Federal Personal Income Tax Measures
Expense Tax Credit
The medical expense tax
credit (METC) recognizes the effect of above-average disability-related
and medical expenses on an individual’s ability to pay tax.
For 2005, the credit equals 16 percent of qualifying expenses in
excess of the lesser of $1,844 and 3 percent of net income. The
net income threshold is used to determine above-average expenses
and it is fully indexed to inflation. There is no upper limit on
the amount of eligible expenses that may be claimed.
The list of eligible disability-related and medical expenses is
regularly reviewed and expanded in light of new technologies and
other disability-specific or medically related items.
Taxpayers may claim the medical expenses that they or their spouses
incur. The 2004 budget proposed to allow caregivers to claim more
of the medical and disability-related expenses they incur on behalf
of dependent relatives. Specifically, for medical expenses paid
on behalf of dependent relatives, such as a grandparent, niece or
nephew, taxpayers will be able to claim qualifying medical expenses
that exceed the lesser of 3 percent of the dependant’s net
income and $1,844 (for 2005). Based on 2004 budget proposals, the
maximum eligible amount that can be claimed on behalf of dependent
relatives will be $5,000.
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