Taxpayers may expect to receive a deduction for every dollar they spent in medical expenses. In reality, the amount eligible to claim is actually based on your income.

The medical expense credit is designed to assist Canadians who spend a significant amount in medical expenses over the course of a year. Which means to the average Canadian, only a portion of your medical expenses translates to a deduction.

The 3% rule

Have you heard of the 3% rules before? It’s a handy tip to keep in mind when calculating. First, review your total medical expenses amount. Next, the eligible amount you can claim is 3% of your income or, the set maximum for the tax year — whichever is less.  Here is an example. If your net income is $60,000, the first $1,800 of medical expenses will not count toward a credit. If your expenses total $2,000, only $200 will be applied to your bottom line.

Refundable and non-refundable tax credits

There are two different types of tax credits that can be claimed; non-refundable tax credits and refundable tax credits. To learn more you can find information on Canadian Government websites.

Some tax credits are non-refundable, which means they reduce or cancel your taxes payable. Non-refundable tax credits, such as medical expenses or charitable donations, are part of the federal and provincial tax credits. These types of tax credits reduce the amount of tax payable on your taxable income.

A refundable tax credit is a credit that can be paid to you even if you have no tax payable income.  Refundable tax credits are part of HST and the Trillium tax credits.  Refundable tax credits are credits that are paid to you only if you are eligible. Often the federal or provincial government pays them in a series of payments throughout the year to assist with living expenses.

If you are looking for a list of other expenses you can deduct head to my other blog. Or if you have any questions feel free to email me at