Alberta taxpayer tries to say parking prices as a medical expense

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It’s too early to start submitting your 2022 private tax return — digital submitting of T1 returns solely opens on Feb. 20 — however now’s the proper time to begin gathering the receipts you’ll want, together with these associated to medical bills should you’re hoping to say the medical expense tax credit score (METC).

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The METC is a non-refundable credit score value 15 per cent federally, with every province and territory providing its personal further credit score. Federally, you’ll be able to declare an METC supplied your whole household’s medical bills exceed a minimal threshold equal to the lesser of three per cent of your web revenue or $2,635 (for 2023). The provincial/territorial minimal revenue thresholds range barely.

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The tax guidelines permit you to declare an METC for bills you incurred for your self, your partner or associate, and your children underneath age 18. To qualify, the medical service or merchandise should be particularly listed as an “eligible” medical expense underneath the Earnings Tax Act. In sure restricted conditions, you might also be entitled to deduct the price of “cheap journey bills” similar to transportation, meals and lodging if you need to journey to acquire these medical providers.

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However as a way to deduct transportation as a medical expense, the medical providers should not be out there in the local people, the place of journey should be positioned greater than 40 kilometres from the affected person’s residence (80 km if you wish to deduct journey bills aside from transportation), the route taken should be a direct one and “it should be cheap for the taxpayer to journey to that place to acquire the providers.” In sure circumstances, a companion’s journey bills may qualify for an METC supplied a medical practitioner has licensed the taxpayer can’t journey with out help.

A tax case determined earlier in January concerned an Alberta taxpayer’s try to say an METC of $853 for hospital parking bills that his spouse, a retired nurse, paid in the course of the 2018 tax yr. In that yr, the taxpayer’s spouse travelled thrice per week to acquire kidney dialysis therapy at an Edmonton hospital. On a dialysis day, the taxpayer’s spouse would drive from their residence to the hospital, the place she would park the automotive, after which, upon completion of her therapy session, drive residence, which was roughly 22 km from the hospital.

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The taxpayer testified that these dialysis therapies “have been life-saving and with out identical his partner would have died.” The taxpayer equated her parking expense to a medical therapy expense as she wanted to have the ability to park her automotive to obtain therapies and, thus, they need to correctly be allowed as a medical expense for the needs of claiming an METC.

The taxpayer was basically difficult the 80-km distance requirement within the Tax Act as being discriminatory and opposite to the Canadian Constitution of Rights and Freedoms. “My spouse has to park to acquire dialysis,” the taxpayer defined. “(The regulation) discriminates in opposition to individuals who need to journey lower than 80 km for obligatory medical therapy” because it solely permits such parking bills to be deducted for people who journey better than 80 km to acquire therapy.

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The decide turned to the wording of the constitution itself, which, underneath the Equality Rights heading, states: “Each particular person is equal earlier than and underneath the regulation and has the best to the equal safety and equal good thing about the regulation with out discrimination and, particularly, with out discrimination based mostly on race, nationwide or ethnic origin, color, faith, intercourse, age or psychological or bodily incapacity.”

The decide stated this was not a case the place there was any discrimination between people because it pertains to claiming an METC. It’s true that the Tax Act specifies a limitation of “not lower than 80 km,” however this limitation isn’t based mostly on, neither is it utilized on the idea of, variations of people themselves. It’s utilized on the idea of whether or not any particular particular person travels lower than 80 km to acquire medical providers. In different phrases, the act, which makes a distinction for one-way journey distances of “not lower than 80 km applies equally to any and all people in search of to say a METC.”

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The decide famous Parliament selected to acknowledge hospital parking prices (being a part of “cheap journey bills”) as a medical expense for one-way journey of not lower than 80 km. However that doesn’t imply Parliament is discriminating by not granting the identical recognition of parking prices for one-way journey of any lesser distance. In spite of everything, Parliament is entitled to make such distinctions within the act for causes similar to “defending the fisc” with out it constituting discrimination.

“Parliament is underneath no obligation to create a specific profit,” the Supreme Court docket of Canada has beforehand said, “(and) is free to focus on the social packages it needs to fund as a matter of public coverage, supplied the profit itself isn’t conferred in a discriminatory method.”

The decide, subsequently, dismissed the taxpayer’s declare for the METC, however selected to not award any prices to the Crown contemplating the circumstances.

Jamie Golombek, CPA, CA, CFP, CLU, TEP, is the managing director, Tax & Property Planning with CIBC Personal Wealth in Toronto. [email protected].

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