Medical Expense and Disability Tax Credits and Attendant Care Expense Deduction,
The medical expense tax credit, the disability tax credit and the attendant care expense deduction all provide tax relief for individuals. The medical expense tax credit applies to individuals who have sustained significant medical expenses for themselves or certain of their dependents. The disability tax credit applies to individuals who have a "severe and prolonged mental or physical impairment" or for individuals who support certain dependents with such an impairment. The attendant care expense deduction is available to individuals who are entitled to claim the disability tax credit and who have incurred expenses for personal care that are necessary to enable them to work.
An individual may claim a non-refundable tax credit for medical expenses (referred to in this bulletin as the "medical expense tax credit") when calculating Part I tax payable. The amount of the medical expense tax credit is determined by multiplying the lowest personal tax rate percentage (17% in 1997) by the amount of qualifying medical expenses in excess of certain minimum amounts. An individual may be entitled to receive a refundable medical expense tax credit in respect of the same medical expenses for which a medical expense tax credit was claimed.
An individual who has a severe and prolonged mental or physical impairment as certified by an appropriate medical practitioner may claim a non-refundable "disability tax credit" when calculating Part I tax payable. The amount of the disability tax credit is determined by multiplying the lowest personal tax rate percentage by $4,233 (for 1997). In addition, any unused portion of the individual's disability tax credit may be transferred to the individual's spouse or to a "supporting individual."
A person entitled to a disability pension under the Canada or Quebec Pension Plan or under an insurance policy is not necessarily entitled to a disability tax credit under the Income Tax Act.
Individuals with a disability entitling them to the disability tax credit may also claim, under certain conditions, a deduction in computing net income for amounts paid for attendant care enabling them to earn certain types of income. The maximum amount that may be claimed as a deduction is $5,000; however, see the note below.
When a medical expense or disability tax credit relates to a non-resident or a part-year resident, please refer to the current versions of IT-171,Non-Resident Individuals - Computation of Taxable Income Earned in Canada and Non-Refundable Tax Credits, or IT-193, Part-Year Residents;Computation of Taxable Income and Non-Refundable Tax Credits.
CANADA REVENUE AGENCY BULLETIN #: IT-519R2
SUBJECT: INCOME TAX ACT - Medical Expense and Disability Tax Credits and Attendant Care Expense Deduction.
REFERENCE: Sections 64, 118.2, 118.3 and 118.4 (also sections 64.1, 118, 118.7 and 118.8; subsections 6(16) and 117(2) and paragraph 117.1(1)(b) of the Income Tax Act and section 5700 of the Income Tax Regulations)
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Manager, Technical Publications and Projects Section
Income Tax Rulings Directorate
Policy and Legislation Branch
Canada Customs and Revenue Agency
Ottawa ON K1A 0L5