Notwithstanding the fact that Canada has a publicly funded health care system, the reality is that each year millions of individual Canadians incur medical and para-medical expenses (like prescription drug costs) which can be significant and which are not covered by that public health care system. Absent a private health insurance plan which provides reimbursement for such expenses, they must be paid for on an out-of-pocket basis.
The financial cost of those expenses can, however, be at least partially offset by claiming a medical expense tax credit (METC) on the annual tax return, as both the federal and the provincial/territorial governments offer a such a credit. For 2025, the federal credit is equal to 14.5% of eligible medical expenses incurred, while the amount of the provincial or territorial credit will vary, depending on the province or territory in which the taxpayer resides.
Given the huge number of Canadian taxpayers who have medical expenses which are eligible for the credit, it’s unfortunate that, while the METC is simple in concept, it can be difficult to determine:
- just what kinds of expenses are claimable for purposes of that credit (not all are, and others are claimable only if certain criteria are met),
- the extent to which expenses can be claimed (only expenses which exceed a certain amount can be claimed, and that amount changes with the income of the taxpayer), and
- who should claim the expenses (usually, but not always, it makes more sense for the lower-income spouse to claim medical expenses incurred by the entire family).
Given all these variables, it’s not hard to see why taxpayers can become confused and frustrated when trying to file a claim for medical expenses on the annual return. However, as is the case with almost all tax and financial planning, starting early and not waiting until the last minute will allow taxpayers to take steps to maximize any available credit for 2025.
Which of my expenses are claimable, and are there additional criteria imposed?
The very first step to take is determining whether medical and para-medical expenses which have been incurred actually qualify for the METC. And while that might seem to be easy to determine or even intuitive, it isn’t. The good news for taxpayers is that there are a great number of different kinds of medical expenses which do qualify for the medical expense tax credit, and the Canada Revenue Agency provides a detailed alphabetical (and searchable) listing of those expenses on its website at https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/deductions-credits-expenses/lines-33099-33199-eligible-medical-expenses-you-claim-on-your-tax-return.html)
However, while each of the medical expenses listed on the CRA website is eligible to be claimed for purposes of the medical expense tax credit, for each such expense it’s necessary to determine whether there are additional criteria which must be met in order to make that particular expense eligible for the credit.
Probably the most important criterion for most taxpayers is that, in some cases, a particular expense is only claimable if a prescription has been obtained from a medical professional certifying a need on the part of the taxpayer to incur the expense. However, making a determination of when it’s necessary to obtain a prescription from a medical professional in order to ensure that the planned expenditure will qualify for the credit is also far from intuitive. For instance, in order to claim the medical expense tax credit for the cost of a cane or a walker, it is necessary to obtain a prescription for that cane or walker. However, where costs are incurred to purchase a wheelchair, those costs are eligible for the medical expense credit, with no requirement that a prescription of any kind be obtained. The listing of eligible medical expenses found on the CRA website does, however, indicate the kinds of expenses for which a prescription is required; where the amount of a planned expenditure for a medical expense is significant, it’s well worth consulting the CRA website to ensure that the purchase is done in a way that will make it possible to claim the medical expense tax credit for the cost incurred.
Finally, other types of medical expense costs can be claimed for purposes of the credit only where the person incurring the expenditure qualifies for the federal disability tax credit. Once again, the listing found on the CRA website indicates the types of expenditures to which this requirement applies.
Of my total medical expenses, how much can I claim?
Once the taxpayer has determined which of the medical expenses incurred do qualify for the METC, the next step is to figure out how much of those medical expenses can actually be claimed for purposes of the credit, and this is where some of the complexity of the METC becomes apparent.
The basic rule is that, for 2025, a taxpayer can claim eligible medical expenses which exceed 3% of the taxpayer’s net income, or $2,834, whichever is less. (Net income is the amount found on line 23600 of the income tax return.)
Put in more practical terms, the rule for 2025 is that any taxpayer whose net income for the year is less than $94,467 will be entitled to claim medical expenses that are greater than 3% of their net income for the year. Those having net income of $94,467 or greater will be limited to claiming qualifying expenses which exceed the $2,834 threshold.
Take, for example, a taxpayer who has $70,000 in net income for 2025 and incurs $3,600 in eligible medical expenses during the year. The computation of the available METC claim for 2025 is as follows. Based on the 3% of net income rule, the taxpayer will be entitled to claim medical expenses incurred over $2,100 (3% of $70,000). That taxpayer will therefore be able to claim $1,500 ($3,600 minus $2,100) in medical expenses for purposes of the METC.
Most tax deduction and tax credit claims require that the taxpayer have incurred the related expense during the tax year for which the claim is being made. That’s not the case for the METC, where the rule is that the taxpayer can claim qualifying medical expenses incurred during any 12-month period which ends in the tax year for which the claim is being made. In other words, each taxpayer must determine which 12-month claim period ending in 2025 will produce the largest tax credit amount. Since that determination will depend on the amount of eligible medical expenses, when such eligible medical expenses were incurred, and the taxpayer’s income for the year in which the claim will be made, there is no quick formula or universal rule of thumb which will enable the taxpayer to easily determine the optimal time period. Tax software can be useful in this regard, as it enables to taxpayer to run “what-if” scenarios to determine which scenario produces the optimal tax result.
Who should make the claim for the METC?
Once the taxpayer has calculated the amount of medical expenses which are eligible for the credit and determined which 12-month period will be used for purposes of calculating the METC, the last step, for taxpayers who have a spouse, is to figure out which spouse should make the claim.
Medical expenses incurred by family members – the taxpayer, their spouse, and children who are under the age of 18 at the end of 2025, as well as certain other dependent relatives – can be added together and claimed by either spouse. In order to maximize the amount of expenses which can be claimed, it’s usually best to make the claim for the METC on the tax return of the lower-income spouse, for whom the 3% of net income threshold will be less.
That said, it’s also necessary to ensure that the spouse making the claim actually has tax payable for the year. The reason for this is that the METC is a non-refundable credit, meaning that it can be used to reduce tax otherwise payable, but cannot create or increase a refund. So, in order to maximize the use of the METC in a year, it should be claimed by the spouse whose tax payable for the year is at least as much as the amount of the METC claim – otherwise some or all of the METC will be “wasted”.
As the end of the calendar year approaches, it’s a good idea to add up the medical expenses which have been incurred during 2025, as well as those paid during 2024 and not claimed on the 2024 return. Once those totals are known, it will be easier to determine whether to make a claim for 2025 or to wait and claim 2025 expenses on the return for 2026. And if the decision is to make a claim for 2025, knowing what medical expenses were paid, and when, will enable the taxpayer to determine the optimal 12-month period for making that claim.
Finally, it makes sense to look into the timing of medical expenses which are likely to be incurred early in 2026. Where those are significant expenses (for instance, a particularly costly medication which must be taken on an ongoing basis, or some expensive dental work that must be done) it may make sense, where possible, to incur and pay for such expenses before the end of the calendar year, so that they can be included in 2025 totals and claimed on the return for 2025.
More information on the METC can be found on the CRA website at https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/deductions-credits-expenses/lines-33099-33199-eligible-medical-expenses-you-claim-on-your-tax-return.html.
The information presented is only of a general nature, may omit many details and special rules, is current only as of its published date, and accordingly cannot be regarded as legal or tax advice. Please contact our office for more information on this subject and how it pertains to your specific tax or financial situation.
