renovation tax credit if they are claimed in respect of the METC, the home accessibility tax credit, or both.
Tax Impact of Claiming the Medical Expense Tax Credit
The METC is a non-refundable tax credit, as was discussed in our Basic Personal Amount blog post. This means that if the reduction to taxes payable exceeds the actual taxes payable amount, then the additional reduction is lost (i.e., reduction to taxes payable cannot result in a refund). This was discussed and illustrated in our Student Loan Interest blog post.
The METC has a minimum threshold of expenses that must be past before any amount can be treated as a tax credit. This minimum threshold is dependent on whether or not the medical expenses are for a dependent or not. In the case of a dependent, the minimum threshold is the lower of:
A fixed amount; and
3% of the dependant’s net income for the year.
In all other cases, the minimum threshold is the lower of:
A fixed amount; and
3% of your net income for the year.
For federal purposes, the fixed amount is set at $2,833 for 2025 and is adjusted annually for inflation. There is typically a provincial fixed amount, which is dependent on the province you reside in and is typically also adjusted annually for inflation.
METC for a Family, No Dependants
Let’s start with a simple situation where we only calculate your, and perhaps your families, but not dependants, METC. Let’s assume you have a net income of $50,000 in the year and have no dependants, let’s calculate your minimum threshold.
As we can see in the above, we calculate the minimum for net income, by taking minimum net income and multiplying this by 3% to get $1,500. We then compare this to the fixed amount of $2,833 to determine that the minimum for net income is lower for $1,500. Therefore, we need to have medical expenses of at least $1,500 to get the METC.
Essentially how this works is that you would take your total medical expenses and see if they exceed your minimum threshold. If it exceeds the minimum threshold, then you would receive the METC for only those medical expenses in excess of the minimum threshold.
Let’s look at a continuation of this example, let’s assume you and your family have medical expenses of $2,000 to determine how much are METC would be.
In the above we would take our total medical expenses, less our minimum threshold, to arrive at a METC of $500. The next step would be to include these with our other non-refundable tax credits, as was discussed in Student Loan Interest blog post. Let’s calculate this using only the federal rate of 15%.
As we can see, our medical expenses of $2,000 results in a reduction to taxes payable of $75, not a significant amount, given our costs incurred. This is significantly reduced by the minimum threshold and then again by the tax rate applied. Please note, the above is only the federal component and could be increased by the provincial tax credit, which will be dependent on the minimum threshold for your province.
METC for a Family and Dependents
Let’s now turn our attention to a situation where you have both your standard medical expenses and you have the medical expenses for a dependent. The key difference here is that for a dependent we use the dependent’s net income for their minimum threshold.
Let’s assume the following facts, you have a net income of $75,000 and your dependent has medical expenses of $10,000. You and your family, other than your dependent, have medical expenses of $7,500 for the year. Your dependent has medical expenses of $15,000 for the year.
As we can see, we get different minimum thresholds for the family, other than dependent and for the dependent, with the dependent being significantly lower. While it may seem favourable, the downside is that if the dependent were included under your minimum threshold you would ultimately get a better METC. In this case, the minimum threshold is effectively the threshold for the family, other than dependent ($2,250) plus the threshold for the dependent ($300) for a total minimum threshold, or reduction to the METC, of $2,550. Whereas, if the dependent were included under your threshold, this threshold would only be $2,250.
Now let’s calculate the actual reduction to taxes payable. We have to do two separate calculations for the different thresholds.
As we can see, we take the medical expenses for both the family and the dependent and determine our METC. We then multiply this by 15% to determine the reduction to taxes payable for both. This results in a total reduction to taxes payable for you of $2,992.50. It is important to note that as the person is dependent on you, you get the reduction to taxes payable, not them.
12-Month Period Considerations
As was discussed in 12-Month Period Rule, there can be special considerations for which 12-month period to select for the METC. Specifically, the goal is to include as many medical expenses into a specific 12-month period to get as far past the minimum threshold as possible.
To illustrate this, let’s assume the following is true for your medical expenses over two years.
Let’s assume we have a net income of $75,000 for each year, which we know from the above example in METC for a Family and Dependents the minimum threshold would be $2,250. Let’s calculate the reduction to taxes payable assuming we pick the calendar year for our 12-month period.
As we can see, we get the same threshold for both years, which reduces our METC by a total of $4,500. As the expenses across the two years is close to the same, we end up with a similar reduction to taxes payable. Now let’s look at what would happen if we instead made our 12-month period end July 31, let’s look at a modified medical expense listing in this case.
* For the previous year, let’s assume there were no medical expenses for August to December for simplicity
Now that we have our revised medical expenses, let’s look at how this will calculate for our METC and reduction to taxes payable. Let’s only look at the previous and current year, however, for comparative purposes.
As we can see, we increased our reduction to taxes payable by $337.50. This is equal to 15% of the minimum threshold, which illustrates that by combining these into one 12-month period we avoid having to use two minimum thresholds and instead use one.
While the savings may not be significant to some, it is still prudent tax planning to ensure you have a good 12-month period setup, especially if there are recurring medical expenses over certain periods.
Other Considerations to the 12-Month Period
As was discussed in Eligibility for the Medical Expense Tax Credit, you cannot claim a medical expense if it was previously claimed for the METC in another year. As such, it may be important to review your medical expenses and minimum threshold to see if a claim is even worthwhile to make. If it is not worthwhile, such as if the medical expenses do not exceed the minimum threshold, then it is likely best to just not include these on your return.
The rationale is that if they are not included in your return but then you later incur medical expenses in the year then these expenses from the previous year have not yet been claimed. As such, you can still claim them in the current year by selecting a different 12-month period.
Claiming the Medical Tax Credit
Claiming the METC involves the following steps:
Collect receipts and documentation for all eligible medical expenses paid within a 12-month period.
Report total medical expenses on the appropriate medical expense form in your tax preparation software, which will be included on Line 33099 of your tax return.
Complete the T1 Income Tax and Benefit Return to calculate the credit amount accurately.
Documentation Requirements
Maintaining accurate documentation is critical for supporting your claim:
Keep all receipts clearly showing payment details and descriptions of medical expenses.
Retain prescription documentation or letters from qualified medical professionals, where applicable.
Maintain records of travel expenses, including mileage logs, if claiming transportation costs.
Note, several pharmacies and other medical practitioners can provide a yearly summary when requested.
Strategic Tips to Maximize Your METC
To maximize your medical expense tax savings:
Bundle your medical expenses within a single 12-month period to exceed the minimum threshold and maximize the deductible amount.
Strategically select which spouse or partner claims medical expenses to optimize tax savings, especially when there's a significant income difference.
Common Mistakes and How to Avoid Them
Avoid common errors by:
Ensuring all claimed medical expenses meet eligibility criteria.
Maintaining thorough documentation and accurate records.
Clearly understanding the threshold requirements and calculation methods.
Impact on Other Benefits
Claiming medical expenses reduces your taxes payable, potentially increasing eligibility for income-tested benefits such as the GST/HST credit or Canada Child Benefit.
Summary
The Medical Expense Tax Credit provides valuable financial relief for Canadian taxpayers facing health-related expenses. Understanding eligible expenses, accurately documenting claims, and strategic planning can maximize this beneficial tax credit.
Stay tuned for our next blog, where we'll explore charitable donations and how to effectively leverage donation tax credits.
KLV Accounting, a Calgary-based accounting firm, is here to help. Contact us today to enhance your financial strategy, minimize your taxes, and drive business success! For a free consultation, call us at 403-679-3772 or email us at info@klvaccounting.ca.
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