The most frequent questions we receive from resident physicians relate to their ability to claim various tax credits and deductions. This is often complicated by their participation in various assistance or rebate programs and the continuing cost of their medical education and licensing.
FAQ’s are as follows:
Q1. Can I claim exam fees as a resident physician?
Board Exams/Exam Fees
Exam fees are not a deductible expense, but can be claimed as tuition on your tax return. The following list of (non-exhaustive) exam fees qualify for tuition treatment:
- Royal College of Physicians and Surgeons Manitoba – Specialty Examinations
- Royal College of Physicians and Surgeons Manitoba – Subspecialty Examinations
Note that you will require an official receipt or letter in order to claim the above as tuition.
Q2. Can I still claim the Manitoba rent credit if I receive rent assist?
Rent (and Rent Assist)
The maximum rent credit one can receive in Manitoba is $525; in order to get the maximum credit, you need to have paid rent of at least $3,500 in the tax year.
However, for every dollar of rent assist that you receive in the year, you lose $1 of rent credit.
Therefore, if you received $525 or more in rent assist, you will not be eligible to claim any of the credit.
You must however, report the rent paid and assistance received in order to qualify for rent assist on a go forward basis.
Q3. Is Malpractice Insurance a deductible expenditure?
Malpractice insurance is a required expenditure in order to practice medicine in Canada. So, is it deductible?
The answer is yes, partially.
The PARIM collective agreement stipulates that the cost of CMPA insurance is to be split on a 75%/25% basis between Shared Health and the Resident, to a maximum of $625/year for residents.
Any amount above that is to be paid by Shared Health.
When you make payment for CMPA dues, it is charged in full. Despite being reimbursed at a later date by Shared Health, your receipt will show the full cost of the annual dues, not your portion.
For this reason, the amount that you can claim on your tax return will differ from the amount on your receipt.
Q4. Can I claim child care expenses if my spouse has no income, or lower income than the childcare expenses?
Child care expenses must be claimed on the return of the spouse with lower income. So, what happens if your spouse has no income, or lower income than the childcare expenses?
Unfortunately, a child care tax deduction can only be used to reduce taxable income to NIL; if there is any additional child care deduction that would reduce income further, that portion will be ‘lost’.
Luckily, there are a few exceptions to the rule.
For example, the spouse with higher income can claim a child care deduction in the tax year if:
- Their spouse was a student
- Their spouse was in jail
If either of these scenarios applies to you, you may claim child care expenses on your own tax return. Hopefully it is for reason 1.
In the absence of one of those exceptions, reducing a spouse with minimal income to nil income could allow for additional non-refundable credit transfers to the higher income spouse, so claiming these deductions (even when no tax is owing for the lower income spouse) may still provide a tax benefit.
* Content is for informational purposes only, and is not intended to be used as professional advice. Each taxpayer’s circumstances are unique. Bokhaut CPA makes no representation as to the accuracy and completeness of the information in this article, and will not be liable for any errors or omissions in this information.