The March 22, 2017 Federal Budget announced a number of proposed changes to medical tax credits. Here is an overview of some proposed changes that may be relevant to you:
Medical Expense Tax Credit – Eligible
The medical expense tax credit is a 15-per-cent non-refundable tax credit that can be claimed by an individual above and beyond the prescribed thresholds.
The 2017 Federal Budget proposes to clarify the eligibility of the medical expense tax credit in relation to the use of reproductive technologies. Although many of the medical costs related to the use of reproductive technologies (such as in-vitro fertilization) are eligible for the medical expense tax credit, the expenses are only eligible if the individual has an existing illness or medical infertility condition. Going forward, the clarification will allow individuals who require medical intervention in order to conceive a child to claim the same expenses even if it is not on account of medical infertility.
This measure will apply to the 2017 and subsequent taxation years. A taxpayer can elect to have the tax credit be effective for any of the 10 prior years, and would need to make an adjustment to their income tax return for that year.
Disability Tax Credit and Nurse Practitioners
The disability tax credit is a 15% non-refundable tax credit that individuals can claim if they have a severe and prolonged impairment in physical or mental functions.
In order to claim the credit, it is required that an eligible medical practitioner certify that the effects of the impairment result in the individual meeting one of the criteria. Currently, they types of medical practitioners who are permitted to certify eligibility for the disability tax credit include medical doctors, audiologists, occupational therapists, optometrists, physiotherapists, psychologists, and speech-language pathologists.
The Federal Budget proposes to add nurse practitioners to the list of medical practitioners who are allowed to certify eligibility for the disability tax credit. Nurse practitioners are defined as registered nurses with additional educational preparation and experience that allow them the ability to diagnose autonomously, order and interpret diagnostic tests, prescribe pharmaceuticals, and perform specific procedures within their legislated scope of practice. A nurse practitioner would be permitted to certify for all types of impairments that are within the scope of their practice. This measure will apply to disability tax credit certifications made on or after March 22, 2017.
Consolidation of Caregiver Credits
Our tax system allows some tax relief for caregivers through various 15% non-refundable tax credits. In the existing system, caregivers have access to three different non-refundable credits: caregiver credit, family caregiver credit, and infirm dependent credit. Each of the credits has its own eligibility criteria, and phases out when the dependent’s income reaches a certain threshold.
The 2017 Federal Budget proposes to simplify the existing system by consolidating the three tax credits for caregivers into one, called the Canada Caregiver Credit. The government asserts that the new credit will be better in supporting those who were unable to get relief due to the income level of their dependent, since the income threshold for the dependent before the credit starts to phase out will be higher.
The maximum amount of $6,383 may be claimed by individuals caring for an infirm dependent relative (i.e. parent, grandparent, sibling, aunt, uncle, niece, nephew, or an adult child); and a maximum of $2,150 may be claimed by individuals caring for an infirm dependent spouse our common-law partner for whom the spouse or common-law partner amount is claimed for, an infirm dependent for whom the eligible dependent credit is claimed for, or an infirm child under 18 years of age at the end of the taxation year.
How does the new credit compare to the existing three? These amounts are consistent with the amounts under the current caregiver credit and family caregiver tax credit, respectively. The Canada Caregiver Credit is in effect for 2017 and subsequent years.
Contact us today for more information on how the proposed medical tax credit changes from the Federal Budget may affect your personal tax situation.