Income Tax Time – Medical Expense Tax Credit

This is another area where I too often see mistakes that have been made in the past. For some reason, many people and tax preparers only pay attention to the current tax year date – but this can be a costly error. You are allowed to use any 12 month period that ends in the current taxation year and this can be important if you have some big-ticket items in the early part of one year that you can couple with some other significant costs from the latter part of the previous year.

As most people know, there is a threshold below which, no tax-credit is created. That threshold is 3% of line 236 of your tax return. For those who choose not to memorise lines on your return, that is your NET INCOME and it can be found about half-way down page 3 of a regular T1 Tax Return. Once allowable expenses exceed the 3% of line 236, a credit is automatically created.

So what can you do besides check for straddling of expenses across two calendar years? Look for DEDUCTIONS – and maximise them to the greatest extent possible on your cash flow. Items such as RRSP or SPOUSAL RRSP contributions reduce your NET INCOME. So do Business investment Losses and allowable moving expenses.

It can be handy to track your expenses on a computer spreadsheet that includes the date and then you have the necessary information at your fingertips when it comes time to prepare your own return or pass the spreadsheet to the firm who does it on your behalf. CRA won’t check if a straddle works in your favour – since you have the information.

Don’t let $$ slide through your fingers.

Ian Whiting

Ian R. Whiting CD, CFP, CLU, CH.F.C., FLMI (FS), ACS, AIAA, AALU With more than 40-years of experience in the industry, Ian has qualified 3 times for MDRT, completed LUATC in 1979, the LUAC Financial Planning Skills Course and attended numerous Schools in Agency Management and Sales Management through LIMRA. He obtained his CLU in 1987 while also completed his IFIC qualification and completed his Fellowship in the Life Management Institute with a specialty in Financial Services in 1988. In 1989, he completed qualifications for his Chartered Financial Consultant designation. In 1992, he qualified as an Associate of the Academy of Life Underwriters (Head Office underwriter qualification) and in 1993 he completed his Associate, Customer Service designation program through LOMA. In 1997, he qualified as a CFP and also completed his courses and exams to obtain the Associate, Insurance Agency Administration designation. In 1999, he completed the study and examinations to qualify as a Trading Officer, Partner and Director for Mutual Funds with the BC Securities Commission. As a result, he is also qualified as both a Branch Compliance Manager and Head Office/Provincial Compliance Officer. He served for nearly 18 years with the Canadian Forces (Air) Reserve (reaching the rank of Captain) primarily working with Air Cadets and was award the Canadian Forces Decoration (CD) in 1982. Long known as a maverick and forward thinker in the financial services world, Ian enjoys the challenge of learning new material and planning for the future evolution of his chosen profession.