Tax Hyperion, Vol. 19, Issue 5, September-October 2022
Wellness Expenses and Medical Expense Tax Credit
Wellness is not just a buzzword, it is about being kind to oneself by taking preventative steps for better psychological and physical health—an improved quality of life. When individuals prioritize wellness, it also indirectly benefits the health care system of each province or territory, which generally focuses on reactive as opposed to preventative health care due to resource constraints. This is where the medical expense credit, which can be clamed in an individual’s tax return, under section 118.2 of the Income Tax Act could make a meaningful impact on individuals and society in general.
A non-refundable tax credit can reduce a taxpayer’s tax owed but does not result in a tax refund for a taxpayer who pays no tax for the year. For a taxpayer with tax withheld at source or paid by instalments, a non-refundable credit can result in a tax refund
The medical expense tax credit, which is a federal tax credit, relies on the provincial/territorial legislation that determines if a practitioner is a “medical practitioner.” Understandably, this creates inconsistent treatment of a medical expense coast-to-coast-to-coast.
The three-part publication explores the ability for an individual to utilize the non-refundable medical expense tax credit to access health care therapies, specifically, massage, chiropractic care, osteopathy, podiatry, acupuncture, naturopathy, physiotherapy and counselling.
These type of health therapies are mostly covered by employer provided healthcare plans and referred to as paramedical health therapies. The intent is to analyze and identify any opportunities or gaps in the medical expense tax credit provided under section 118.2 when an individual incurs health therapy expenses above and beyond what is covered by their employer provided health plans and therefore incur out-of-pocket expenses.
At the federal level, a workaround could not be found; specific legislation to regulate a specific profession in each province/territory is required for a taxpayer to access the medical expense tax credit. At the provincial and territorial level, two additional approaches to regulating healthcare professions emerged that merit consideration.
The full publications are accessible here:
Part 2 –
Part 3 –
