Wondering whether that new air conditioning unit you installed last summer is an eligible medical expense for tax purposes? You aren’t alone. The Canada Revenue Agency maintains a list of “common adjustments” resulting from its various tax return review programs.
While you might think there’s no harm in trying to claim a questionable expense, the reality is that not only could the CRA disallow your deduction and reassess you but it could also hit you with non-deductible arrears interest, and in some cases, a penalty.
Here are three items from the list to pay particular attention to this filing season: “Line 232 – Other Deductions” & “Line 256 – Additional Deductions,” interest paid on student loans and eligible medical expenses.
1. Other/Additional deductions
These lines are apparently used by a variety of taxpayers as a “catch-all” for various deductions. Although these line names may sound like they are meant to allow any number of miscellaneous deductions, they each have very specific purposes.
The CRA specifically cited the following examples of expenses that are non-deductible but tend to be claimed erroneously as other or additional deductions on these lines: legal fees you paid to get a separation or divorce or to establish custody for a child, funeral expenses, wedding expenses, loans to family members (that presumably went “bad”) and a loss on the sale of your home.
Before filing your 2013 return, you may wish to peruse the “What You Can Deduct” section of the CRA’s website to make sure that an expense is properly deductible before making the claim.
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