Can You Claim Therapy on Your Taxes in Canada?

Yes, in most cases. In Canada, fees you pay to a psychologist are eligible medical expenses for the medical expense tax credit on your income tax return. It is a non-refundable credit rather than a deduction, so it reduces the tax you owe instead of your taxable income, and you can only claim the part you paid yourself, not the part your insurance covered.

The Canada Revenue Agency accepts payments to authorized medical practitioners, and which professions count depends on the province where they practise. Registered psychologists qualify in every province, including Alberta. For other professions, such as counsellors and social workers, eligibility depends on the provincial rules, so check the Canada Revenue Agency's list for Alberta or ask whoever prepares your return before you claim.

• Therapy sessions with a psychologist for yourself, your spouse or common-law partner, and your children under 18.
• Psychological assessments, such as an ADHD assessment or a psychoeducational assessment.
• The portion of a fee left over after insurance paid its share.
• Expenses from any 12-month period that ends in the tax year you are filing for.

• Any amount your insurance reimbursed.
• Amounts paid from a health spending account, since your employer funded those.
• Sessions that cost you nothing, such as those through an employee assistance program.

The credit applies to eligible expenses above a threshold: the lower of 3 percent of your net income or a fixed amount the government sets each year. The federal credit is calculated at the lowest federal tax rate, and Alberta adds a provincial credit on top. Because of the income-based threshold, many families claim all their medical expenses on the return of the spouse with the lower income.

The credit does not make therapy free, but for a year with regular sessions or an assessment, it can return a meaningful amount.

You do not send receipts with your return, but the Canada Revenue Agency can ask to see them. Keep each receipt along with your insurer's statement of what they paid. When a clinic bills your insurer directly, those two documents show exactly what you paid yourself, which is the figure you claim.

• Psychologists' services are exempt from GST, so there is no GST on your sessions.
• If a condition is severe and long-lasting, the disability tax credit may apply. It has its own application, and a psychologist can certify some impairments, including those affecting mental functions.
• If you travel a long way for care that is not available closer to home, some travel costs can also count. Check the Canada Revenue Agency's rules before you claim them.

Supporting Wellness direct bills many insurers, including Alberta Blue Cross, Canada Life, Sun Life, Manulife, Greenshield and Desjardins. You pay only the part your plan does not cover, and that part is what you can include in your medical expense claim. Ask us for receipts at any time. See direct billing and insurance or call 1-888-622-8350.

This article is general information, not tax advice. Your tax preparer or the Canada Revenue Agency can confirm what applies to your situation.

Related reading: How much therapy costs in Calgary, What an ADHD assessment costs and Paying for therapy in Alberta.