As family members age, you may need to consider whether obtaining care and assistance for your loved ones makes sense. You may be unclear on the types of tax credits available and how to maximize your tax relief.
Medical expense tax credit
The medical expense tax credit (METC) is a non-refundable tax credit that allows you to claim eligible medical expenses you incur for yourself, your spouse, or your children who were under 18 years of age and dependent on you for support. In addition, you may be able to claim medical expenses for a dependent relative, other than your
spouse or dependent children, including your parent or your spouse’s parent, grandparent, adult-age children or grandchildren, brother, sister, uncle, aunt, niece, or nephew.
Eligible medical expenses can include:
– dental services,
– and private health insurance premiums as well as attendant care expenses and nursing home fees.
Disability tax credit
Similar to the METC, the disability tax credit, or “disability amount,” is also a non-refundable tax credit generally available when an individual has Form T2201 certified by an authorized medical practitioner as having a severe and prolonged impairment in physical or mental functions, and approved by the Canada Revenue Agency. Where the person with a disability cannot use all or part of the disability tax credit, the unused portion may be able to be transferred to a spouse, or to a supporting individual including a child, grandchild, parent, grandparent, brother, sister, aunt, uncle, nephew, or niece.
Attendant care is care given by a person who performs personal tasks that the individual is unable to do for themselves.
Where an individual hires an attendant for assistance at home, the cost of one full-time attendant may be eligible for the METC. In order to make this claim, the individual needs to either qualify for the disability amount or has been certified by a medical practitioner in writing that the individual is, and in the foreseeable future, will continue to be dependent on others for his or her personal needs and care.
Care in a retirement home
Where an individual resides in a retirement home, the salaries and wages paid to employees who perform certain tasks such as food preparation, housekeeping for the resident’s personal living space, laundry services, health care, and transportation can be claimed as care expenses for purposes of the METC provided that the individual qualifies for the disability amount.
Nursing home or similar full-time care facility
Where an individual resides in a nursing home, generally the entire amount paid for full-time care in the facility may be claimed for purposes of the METC. It is important to recognize that a retirement home facility would only be considered a nursing home facility if it provides that level of care comparable to that of a nursing home.
Disability supports deduction
Attendant care expenses may be eligible for the disability supports deduction as well. This deduction can only be claimed by a person with a disability and cannot be transferred to another taxpayer.
Other tax credits
– The Canada caregiver credit.
– The home accessibility tax credit
Be sure you are getting clarity from your tax advisor on the various tax credits that may be available to you in your specific situation.
Scott Conner is a partner in BDO’s Huntsvile office, with over 20 years of experience providing corporate and personal tax planning strategies for family-owned businesses, entrepreneurs, and large corporations. He helps his clients with shareholder remuneration strategies, estate planning, as well as business structuring to minimize taxes.