Claiming Counselling Expenses: Tax Tips for Canadians
There can be so many hurdles clients navigate when it comes to getting help. Things like social stigma, finding the right counselling, having enough time, having the financial means, and perhaps nagging thoughts that we should be able to just get over it.
Let's Talk about it
At Aspen Psychology we work hard to remove as many barriers as possible because we really believe in what we do and want to make our services accessible to everyone. Often these roadblocks to beginning therapy are nothing more than misconceptions and outdated ideas that can be overcome.
With compassion, understanding, and evidence-based approaches, we strive to create a comfortable space where you feel supported and heard, making it easier to take that step forward toward a healthier, more fulfilling life.
An important factor to consider, once you’ve decided to move forward, is how you’ll manage the financial side of getting the support you need. We’re sharing this tax information because we take pride in helping our clients not only receive the assistance they deserve but also make the most of any financial benefits available.
NOTE - Before we begin - we are not financial experts and this should not be taken as financial advice. You definitely need to speak with your accountant or tax professional to make sure you get this right. We present this as information and a starting point for you to think about.
Key Highlights
- Canadians might be able to claim counselling expenses on their taxes under certain conditions.
- Eligible expenses include fees for services by qualified therapists in Canada for diagnosed mental health conditions.
- You'll need proper documentation like receipts, invoices, and potentially a diagnosis from a medical practitioner.
- Only expenses exceeding 3% of your net income are deductible.
- The process involves understanding federal and provincial regulations and may involve claiming a medical expense tax credit.
Introduction
Navigating the tax system in Canada can take time and effort. This is particularly true when thinking about healthcare costs. Many Canadians are unsure if their counselling sessions like womens counselling, couples counselling and counselling for men can get them a tax credit.
This guide will help you see how to claim counselling expenses on your tax return. We will cover eligibility, how to take deductions, and other important details from the Canada Revenue Agency (CRA).
Eligibility for Claiming Counselling Expenses in Canada
Criteria for Deductible Counselling Services
In Canada, you can claim counselling expenses as medical costs if you meet certain rules.
To find out if your counselling services are eligible for medical expenses, think about these points.
First, the therapy should help with a mental health condition that a medical practitioner has confirmed. This means that counselling should be a necessary part of your medical care, not just for personal growth.
Second, the therapist needs to be a licensed professional recognized by your province or territory. This can include psychologists, social workers with the right qualifications, or other registered therapists.
Finally, keeping good records is very important. Make sure to save all receipts, invoices, and documents to back up your claim for the medical expense tax credit.
Understanding the CRA's Definition of Medical Expenses
The Canada Revenue Agency (CRA) has a list of eligible medical expenses you can use for tax purposes. When thinking about counselling, it is important to be clear. The CRA defines eligible therapy as needed for treating a diagnosed mental health condition.
If you go to counselling for your personal growth or relationship issues, it will not qualify. But if you are diagnosed with a condition like depression and get therapy from an eligible medical practitioner, that cost can be seen as a medical expense by the CRA. It's important to understand these details when figuring out what costs you can claim.
Tax Deduction Process for Counselling Expenses
Keeping good records can make everything easier and help you avoid problems with the CRA.
It is really important that you keep everything related to your medical or counselling expenses, things like the session location and time, the type of therapy you are receiving and the receipt for payment.
Calculating Your Deductible Amount
If you have an accountant that prepares your taxes then this next part will be taken care of by them.
If you are self-filing then here are some general guidelines for adding this expense.
To find out how much you can deduct for counselling expenses on your taxes, you need to do some math. First, figure out the medical expense tax credit threshold. This threshold is either 3% of your net income or a specific amount set by the CRA for that tax year. You should use whichever amount is lower.
For instance, if 3% of your net income is $2,000 and the set amount is $2,479, you will go with $2,000. Next, subtract this threshold from your total eligible medical expenses. The amount you get is what you can claim on your tax return.
NOTE - again we are just giving you this as a general guideline, it would be best to ask a tax accountant to make sure you do it right.
Documentation and Receipts: What You Need to Keep
Keeping careful records is very important when you want to claim medical expense deductions, like those for counselling. Make sure to keep all your therapy session receipts. The receipts can be tax deductible if they have your name (or the name of the person you're claiming for), the therapist's name and contact details, the date of each session, and the amount paid.
If you can, get a statement from your therapist that includes your diagnosis, how long you have been in treatment, and why the sessions are needed for your health. These supporting documents are very important if the CRA wants to check your claims later.
Summary
Are counselling expenses tax deductible? Yes; in Canada counselling expenses can be tax-deductable, but there are specific guidelines and criteria that you must follow.
It's important to know how to claim counselling expenses in Canada to get the best tax breaks. These tax breaks can make counselling more affordable and help you get the therapy you need.
You should follow the rules from the CRA and keep good records. This way, you can smoothly handle the tax deduction process. Make sure to figure out your deductible amount correctly and send in your claim the right way. Getting advice from a professional can also help you use all the deductions you can. If you have questions or need help, check out our guide or talk to a tax expert for support.
Frequently Asked Questions
Can I claim counselling for stress as a medical expense?
Claiming counselling for stress depends on your situation. If stress comes from a known mental health condition, like anxiety or depression, then counselling could be treated as a medical expense. But if the counselling is for everyday stress without a specific diagnosis, it probably won’t qualify.
Is Therapy Tax (GST) Exempt in Canada?
Certain psychotherapy and counselling services in Canada have been exempted from collecting sales taxes, a move aimed at making mental health care more affordable.
The Canada Revenue Agency (CRA) announced that registered psychotherapists and counselling therapists are no longer required to charge goods and services tax (GST) or harmonized sales tax (HST) on their services.
Originally proposed by the federal government in its November (2023) fall economic statement, the tax exemption took effect on June 20 following royal assent. It applies to practitioners who hold a license from an approved regulatory body.
Is Counselling a Taxable Benefit for Business Owners?
If you are an owner operator, or you own a business with few employees, offering them extras on top of their salary is a great way to get and retain good employees.
It's also important to know if you own your own business and operate it yourself what you can deduct and what you have to claim as a taxable benefit on your personal income tax.
We are not tax specialists and strongly recommend you speak with a professional but here are some thoughts.
Counselling services for mental or physical impairment provided by authorized medical practitioners may qualify as eligible medical expenses for the medical expense tax credit under the Canada Revenue Agency guidelines. For business owners, if counselling is offered as an employee benefit, it may be considered a taxable benefit, depending on the circumstances. Always confirm specifics with the CRA.