Tax Tips - 2016 Taxation Year
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Every year during tax season, The Kidney Foundation of Canada prepares general tax tips for people who are on dialysis or have had a kidney transplant. The income tax assistance measures most often used by people with kidney disease are the Medical Expense Tax Credit and the Disability Tax Credit. These are non-refundable tax credits that reduce the amount of income tax you owe. They can’t reduce the amount of tax owed to less than zero, meaning they won’t reimburse your medical expenses, but they reduce the amount of income tax you have to pay.
Information on other tax assistance measures and on Tax Preparation Clinics can be found below, as well as sample letters.
|Note: The information provided below is general in nature and does not necessarily cover all circumstances. While we make every effort to be accurate, we recommend that you seek professional tax advice for your individual questions. The Canada Revenue Agency (CRA) provides detailed instructions for claiming the various tax credits and deductions that are available. You can find these instructions from the CRA website www.cra-arc.gc.ca or by calling 1-800-959-8281
Medical Expense Tax Credit
The Medical Expense Tax Credit is a non-refundable tax credit that you can claim for a wide range of medical and related expenses.
You can claim eligible medical expenses that you or your spouse or common-law partner paid for:
- Your spouse or common-law partner
- Your or your spouse’s or common-law partner’s children born in 1999 or later.
You can claim eligible medical expenses that you, or your spouse or common-law partner paid for in any 12-month period ending in 2016 and did not claim in 2015.
Your total expenses have to be more than 3% of your net income (line 236) or $2,237, whichever is less.
Common expenses for people with kidney disease that can be claimed are listed here:
1. Travel Expenses
Claiming travel expenses is different based on how far you travel from your home for treatment. Travel expenses cannot be claimed as a medical expense if you travelled less than 40 kilometres one-way from your home to get medical services.
Travel Expenses: at least 40 km but less than 80 km one-way
The cost of public transportation expenses (for example, bus, taxi, or train) can be claimed if you travelled at least 40 kilometres (one-way), but less than 80 km, from your home to get medical services.
To claim transportation and travel expenses, the following conditions must be met:
- The same medical services were not available near your home
- You took a reasonably direct travelling route
- It is reasonable for you to travel to that place for those medical services
You can also claim the travel expenses of a person to accompany you if a medical professional certifies in writing that you were not able to travel alone to get medical services.
Where public transportation is not readily available, you may be able to claim vehicle expenses.
You can calculate meals and vehicle expenses two ways: the detailed or simplified method.
If you use the detailed method to calculate meal expenses, you must keep your receipts and claim the actual amount that you spent.
If you use the simplified method to calculate meal expenses, you can claim in Canadian or US funds a flat rate of $17/meal, to a maximum of $51/day (sales tax included) per person, without receipts. Although you do not need to keep detailed receipts for actual expenses if you use the simplified method, the CRA may still ask you do provide some documentation to support your claim.
If you use the detailed method to calculate vehicle expenses, you must keep all receipts and records for the vehicle expenses you incurred during the 12-month period you choose for medical expenses.
Vehicle expenses include:
- Operating expenses such as fuel, oil, tires, licence fees, insurance, maintenance, and repairs.
- Ownership expenses such as depreciation, provincial tax, and finance charges.
Keep track of the number of kilometres you drove in that 12-month time period, as well as the number of kilometres you drove specifically for the purpose of medical expenses. Your claim for vehicle expenses is the percentage of your total vehicle expenses that relate to the kilometres driven for medical expenses.
For example, if you drove 10,000 km during the year, and half of that was related to medical expenses, you can claim half of the total vehicle expenses on your return.
If you use the simplified method, keep track of the number of kilometres driven during the 12-month period you choose for medical expenses. To determine the amount you can claim for vehicle expenses, multiply the number of kilometres by the cents/km rate from the chart below for the province or territory in which the travel begins.
CRA Cents per Km. Rates for 2016 by Province or Territory
(Rates taken from: www.cra-arc.gc.ca/travelcosts/)
|Province or Territory
|Newfoundland and Labrador
|Prince Edward Island
Although you do not need to keep detailed receipts for actual expenses, the CRA may still ask you to provide some documentation to support your claim.
Travel Expenses: at least 80 km one-way
The cost of travel expenses, including accommodations, can be claimed if you travelled at least 80 kilometres (one-way) from your home to get medical services.
For calculating meal and vehicle expenses, you can use the detailed or simplified methods explained above.
You must keep receipts for all accommodation expenses and you must be able to show that the amount you paid for accommodation is necessary because of the distance travelled and your medical condition. Claim the amount for accommodation as shown on your receipts.
2. Home Hemodialysis Machine (“Kidney Machine”)
People who have installed a home hemodialysis machine may claim the following costs:
- Additions, renovations, or alterations to your home required to install the machine (the hospital official who installed the machine must certify in writing that they were necessary for installation)
- Repairs, maintenance, and supplies
- A telephone extension in the dialysis room and all long distance calls to a hospital for advice or to obtain repairs
- Necessary and unavoidable costs to transport supplies
- The part of the operating costs of the home that relate to the machine (excluding mortgage interest and capital cost allowance)
To calculate the cost for housing the machine (that is, municipal taxes, insurance, heating, lighting, and maintenance and repairs, but not including capital cost allowance or mortgage interest) or the portion of rent that is attributable to the room where the machine is kept: you should use percent of square footage of your home and pro-rate your expenses. So if you keep your dialysis machine in a room that is 20% of the square footage of your home, you can claim 20% of the expenses of your taxes, insurance, heating, lighting, rent, etc.
To calculate the utilities (water) you can claim what can reasonably be attributed to the machine. One way to calculate this would be to look at the difference between the bills you received before the machine was installed and those after it was installed. The difference in the cost is what you could claim.
3. Organ Transplants
You may claim reasonable amounts you paid to arrange the transplant including insurance premiums, and reasonable travelling costs including accommodations for the patient, the donor, and their respective attendants. All provinces have programs to reimburse living donors for the costs associated with donation (parking/transit, meals, accommodation, etc.). Any costs for which reimbursement is provided cannot be claimed as medical expenses.
4. Prescription drugs and medications
You can claim the cost of prescription drugs and medications that were prescribed by a medical professional and were recorded by a pharmacist. You cannot claim over-the-counter medications, vitamins, or supplements, even if prescribed by a medical professional (except Vitamin B12).
5. Drugs and medical devices bought under Health Canada’s Special Access Program
You can claim the amounts paid for drugs and medical devices that have not been approved for use in Canada, if they were bought under this program. For more information, visit http://www.hc-sc.gc.ca/dhp-mps/acces/index-eng.php.
For a complete list of the medical expenses you can claim, visit www.cra.gc.ca/medical.
Disability Tax Credit
The Disability Tax Credit is a non-refundable tax credit helps persons with disabilities or their supporting persons reduce the amount of income tax they may have to pay. Dialysis is a life-sustaining therapy that meets the criteria for this credit. The credit will reduce your income tax payable if you qualify. If you have no tax payable, you may transfer the credit to a spouse or other supporting person.
We recommend that all dialysis patients apply for the Disability Tax Credit. Your renal social worker can help you with the paperwork, if needed. The application is easily completed and there is no need for a private company to assist.
You are eligible for the Disability Tax Credit if the CRA approves Form T2201 Disability Tax Credit Certificate. A medical professional has to fill this out and certify that you have a severe and prolonged impairment and must describe its effects. In Part B, under Life Sustaining Therapy, we recommend that your doctor answer ‘yes’ to the question: “Does your patient meet the conditions for life-sustaining therapy?” and specify the type of therapy as “kidney dialysis to filter blood.” The attached letter, “Addendum to the Disability Tax Credit Certificate” may also be helpful in explaining the diagnosis of End-Stage Renal Disease and the time required for dialysis. The application for the T2201 Disability Tax Credit Certificate is available at http://www.cra-arc.gc.ca/E/pbg/tf/t2201/README.html.
The maximum federal disability amount for 2016 is $8,001 for those over the age of 18, and $4,667 for persons under 18 years old (Source: http://www.cra-arc.gc.ca/tx/ndvdls/sgmnts/dsblts/dtc/menu-eng.html).
|Registered Disability Savings Plan (RDSP)
The RDSP is a federal government program that encourages people with disabilities to save in order to become more financially secure. It is similar to paying into a private pension plan and the government matches personal contributions up to a certain amount. Canadian residents under the age of 60, who qualify for the Disability Tax Credit, may be eligible if they meet certain criteria. Parents can open an RDSP for their child. For more information, visit www.cra-arc.gc.ca/rdsp.
Additional Tax Assistance Measures
Family Caregiver Amount (FCA)
If you have a dependant (for example, a child, spouse or common-law partner) with an impairment in physical or mental functions, you may be eligible to claim an additional amount of $2,121 with a signed statement from a medical professional showing when the impairment began and what the duration of the impairment is expected to be. You do not need a signed statement from a medical practitioner if the CRA already has an approved Form T2201 Disability Tax Credit Certificate, for the specified period. More information is available at http://www.cra-arc.gc.ca/familycaregiver/.
Refundable Medical Expense Supplement
You can claim a refundable credit of up to $1,187 if you have a low income and high medical expenses. More information is available at http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/ddctns/lns409-485/452-eng.html.
Disability Supports Deduction
If you have a physical or mental impairment, you can claim a disability supports deduction if you paid expenses that no one has claimed as a medical expense, and you paid them so that you could:
- Be employed or carry on a business (either alone or as an active partner)
- Do research or similar work for which you received a grant; or
- Attend a designated educational institution or a secondary school where you were enrolled in an educational program.
More information is available at http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/ddctns/lns206-236/215-eng.html.
Federal Excise Gasoline Tax Refund Program
You may qualify to have a portion of the federal excise tax on gasoline refunded to you if you have a letter from a medical professional certifying that you suffer from a permanent mobility impairment that renders the use of public transportation hazardous. More information and the application form are available at http://www.servicecanada.gc.ca/eng/goc/gasoline_tax_refund.shtml.
Working Income Tax Benefit (WITB)
This is a refundable tax credit intended to provide tax relief for eligible working low-income individuals and families. The WITB consists of a basic amount and a disability supplement. More information is available at http://www.cra-arc.gc.ca/witb/.
Volunteer Tax Preparation Clinics
Volunteers trained by the CRA are available to help you complete your return. The program is designed to help low-income people with simple tax situations. To find a tax preparation clinic in your area go to http://www.cra-arc.gc.ca/tx/ndvdls/vlntr/clncs/menu-eng.html or call 1-800-959-8281.
Remember to bring your tax information slips and receipts. You can get your current year and prior year old age security (OAS), employment insurance (EI) and Canada pension plan (CPP) tax slips electronically. You can find this service at https://www.canada.ca/en/employment-social-development/services/my-account/tax-information.html.
Download Canada Revenue Agency guides:
For more information on filing your tax return, check the CRA website
Individual Income tax enquiries: 1-800-959-8281
T.I.P.S (Tax Information Phone Service) at 1-800-267-6999 (automated)