When filing your taxes, there are numerous personal tax credits available that will help you offset the federal (and sometimes provincial) taxes owing on your tax return. We previously discussed how tax credits affect your balance owing. In this posting we will be providing you with some relevant information about a few of these tax credits.

Please note that technical data below has been taken from the Canada Revenue Agency Website at the following link:

http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/ddctns/lns300-350/menu-eng.html

Line 330 – Medical expenses for self, spouse or common-law partner, and your dependent children born in 1995 or later

You can claim on line 330 the total eligible medical expenses you or your spouse or common-law partner paid for:

  • yourself;
  • your spouse or common-law partner; and
  • your or your spouse’s or common-law partner’s child born in 1995 or later.

Medical expenses for other dependants must be claimed on line 331.

 

Which medical expenses are eligible?

The cost of any of the following items can be claimed at line 330 or used in the calculation for a claim at line 331. When you click on any of the medical expenses below, a brief description of the expense is given along with any certification needed, including the need for an approved Form T2201 , Disability Tax Credit Certificate. This list is not exhaustive.

For a more detailed list and additional information of allowable medical expenses, see IT519, Medical Expense and Disability Tax Credits and Attendant Care Expense Deduction. To verify if a specific profession is recognized, see Authorized medical practitioners by province or territory for the purposes of claiming medical expenses.

Note
The person with the impairment in physical or mental functions may be able to claim some of the following expenses as a disability supports deduction on line 215. He or she can claim these expenses at either line 215 or line 330, or split the claim betweenthese two lines as long as the total of the amounts claimed is not more than the total expenses paid. The person may claim whichever is better for him or her.

To get a list of topics in alphabetical order, select or type a letter:

A

B

C

D

E

F

G

H

I

K

L

M

N

O

P

R

S

T

V

W

 

During which period must the medical expenses be paid to be eligible?

You can claim eligible medical expenses paid in any 12-month period ending in 2012 and not claimed for 2011. Generally, you can claim all amounts paid, even if they were not paid in Canada.

Notes
On the return for a person who died in 2012, a claim can be made for expenses paid in any 24-month period that includes the date of death, if they were not claimed for any other year.

If you are claiming expenses paid for a dependant who died in the year, these amounts can be claimed for any 24-month period that includes the date of death, if they were not claimed for any other year.

 

Which medical expenses are not eligible?

There are a number of expenses that are commonly claimed as medical expenses in error. The expenses that you cannot claim include the following:

  • athletic or fitness club fees;
  • birth control devices (non-prescription);
  • blood pressure monitors;
  • cosmetic surgery – expenses for purely cosmetic procedures including any related services and other expenses such as travel, incurred after March 4, 2010, cannot be claimed as medical expenses. Both surgical and non-surgical procedures purely aimed at enhancing one’s appearance are not eligible. These non-eligible expenses include the following:
    • liposuction;
    • hair replacement procedures;
    • botulinum injections;
    • teeth whitening.

An expense, including those identified above, may qualify as a medical expense if it is necessary for medical or reconstructive purposes, such as surgery to address a deformity related to a congenital abnormality, a personal injury resulting from an accident or trauma, or a disfiguring disease.

  • diaper services;
  • health plan premiums paid by an employer and not included in your income;
  • health programs;
  • organic food;
  • over-the-counter medications, vitamins, and supplements, even if prescribed by a medical practitioner;
  • personal response systems such as Lifeline and Health Line Services;
  • the following provincial and territorial plans:
    • Alberta Health Care Insurance Plan
    • Manitoba Health Plan
    • Medical Services Plan of British Columbia
    • New Brunswick Medicare Division of Provincial Department of Health
    • Newfoundland Medical Care Plan
    • Northwest Territories Health Insurance Services Agency of Territorial Government
    • Nova Scotia Medical Services Insurance
    • Ontario Health Insurance Plan
    • Prince Edward Island Health Services Payment Plan
    • Quebec Health Insurance Board (including payments made to the Health Services Fund)
    • Saskatchewan Medical Care Insurance Plan
    • Yukon Territorial Insurance Commission; or
  • travel expenses for which you can get reimbursed.

 

 

Completing your tax return

On line 330 of Schedule 1, Federal Tax, enter the total amount of eligible medical expenses for 2012 that you or your spouse orcommon-law partner paid for:

  • yourself;
  • your spouse or common-law partner; or
  • your or your spouse’s or common-law partner’s child born in 1995 or later.

On the line below line 330, enter the lesser of:

  • 3% of your net income (line 236); or
  • $2,109.

Subtract this amount from your total medical expenses from line 330, and enter the result on line (A) above line 331 of Schedule 1.

Tax Tip
Compare the result with the amount your spouse or common-law partner would be allowed. It may be better for the spouse or common-law partner with the lower net income (line 236) to claim the allowable medical expenses. You can make whichever claim you prefer.

Remember to claim the corresponding provincial or territorial non-refundable tax credit on line 5868 of your provincial or territorial Form 428.

Example
Rick, and his wife Paula, have reviewed their medical bills and decided that the 12-month period ending in 2012 for which they will calculate their claim is July 1, 2011, through June 30, 2012. They incurred the following expenses:

Rick $1,500
Paula $1,000
Jenny (their 16 year old daughter) $1,800
Kyle (their 19 year old son) $1,000
Total medical expenses $5,300

The total allowable expenses for 2012 are $4,300, which will be entered on line 330. As Kyle is older than 18 years of age, his expenses will be claimed on line 331. 

Paula’s net income on line 236 of her return is $32,000. She calculates 3% of that amount as $960. Because the result is less than $2,109, she enters $960 on the line below line 330 on Schedule 1 and subtracts it from $4,300. The difference is $3,340, which is the amount (A) above line 331.

Rick’s net income on line 236 of his return is $48,000. He calculates that 3% of that amount as $1,440. Because the result is less than $2,109, he enters $1,440 on the line below line 330 and subtracts it from $4,300. The difference is $2,860.

In this case, Paula and Rick have found it is better for Paula to claim the expenses for them and their daughter, Jenny.

Supporting documents

Filing electronically
Keep all your documents in case we ask to see them at a later date.

Filing a paper return
Attach all documents for yourself and documents for the person(s) you are claiming (other than for premiums paid to a private health services plan, which you should keep in case we ask to see them) and other documents. Receipts must show the name of the company or individual to whom the expense was paid. Receipts for attendant care or therapy paid to an individual should also show the individual’s social insurance number.

You may be claiming expenses that would be allowable only for a patient who qualified for the disability amount on line 316. In that case, if we do not have a valid Form T2201 , Disability Tax Credit Certificate, for that person, you also have to attach a properly completed and certified copy of that application. We will review your claim before we assess your return to determine if the person for whom you are claiming medical expenses qualifies. If he or she qualified for the disability amount for 2011 and still meets the eligibility requirements in 2012, you can claim this amount without sending us a new Form T2201. However, you have to send us one if the previous period of approval ended before 2012, or if we ask you to do so.

 

 

 

Line 331 – Allowable amount of medical expenses for other dependants

Claim, on line 331, the part of eligible medical expenses you or your spouse or common-law partner paid for the following persons who depended on you for support:

  • your or your spouse’s or common-law partner’s child who was born in 1994 or earlier, or grandchild; or
  • your or your spouse’s or common-law partner’s parent, grandparent, brother, sister, aunt, uncle, niece, or nephew who was a resident of Canada at any time in the year.

The expenses must meet all the criteria explained at line 330. The claim must be for the same 12-month period that was determined under line 330.

Completing your tax return

You have to do the following calculation, for each dependant:

Total dependant’s eligible medical expenses minus either $2,109 or 3% of line 236 (whichever is less) of that dependant.

Enter on line 331 of Schedule 1, Federal Tax, the total of all allowable amounts in respect of each dependant.

Remember to claim the corresponding provincial or territorial non-refundable tax credit on line 5872 of your provincial or territorial Form 428.

Supporting documents

Filing electronically
Keep all your documents in case we ask to see them at a later date.

Filing a paper return
Attach all documents for yourself and documents for the person(s) you are claiming (other than for premiums paid to a health services plan, which you should keep in case we ask to see them). Receipts must show the name of the company or individual to whom the expense was paid. Receipts for attendant care or therapy paid to an individual also should show the individual’s social insurance number.

You may be claiming expenses that would be allowable only for a patient who qualified for the disability amount on line 316. In that case, if we do not have a valid Form T2201, Disability Tax Credit Certificate, for that person, you also have to attach a properly completed and certified copy of that application. We will review your claim before we assess your return to determine if the person for whom you are claiming medical expenses qualifies. If he or she qualified for the disability amount for 2011 and still meets the eligibility requirements in 2012, you can claim this amount without sending us a new Form T2201. However, you have to send us the form if the previous period of approval ended before 2012, or if we ask you to do so.

 

 

 

Line 349 – Donations and gifts

If you or your spouse or common-law partner made a gift of money or other property to certain institutions, you may be able to claim a federal and provincial or territorial non-refundable tax credit when you file your return. Generally, you can claim all or part of this amount, up to the limit of 75% of your net income.

If you require information about a gift made prior to 2012, you will need the version of Pamphlet P113, Gifts and Income Tax, for the year in which you made your gift.

Carryforward
You do not have to claim all of the donations you made this year on your current year return. It may be more beneficial to carry them forward and claim them on your return for any of the next five years.

Note
If you contributed to a federal political party, see lines 409 and 410 to find out about claiming a credit. If you contributed to a provincial or territorial political party, see the provincial or territorial forms in your forms book to find out about claiming a credit.

 

Which donations can I claim?

You can claim a tax credit based on the eligible amount of the gift you give to a qualified donee. Qualified donees generally include:

  • registered charities;
  • registered Canadian amateur athletic associations;
  • registered national arts service organizations;
  • listed housing corporations in Canada set up only to provide low-cost housing for the aged (see note);
  • listed municipalities in Canada (see note);
  • listed municipal or public bodies performing a function of government in Canada (see note);
  • the United Nations and its agencies;
  • listed universities outside Canada with a student body that ordinarily includes students from Canada provided that these universities are listed in Schedule VIII of the Income Tax Regulations (see note);
  • listed charitable organizations outside Canada to which the Government of Canada has made a gift during the 36 month period beginning 24 months before the time of the donor’s gift (or for gifts made prior to 2012, during the donor’s tax year or in the 12 months just before that period) (see note); and
  • the Government of Canada, a province, or a territory.

Note 
Certain types of qualified donees are required to register with us in order to be included on a publicly available list that we maintain. This will further assist donors in determining which organizations may issue official donation receipts.

See Pamphlet P113, Gifts and Income Tax, for more information about:

  • non-qualifying gifts
  • gifts to U.S. charities
  • gifts to Canada, a province or a territory
  • gifts of ecologically sensitive land
  • gifts of certified cultural property

What is the eligible amount of my gift?

In most cases, the eligible amount of your gift is the amount shown on your charitable donation receipt.

However, in more technical terms, the eligible amount of the gift is, under proposed changes, the amount by which the fair market value of the gifted property exceeds the amount of an advantage, if any, received or receivable for the gift.

Under proposed changes, the advantage is generally the total value of any property, service, compensation, use or any other benefit that you are entitled to as partial consideration for, or in gratitude for, the gift. The advantage may be contingent or receivable in the future, either to you or a person or partnership not dealing at arm’s length with you. Under proposed changes, the advantage also includes any limited-recourse debt in respect of the gift at the time it was made.

Example
You donate $1,000 to the Anytown Ballet Company, which is a registered charity. In gratitude, the company provides you with three tickets to a show that are valued at $150. You are therefore considered to have received an advantage of $150. The eligible amount of the gift is $850 ($1,000 – $150).

Under proposed changes, there are situations in which the eligible amount may be deemed to be nil. For more information, see the section called “Deemed fair market value” in Pamphlet P113, Gifts and Income Tax.

Completing your Schedule 9

Add up all of the eligible donations either you or your spouse or common-law partner made in 2012 plus any donations from the previous five years that have not been claimed before. This includes gifts of capital property as well as any gifts to Canada, a province, or a territory.

Generally, you can claim on line 340, all or part of these donations, up to a limit of 75% of your net income (line 236). As an exception, gifts of capital property are limited to 100% of your net income. Also, for the year a person dies and the year before, the 75% limit is extended to 100% of the person’s net income.

Unlike other donations, your total eligible amount claimed for cultural and ecological gifts are not limited to a percentage of net income. Enter the amount of these donations on line 342. Also include on this line any gifts to Canada, a province, or a territory agreed to in writing before February 19, 1997.

You can choose the part of your donations you want to claim in 2012 and carry forward any unused part for up to five years.

If you have taken a vow of perpetual poverty, claim your donations without limit on line 256.

Enter on line 349 of your schedule 1, the amount calculated at line 13 of Schedule 9.

Supporting documents

If you are filing electronically, keep all of your documents in case we ask to see them.

If you are filing a paper return, include Schedule 9 and your official receipts showing either your or your spouse or common-law partner’s name.

Do not send official receipts for amounts shown in box 46 of your T4 slips, box 046 of your T4A slips, box 48 of your T3 slips, box 103of your T5013 or T5013A slips, or on financial statements showing an amount a partnership allocated to you. Keep copies of all your documents in case we ask to see them at a later date.

If you received a T5003 slip with an amount shown in box 13, you must attach this slip as well as the charitable donation receipt you received from the registered charity. You must also complete and attach Form T5004, Claim for Tax Shelter Loss or Deduction, to your return. For more information, see “Tax shelters” in the General Income Tax and Benefit Guide.

If you attached to a previous return a receipt for a donation you are claiming for 2012, tell us in writing with which return it was sent. If you need more information about official receipts, see IT110R3, Gifts and Official Donation Receipts.

Be sure to complete the donations area on your provincial or territorial tax and credit form.

 

Capital gains realized on gifts of certain capital property

If you donated certain types of capital property to a registered charity or other qualified donee, you may not have to include in your income any amount of capital gain realized on such gifts. You may be entitled to an inclusion rate of zero on any capital gain realized on such gifts.

Note
For donations of ecologically sensitive land to a private foundation, the inclusion rate of zero does not apply.

The inclusion rate of zero applies if you donate the following property:

  • a share of the capital stock of a mutual fund corporation;
  • a unit of a mutual fund trust;
  • an interest in a related segregated fund trust;
  • a prescribed debt obligation;
  • ecologically sensitive land (including a covenant, an easement, or in the case of land in Quebec, a real servitude) donated to a qualified donee other than a private foundation (for more information, see “Gifts of ecologically sensitive land” in Pamphlet P113, Gifts and Income Tax); and
  • a share, debt obligation, or right
    [e.g., security (stock) option] listed on a designated stock exchange.

    For donations of publicly traded securities, the inclusion rate of zero is extended to any capital gain realized on the exchange of shares of the capital stock of a corporation for those publicly listed securities donated when:

    • at the time they were issued and at the time of disposition, the shares of the capital stock of a corporation included a condition allowing the holder to exchange them for the publicly traded securities;
    • the publicly traded securities are the only consideration received on the exchange; and
    • the publicly traded securities are donated within 30 days of the exchange.

In cases where the exchanged property is a partnership interest (other than prescribed interests in a partnership), the capital gain will generally be the lesser of:

  • the capital gain otherwise determined; and
  • the amount, if any, by which the cost to the donor of the exchanged interests (plus any contributions to partnership capital by the donor) exceeds the ACB of those interests (determined without reference to distributions of partnership profits or capital).

If you donate property to a qualified donee after March 21, 2011, that is, at the time of the donation included in a flow-through share (FTS) class of property, in addition to any capital gain that would otherwise be subject to the zero inclusion rate discussed earlier, you are deemed to have a capital gain from the disposition of another capital property equal to the lesser of:

  • the amount of your exemption threshold, at that time, in respect of the FTS class of property; and
  • the total capital gains from the actual disposition.

For more information, you can contact the Charities Directorate at 1-800-267-2384 .

If you did not receive an advantage in respect of the gift, the full amount of the capital gain is eligible for the inclusion rate of zero. However, if you received or are entitled to an advantage, only a portion of the capital gain is eligible for the inclusion rate of zero. Thenon eligible portion is subject to an inclusion rate of 50%.

The amount eligible for the inclusion rate of zero is calculated using the following formula:

A × (B ÷ C)

where

A = the capital gain
B = the eligible amount of the gift
C = the proceeds of disposition

Gifts of securities acquired under a security option plan

You can claim an additional deduction on line 249 of your return for donating publicly listed shares of corporations or mutual fund units you acquired through your employer’s security option plan. However, you must meet all of the following conditions:

  • You acquired a security under an option that was granted to you as an employee of a corporation or a mutual fund trust.
  • You disposed of the security in the year it was acquired, and not more than 30 days after its acquisition, by donating it to a qualified donee.
  • You are entitled to claim a security option deduction on line 249.

The additional deduction is equal to 50% of the amount of the taxable benefit, which may effectively exempt from tax the employment benefit associated with the exercising of the stock option. When calculating the amount of the additional deduction that can be claimed on line 249, you determine the employment benefit by using the lesser of:

  • the FMV of the security at the time of acquisition; and
  • the FMV of the security at the time of disposition (through donation).

You may have a capital gain on the disposition of the security. For more information, see “Capital gains and losses” in Pamphlet P113, Gifts and Income Tax.

Granting of options to a qualified donee

You may not claim a gift in respect of an option to acquire a property that is granted to a qualified donee after March 21, 2011, until such time as the qualified donee either exercises or sells the option. At that time, the amount of the gift that you may claim is generally equal to:

  • where the option is exercised by the qualified donee, the FMV of the underlying property minus any consideration that you receive from the qualified donee for the property or the option; or
  • where the option is sold by the qualified donee, the lesser of:
    • the FMV of the underlying property; and
    • the FMV of any consideration, other than a non-qualifying security of any person, received by the qualified donee for the option,

minus any consideration that you receive from the qualified donee for the option.

Completing your Form T1170 and Schedule 3

On Form T1170, Capital Gains on Gifts of Certain Capital Property, report the total of all amounts (see Note below for exception) subject to the 50% or zero inclusion rate on line 6823 and/or on line 6825, depending on the type of property.

On line 132 and/or line 153 of Schedule 3, Capital Gains (or Losses), report the applicable amounts calculated on Form T1170.

Note
The capital gain realized on an exchange of partnership interests for publicly listed securities that are then donated should not be reported on Form T1170. Instead, it should be reported directly on line 174 of Schedule 3.

 

If you would like more information on the above we would gladly be able to assist you with your needs.