There seems to be a growing trend amongst Canadians to travel both inside and outside of Canada to obtain medical services. In the case of foreign travel, Canadians are often seeking either quicker medical services in foreign countries or treatments that are simply not available in Canada. If you are one of these people, you are likely paying for these costs out of your own pocket. As well, you have probably found that the travel expenses associated with these visits abroad are often expensive as they can include airfare, hotel and meal costs. In addition, in cases where a patient is incapacitated these costs can also include the travel expenses of an attendant. The good news is that the Canada Revenue Agency (CRA) has recently clarified the circumstances where travel costs will qualify as a medical expense for purposes of the medical expense tax credit.
How does the Medical Expense Tax Credit work?
As a bit of a background, you can claim eligible medical expenses that you incurred for yourself, your spouse or common-law partner or your or your spouse or common-law partner’s children who were under age eighteen during the year who were dependent on you for support. For 2010, creditable medical expenses are reduced by the lesser of $2,024 or 3% of your net income for the year for federal tax purposes (the threshold varies for provincial tax purposes). You must include your receipts for your medical expenses when you claim the tax credit, and you cannot claim expenses already claimed in a previous return. You can claim medical expenses for any 12-month period that ends during the taxation year.
What is the CRA’s position on travel expenses?
Last fall, the CRA confirmed their policies on medical travel expenses in general. According to the CRA:
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Where a medical practitioner certifies that an individual is incapable of travelling alone to obtain medical services, the individual may claim the travel expenses of an accompanying attendant
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The attendant’s presence must be necessary for the patient’s care and wellbeing and the attendant’s role in such care should be continuous and ongoing
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Reasonable travel expenses include gas, meals, accommodations, for the patient and attendant for the period en route to and from the city where treatment is provided as well as during the period of treatment
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For all expenses, an individual can only claim the part of the expense for which he or she has not and will not be reimbursed (unless the reimbursement is included in income), and the individual did not deduct the reimbursement anywhere else on his or her return
For more information on the medical expense tax credit and whether any expenses that you have incurred qualify for the credit, contact your BDO advisor.
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