Sunday, March 26, 2023

Alberta taxpayer tries to assert parking prices as a medical expense

Jamie Golombek: Begin gathering the receipts you’ll want in case you’re hoping to assert the medical expense tax credit score

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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 could be the proper time to start out gathering the receipts you’ll want, together with these associated to medical bills in case you’re hoping to assert 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 offered your whole household’s medical bills exceed a minimal threshold equal to the lesser of three per cent of your web earnings or $2,635 (for 2023). The provincial/territorial minimal earnings thresholds differ barely.

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The tax guidelines mean you can declare an METC for bills you incurred for your self, your partner or accomplice, and your youngsters beneath age 18. To qualify, the medical service or merchandise should be particularly listed as an “eligible” medical expense beneath the Revenue Tax Act. In sure restricted conditions, you might also be entitled to deduct the price of “cheap journey bills” comparable to transportation, meals and lodging if it’s a must to journey to acquire these medical companies.

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However so as to deduct transportation as a medical expense, the medical companies should not be out there in the area people, the place of journey should be situated greater than 40 kilometres from the affected person’s house (80 km if you wish to deduct journey bills apart 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 companies.” In sure circumstances, a companion’s journey bills may qualify for an METC offered 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 assert an METC of $853 for hospital parking bills that his spouse, a retired nurse, paid in the course of the 2018 tax 12 months. In that 12 months, the taxpayer’s spouse travelled 3 times per week to acquire kidney dialysis therapy at an Edmonton hospital. On a dialysis day, the taxpayer’s spouse would drive from their house to the hospital, the place she would park the automotive, after which, upon completion of her therapy session, drive house, which was roughly 22 km from the hospital.

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The taxpayer testified that these dialysis remedies “had been life-saving and with out similar 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 remedies 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 vital 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 choose turned to the wording of the constitution itself, which, beneath the Equality Rights heading, states: “Each particular person is equal earlier than and beneath the regulation and has the correct to the equal safety and equal advantage of the regulation with out discrimination and, specifically, with out discrimination based mostly on race, nationwide or ethnic origin, color, faith, intercourse, age or psychological or bodily incapacity.”

The choose 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 will not be based mostly on, neither is it utilized on the premise of, variations of people themselves. It’s utilized on the premise of whether or not any particular particular person travels lower than 80 km to acquire medical companies. 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 searching for to assert a METC.”

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The choose 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 comparable to “defending the fisc” with out it constituting discrimination.

“Parliament is beneath no obligation to create a selected profit,” the Supreme Courtroom of Canada has beforehand acknowledged, “(and) is free to focus on the social applications it needs to fund as a matter of public coverage, offered the profit itself will not be conferred in a discriminatory method.”

The choose, 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.


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