discussion Way off topic!!!!! (looking for a tax guru)

[sswilson]

Already got my taxes done, so I'm not asking for tax advice.....

I also think I know how this works, but would like to get confirmation/validation.......

Are eligible medical expenses (above the calculated cut-off) a fully refundable credit, or is the calculated amount just tax exempt like an RRSP contribution?

My understanding is that it's fully refundable against the taxes an individual pays, but I'm not absolutely positive.

Amounts you can claim​

Line 33099 – You can claim the total of the eligible expenses minus the lesser of the following amounts:

• $2,421
• 3% of your net income (line 23600 of your tax return)

Let's assume a taxable income of $50K...... (all numbers just a rough guesstimate, and there's a good cnance some of my logic is completely off the rails)

$16K personal exemption + $1K employment exemption off the top = $33K X 20% tax rate = $6600 taxes due/paid (again.... I don't know the effective rate, I'm just pulling that out of my butt)

3% of net ($33K - $6600) would be $792 as the lower end cut-off (or is net total income - tax/benefits paid?)

Does this mean that any eligible medical expenses over and above $792 can be deducted directly from the $6600 due/paid, or does it mean that any expenses above $792 will lower a person's taxable income by their effective tax rate?

 

[crazyea]

AFAIK you will only get a credit equivalent to your tax rate. Every time I put in medical expenses it barely makes a dent.

 

[sswilson]

AFAIK you will only get a credit equivalent to your tax rate. Every time I put in medical expenses it barely makes a dent.

But are you claiming significantly above the $2421/3%?

edit.... fixed the subtraction error in the first line of calculations.....

 

[Sagath]

Medical Expenses 2025 - Canada.ca

The rc4065 is for persons with medical expenses and their supporting family members. The guide gives information on eligible medical expenses you can claim on your tax return.

www.canada.ca

Always use the CRA page to figure it out. They have very good walkthroughs & explanations.

Pauline’s net income (on line 23600 of her return) is $32,000. She calculates 3% of that amount, which is $960. Because the result is less than $2,421, she subtracts $960 from $4,300. The difference is $3,340, which is the amount she could claim on her tax return.


Richard’s net income is $48,000. He calculates 3% of that amount, which is $1,440. Because the result is less than $2,421, he subtracts $1,440 from $4,300. The difference is $2,860, which is the amount he could claim on his tax return.
In this case, it is better for Pauline to claim all the expenses for Richard, herself, and their daughter Jen on line 33099.

The $4300 is the medical expensive that CRA uses in this example.

In your case you would have credits of [$8600 minus whichever is lesser (3% or 2421)] to apply against your taxes paid. Using your 50k example, you're gonna hit the 3% as the lesser of. Hell, most of Canada will hit the 3% since you'd need to make ~95k for 3% to break $2421.

This 'medical expense' credit is the same as the donations exemptions credit, so it would get added to them for a 100% tax rebate.

 

[sswilson]

Medical Expenses 2025 - Canada.ca

The rc4065 is for persons with medical expenses and their supporting family members. The guide gives information on eligible medical expenses you can claim on your tax return.

www.canada.ca

Always use the CRA page to figure it out. They have very good walkthroughs & explanations.


The $4300 is the medical expensive that CRA uses in this example.

In your case you would have credits of [$8600 minus whichever is lesser (3% or 2421)] to apply against your taxes paid.

This 'medical expense' credit is the same as the personal exemptions credit, so it would get added to the 16k for a 100% rebate.

That makes it sound like a person would treat the applicable medical expenses as non taxable as opposed to it being a full rebate. The $16K PE is a tax free exemption, not a rebate.

Lets say medical expenses are $3000 over the calculated minimum.....

Would a person get the full $3000 back or would it just be treated as non taxable so they'd get (assuming a 20% tax rate) $600 back?

 

[Sagath]

That makes it sound like a person would treat the applicable medical expenses as non taxable as opposed to it being a full rebate. The $16K PE is a tax free exemption, not a rebate.

Lets say medical expenses are $3000 over the calculated minimum.....

Would a person get the full $3000 back or would it just be treated as non taxable so they'd get (assuming a 20% tax rate) $600 back?

I edited my post afterwards sorry. Its a Tax credit. Not a full credit. Poor wording on the 'baseline' portion.

 

[sswilson]

I edited my post afterwards sorry. Its a Tax credit. Not a full credit. Poor wording on the 'baseline' portion.

Ok, so in that case, a person would get $600 back on their taxes with $3000 claimable expenses? (This is what comes from not doing taxes by hand.... you just punch in the numbers and can't see how those numbers affect the outcome.... ).

 

[Sagath]

Ok, so in that case, a person would get $600 back on their taxes with $3000 claimable expenses? (This is what comes from not doing taxes by hand.... you just punch in the numbers and can't see how those numbers affect the outcome.... ).

Assuming a 20% marginal rate, and no provincial credits? Yes.

(Lets not get in to marginal rates to muddy the waters further )

 

[sswilson]

Heh.... I used the page you linked to get the percentage I quoted in the OP (I also saw the breakdown of how to decide who claims it).... if I had scrolled further down the page they've got a full breakdown of the actual calculations, and yeah, they apply a 15% rate to calculate what's claimed against taxes owed/paid.



So yeah.... yet again the CRA website is pretty damn good as long as you read the whole page.....

 

[crazyea]

I always set my personal amount to "0" with my employer. This way I always have money for new toys in March. lol.