The medical expense tax credit is a non-refundable credit for eligible medical costs exceeding a threshold, reducing the tax of individuals and families with significant health expenses.
The medical expense tax credit (METC) provides relief for out-of-pocket medical costs, prescriptions, dental, vision, certain therapies, private health premiums, and much more, that exceed a threshold: the lesser of a fixed dollar amount or 3% of net income. Only the excess above that threshold generates the credit.
Because it is threshold-based and non-refundable, it is usually best to claim all family medical expenses on one spouse's return, typically the lower-income spouse (whose 3% threshold is lower), to maximise the credit. Expenses can be claimed for any 12-month period ending in the tax year.
A family with $60,000 net income and $4,000 of eligible medical expenses claims the credit on the amount above 3% of income ($1,800), so on $2,200, generating a non-refundable credit that reduces their tax.
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