Every year we pull out our box of receipts, files of documents, a calculator and a bottle of ibuprofen, and we get ready to do our taxes. And every year, it seems just as complicated, if not more, than the last.
To make things a little easier, here are a few important items that should be considered when preparing personal tax returns if you’re a senior or someone caring for a dependent.
Attendant care expenses
Attendant care describes a range of support that a person receives, either from a retirement home, nursing (long-term care) home or in-home care services. You can claim these expenses for yourself, your spouse, your common-law partner or your dependent.
Nursing homes provide full-time care, and so generally, most expenses are considered eligible. These include personal and nursing care, accommodation, activities and social programming.
If you live in a retirement home, you cannot claim the entire amount you paid, as rent and food costs are not included. However, if you qualify for the disability tax credit, you may be able to claim the attendant care expenses as a medical expense. This would include the salaries and wages of retirement home staff who provide care and services like housekeeping of resident’s suites, meal preparation, personal laundry and nursing care.
For this reason, retirement homes will provide you with detailed invoices that break down expenses, separating the eligible items like care, from non-eligible items, like rent. Retirement homes must provide you with a receipt of these expenses for you to claim them.
In some cases, there are limitations as to what expenses can be claimed. For example, in a full-time nursing home, you are only entitled to the disability credit or the attendant care costs, but not both. It’s important to know which ones you qualify for and which ones will give you the greatest benefit.
In addition to attendant care expenses, medical expenses incurred during the year are eligible for a non-refundable medical expense tax credit. Some medical expenses include medical supplies, dental care, and many other services, procedures and products. To help determine if a particular medical expense is eligible to be claimed, the CRA has outlined an extensive list of eligible medical expenses.
The disability tax credit
The disability tax credit can offer tax savings to those impacted by disability and covers a range of health conditions and limitations. A detailed outline of the eligibility criteria for the disability tax credit can be found on the Canada Revenue Agency website. Once eligible, this tax credit can be claimed on behalf of yourself, your spouse or common-law partner, or your dependent.
This credit cannot just be claimed on an individual’s tax return, however. Instead, a form T2201 Disability Tax Credit Certificate will need to be completed, signed by your doctor, and filed with CRA for approval. Once approved, you can then claim the DTC for future years and up to 10 previous tax years. This adjustment can be requested when filing the form.
All receipts should be kept as CRA occasionally performs reviews and requires supporting documentation.
The Canada caregiver credit
Many couples and family members who provide care for a loved one living with dementia or other health conditions may not know that they could qualify to receive this credit. This tax credit is available to anyone supporting a spouse, common-law partner or dependant who has a physical or mental impairment.
According to Canada Revenue Agency, “an individual is considered to depend on you for support if they rely on you to regularly and consistently provide them with some or all of the basic necessities of life, such as food, shelter and clothing.”
The amount you can claim depends on various factors, including the individual’s net income, whether they have other credits being claimed for them, and your individual circumstances.
Filing your taxes
There is a lot to think about and sort through when it comes to tax time. If you need assistance making sure you’re filing correctly and not missing any benefits, you might want to consider contacting a reputable accounting firm to help make the process easy.
This article has been prepared featuring the expertise of Corey Roberts, CA, CPA and Partner at Paterson & Company in Ottawa. Corey specializes in tax planning and compliance, with additional expertise in Canadian personal and corporate tax, CRA assistance, and international and cross-border taxation. Corey loves being active in his spare time and is an avid golfer, men’s league hockey player, and co-ed softball player. When he’s not busy helping his clients, he can be found spending time with his family and extra-large lap dog, Mabel, a St. Bernard-mix.
This article does not take into account or anticipate any changes in law or practice, by way of judicial, governmental or legislative action or interpretation. These authorities are subject to change, retroactively and/or prospectively, and any such changes could have an effect on the validity of the information presented within this article and may result in incremental taxes, interest or penalties. We will not update this article to take any such changes into account. This article is not intended to replace personalized advice from a qualified tax professional.