Are Mental Health Services Tax-Deductible?

Accessing mental health services is an excellent step towards improving mental health, but it can be costly. Luckily, there are a few tax credits the Canadian government instills to assist in offsetting these costs. 

What is a tax credit?

You are taxed based on your total income for the year. Tax credits (sometimes referred to as deductibles or write-offs) reduce the amount of your income that is taxable. For example, if you make 60 000$ in a year, but have 2000$ in tax deductions, only 58 000$ of your income is taxed. So what deductions can you claim for mental health services? 

The Disability Tax Credit (DTC)

The DTC reduces the amount of income tax that individuals with physical or mental disabilities must pay. The maximum credit given is 9872$ per year. Some mental illnesses, such as depression, anxiety and ADHD, can be classified as a mental disability, depending on the extent to which the impairment affects daily life. To assess this, the Canadian Revenue Agency compiled a list of daily mental functions that mental disabilities may impact. These functions are as follows: 

• • Attention: including impulse control and ability to notice danger
  • Goal-setting: beginning tasks (such as cleaning, laundry, cooking) and making a plan
  • Adaptive functioning: Basic hygiene, ability to express needs
  • Concentration: Remembering short-term information, ability to focus on simple tasks 
  • Perception of reality: being able to separate delusions from reality
  • Regulating behaviour and emotions: Emotional regulation, appropriate responses for a given situation
  • Judgment: comprehending that actions have consequences, choosing appropriate outfits for weather conditions, and decisions about your own welfare

To see if you may qualify for the DTC, assess your ability to perform these functions. Then, question if you meet ALL THREE of the following criteria:

• • Despite efforts such as consistent therapy, medication and assistive devices, you cannot execute the above mental functions, OR it takes 3 times longer to perform them compared to someone of a similar age without the impairment. 
  • The effects of the impairment are present most of the time (approximately 90% or more)
  • The disability is expected to persist for at least 12 months (continuously) OR has already lasted 12 continuous months. 

If you believe you meet the criteria, the next step is to find a medical doctor, nurse practitioner or psychologist to certify that this is indeed the case. It’s also a good idea to maintain records that prove you have kept up with therapy, medications and any other plans to assist your mental health. While this can be a challenging process, the good news is any costs associated with obtaining the disability tax credit are also tax-deductible. 

If you’re on the hunt for a medical professional to verify your symptoms, book a session with one of our psychologists here. 

What other tax write-offs are there?

Psychologist visits: the amount paid for psychological services can be used as a tax deduction, under the “medical expense” section. It’s important to note that you can ONLY claim what insurance didn’t cover, that is, what you paid out of pocket. 

Personalized Therapy Plan: The costs associated with creating a customized therapy plan can be used as a tax deduction. The plan must be designed for someone eligible for the disability tax credit, and a medical professional (psychologist, medical doctor or nurse practitioner) must prescribe it. 

Prescription drugs and medications: Any prescribed drug (including antidepressants and anti-anxiety medication) can be tax-deductible. Just keep in mind the pharmacist has to record the prescription for proof. 

Service animals: If you have a service animal, the cost of the animal, food, veterinarian care and training are write-offs. The animal must be used for more than emotional support, that is, it’s trained to perform specific tasks such as deep pressure therapy, interrupting harmful behaviours or panic attacks, retrieving medication, or finding help, etc.