Your employees may not be aware that premiums and out-of-pocket expenses related to your group health, vision and dental plans may give rise to a tax credit.
The information below provides information regarding the medical expense tax credit for residents of Quebec.
What is the medical expense tax credit?
The medical expense tax credit is a non-refundable tax credit that is available both federally and provincially. Its objective is to offset part of the medical costs borne by a taxpayer, when these exceed a certain level of income.
Federal
The total annual payroll deductions for health and dental insurance can be found on the T4 in box 85.
To this amount, employees should add any medical and dental expenses that have not been reimbursed by the group insurance plan for themselves and their dependents. This information is readily available on the insurer’s member site and mobile app.
The credit will be granted on the excess of the lesser of 3% of net income or $2,635 (indexed from $2,479 for 2022 and $2,421 for 2021).
Employees should compare the amount to which they may be entitled with that of their spouse, if applicable. It is generally more advantageous for the spouse with the lower net income to apply.
For complete details, visit the Canada Revenue Agency website.
Provincial (Quebec)
Total annual payroll deductions for health and dental insurance can be found on the RL-1 in box 235.
To this amount, employees should add the taxable benefits resulting from the employer’s contribution to the health and dental plan. This number is indicated on the RL-1 in box J.
Next, employees should add any medical and dental expenses that have not been reimbursed by the group insurance plan for themselves and their dependents.
The applicable credit corresponds to the excess of 3% of the family income.
For complete details, visit the Revenu Québec website.
Employee Communication
Did you know that Vita Assure offers its clients, free of charge, a personalized memo for distribution to employees with their tax slips? The memo explains where to find the information required to calculate the tax credit. Contact your advisor to get your copy.
