We all love a nice smile. It’s the facade of our personality, and that’s why teeth are so important. But dental care can be expensive. Luckily for Canadians, most dental expenses are tax deductible, including orthodontics.
As a non-refundable tax credit, the medical expense tax credit can reduce any income tax you may owe to the CRA. In general, you can claim all the amount paid for dental care, dentures, or implants within the 12-month period when you file your income tax at the end of a fiscal year. For example, if you claimed $2000 that you had spent on dentures in your tax return filed on March 12, 2021, the total amount of $2000 must be made within the twelve months no earlier than March 21, 2020. In addition, you must pay for the expenses yourself without reimbursement. That said, you can make these expenses in other countries and still claim the tax credit from the CRA.
Who can claim the credit and for how much?
Most tax credits can be transferred to a spouse or a common-law partner, and so, too, are medical tax credits. If you are subject to much heavier tax duty than your life partner, your partner can transfer their credits to you and reduce the tax amount owed as a household. In addition, you can avail yourself of medical expenses incurred by your or your partner’s children. If a family member dies in the same fiscal year, medical expenses made within a 24-month period prior to death can also be claimed for deduction by an appointed person, provided that the expenses have not been previously claimed.
My family and I have large medical bills. Can I claim all the amounts within the eligible time period?
No, there is a limit to the amount you can claim. All Canadian taxpayers are entitled to the amount of deduction on medical expenses that exceed the lesser of either $2,397, or 3% of your net income. If you, your spouse/partner, or your child incurred medical expenses in 2020, you can claim 15% of the total expenses subtracting the lesser of the two values quoted above, and use it as a credit against the tax you owed.
Are all credits for dental expenses non-refundable?
No, the CRA has made an exception to low income families and individuals with higher medical bills under a program known as the Refundable Medical Expense Supplement. To be eligible for the supplement program, candidates must meet the following conditions:
- You are a working adult (18+) who resides in Canada through the fiscal year prior to applying.
- You made a claim for medical expenses on line 33200 in your T1 form, or for the disability supports deduction on line 21500.
Are all expenses on dental care eligible for the claim?
While most such expenses as filings, cleaning, dentures, and implants are so indeed, there are a few exceptions. Keep in mind, any dental services for purely cosmetic purposes are excluded from the deal, like teeth whitening. Please note that while orthodontic procedures like having invisalign, braces, or retainers may sound cosmetic in purpose, expenses are eligible for claiming tax credits. For much we know, over or underbite is not a purely cosmetic problem but affects our speech, eating, and long term health.
So, if you have incurred any such expenses mentioned above, please don’t discard any of the related receipts in case of audit. If you need more information regarding your eligibility for tax deduction, please consult our chartered accountants. We’d be happy to answer any questions you may have.