Caregiving and Tax Benefits: Take What You Can Get!

Caregiving and Tax Benefits: Take What You Can Get!

Canadian caregivers are spending millions of dollars every year, paying for such things as prescriptions, transportation and parking fees, meals, professional assistance in the home, adult day programs, and medical devices/aides. These are often referred to as ‘out-of-pocket’ expenses ‘though they are perhaps better described in the plural as ‘out-of-pockets’ expenses. The expenses are on average $275 per month/ $3300 per year. Many caregivers don’t have an extra $275 to spend each month and are dipping into savings, reducing personal spending, saving less for retirement, and even going into debt by taking out loans or maxing out credit cards.

Can you relate to this?  Do you know how much your ‘out-of-pocket’ expenses are? Do you track these expenses? Do you have a system to keep your receipts? This is a perfect time to begin to keep track of your spending and organize your receipts. This will help you decide whether to apply for federal tax credits.
As it is now, financial benefits for caregivers in Canada are mostly in the form of federal tax credits or insurance benefits. Nova Scotia is currently the only province in Canada with a caregiver allowance (called the Caregiver Benefit program). For your information, the UK and Australia both have a caregiver allowance program and the adoption of such a program in Canada would help to relieve some of the financial costs of caregiving that are absorbed by caregivers. But until then, elizz stated optimistically, this is what is available in terms of federal tax credits:


Disability Tax Credit Certificate

In order to be eligible for the Disability Tax Credit and the Canada Caregiver Credit you have to first get a Disability Tax Credit Certificate. This certificate can be completed by a health care provider including a family doctor or nurse practitioner or a specialist (such as an audiologist, speech language pathologist, occupational therapist, or optometrist).

To qualify, the disabled person must have a “significant impairment of their mental or physical functions resulting in their ability to perform at least one of their basic daily life activities being markedly affected.” It also has to be “prolonged” which means it has lasted or is expected to last at least 12 months.
 
If you aren’t sure about eligibility, you can talk to your health care provider or specialist about it. Once approved, the Disability Tax Credit Certificate is submitted by the person with the disability to the Canada Revenue Agency, and then the Disability Tax Credit and the Canada Caregiver Credit can be claimed.


Disability Tax Credit (DTC)

This credit is worth between $1500 and $2700 (if there is a negative tax balance, there is no refund). It may be possible to claim up to 10 years of DTC retroactively. You must have taxable income to apply for this credit.
A “supporting person” can apply for this credit, if they are a  common-law partner or spouse, parent, child, grandparent, grandchild, sister, brother, aunt, uncle, niece or nephew and the disabled person relies or relied upon them for food, shelter, and clothing.


Canada Caregiver Credit (CCC)

This replaces The Caregiver Amount, The Amount for Infirm Dependants (18 & older), and The Family Caregiver Amount.

Like the Disability Tax Credit, you must have taxable income in order to claim the credit. Credits are about reducing the amount of income tax that needs to be paid.  The credit starts when the total amount of medical expenses (this includes mileage and meals) is greater than 3% of the claimant’s net income.
 
A “supporting person” (again, one who must have taxable income) can apply for this credit. This is defined as: a spouse, common-law partner, parent, minor child, grandparent, grandchild, sister, brother, aunt, uncle, niece or nephew. The credit can be shared by more than one caregiver ‘though this makes it complicated at tax time (an alternative to this is to have one submit it and split the return).
 
The claimant does NOT have to live with the person but the person has to be dependent on you for “support” due to a “medical or physical infirmity” (already determined with the Disability Tax Credit Certificate). The maximum CCC amount is $6986, for which you can claim a 15% non-refundable federal credit.


Home–Accessibility Tax Credit (HATC)

This is a maximum of S10,000 per year that can be applied to renovations or alterations to a residence to increase mobility or reduce the risk of harm. Expenses which can be submitted can include expenses such as building materials, fixtures, equipment rentals, building plans, and permits and/or labour costs.

This does NOT include you and your cousin Bill’s labour as enthusiastic and amateur “do it yourselfers!”


Medical-Expense Tax Credit (METC)

Like most tax credits, you can only claim if you have taxes owing or payable because it is a tax credit, not an allowance or pension. The METC is for expenses that exceed the lower of either $2302 or 3% of one’s net income. You can claim both the Home Accessibility Tax Credit (HATC) and this Medical-Expense Tax Credit.


Wholly Dependent Person Tax Credit

This can be claimed for a child less than 18 years of age or of any age if the child is mentally or physically impaired. To be eligible, the claimant must not have a spouse or common-law partner, been separated from their spouse /partner with no support (provided or given), supported the child in the tax year, and lived with the child in a home maintained by the individual.


Eligible Dependent Tax Credit

This tax credit allows caregivers to claim an additional amount for dependents who have an “impairment in physical or mental functions.” Also, the dependant must live with you, rely on you for support with the impairment, and have little or no income. An eligible claimant can receive a tax credit for their parent or grandparent by blood, marriage, common-law partnership, or adoption, or for their child, grandchild, brother, or sister by blood, marriage, common-law partnership, or adoption if he/she is under 18 years of age or has impairment in physical or mental functions.

Claims up to $2,040 in tax credits can be claimed above what can already be claimed for an eligible dependent.

Please note that eligibility criteria and claim amounts do change, so it is wise to go right to the horse’s mouth, that is, the mouth of the Canada Revenue Agency. If this overwhelms or stresses you out, you may want to call the Canada Revenue Agency and ask to speak to an agent who can explain your options and help determine your eligibility, or speak to a tax accountant about tax credits for caregivers.
 

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