Is travel insurance tax deductible in Canada? What you need to know.

Tax season in Canada is fast approaching, and many people are looking for ways to reduce their tax burden. While many are aware of the tax benefits of RRSPs and other accounts, many don’t know that the medical portion of travel insurance is tax deductible. 

Travel insurance is crucial when travelling outside the country or your home province. It protects your travel plans in case of unforeseen emergencies—such as unexpected travel interruptions, and having extra health insurance protects your wallet from the high cost of medical care. 

Buying travel insurance is a smart move that covers you in an emergency with a tax benefit as a nice bonus. 

Can I claim travel insurance on my taxes?

If you’re planning on escaping the snow, Canadian snowbirds and other travelers may be able to recover a portion of the cost associated with their travel medical insurance premiums by claiming them as a Medical Expense Tax Credit on their T1 General Income Tax and Benefit Return. 

This tax credit is designed to reduce overall income tax liability. It allows individuals to claim travel medical insurance premiums and other qualifying medical expenses on their tax return if the costs fall within the criteria outlined by the Canada Revenue Agency (CRA).

While travel medical insurance premiums are recognized as eligible expenses for tax credit purposes, it is essential to note that other types of travel insurance—such as trip cancellation insurance, trip interruption insurance, and baggage loss insurance—do not qualify for this credit and should not be included in any tax claims related to medical expenses. Only the medical coverage portion of your policy can be used, including what you paid in premiums and any eligible medical expenses you had to pay.

How to claim travel medical insurance

You can claim this tax credit if you have eligible medical expenses for:

• Yourself
• Your spouse or common-law partner
• Your children under 18
• Certain other dependants (like parents, grandparents, siblings, etc.).

If you have a spouse and a common-law partner, you can only claim medical expenses for one, not both.

How is the medical expense tax credit calculated?

The tax credit is 15% of the total eligible medical expenses that exceed the lower of:

• A fixed amount (which changes yearly).

• 3% of your net income for the year.

For other dependants (e.g., parents, grandparents), the tax credit is based on 3% of their net income instead of yours.

Who counts as a dependant?

• A child, grandchild, parent, grandparent, sibling, uncle, aunt, niece, or nephew who:
  • • • Depends on you for support (food, shelter, clothing, etc.).
      • Lives in Canada (unless they are your child or grandchild).
• Children under 18 are not considered dependants for this purpose because their expenses are already covered under your main claim.
• If you paid for a spouse’s or dependant’s medical expenses while still your spouse/dependant, you can claim them even if they are no longer your spouse or dependant when you file your taxes.
• Either spouse/common-law partner can claim the total medical expenses for the family.

Conditions for claiming travel medical expenses

To qualify for the tax credit:

• The medical costs must be eligible under tax rules.
• You or your legal representative must have paid the expenses.
• The expenses must have been paid within 12 months ending in the tax year (or 24 months if the patient passed away).
• The expenses cannot have already been used for another tax deduction.
• You must have receipts as proof.
• The expenses must not have been reimbursed by insurance or another source.

Consult a tax professional if you’re not sure about your eligibility.

 

Keep a record of your expenses

Using the tax credit takes a bit of preparation. Always keep detailed records of your expenses and hold on to all receipts, ensuring they clearly show the name of the company you paid. However, do not send these documents with your tax return—keep them if the CRA asks to see them later. Generally speaking, you must keep all required records and supporting documents for six years from the end of the last tax year they relate to. Visit Revenu Québec and the CRA for more information.

The bottom line

Travel insurance isn’t just a smart way to protect yourself from unexpected medical costs—you can also use the medical portion to reduce your overall tax burden with the Medical Expense Tax Credit. Whether you're a frequent traveler or planning a one-time trip, claiming the eligible portion of your travel insurance costs can help you save money while staying protected. Consult with a tax professional to ensure you maximize your deductions and meet all CRA requirements.

For information about insurance and taxes visit our insurance tax guide.

Also read

• How to choose the best travel insurance
• How travel insurance protects you from travel scams
• Is small business insurance tax deductible in Canada?