For many years, the government has allowed people to claim dependents on their taxes. This applies not only to children, but also those in their family who require daily care such as an elderly parent or a family member who is disabled.
There are currently three different credits that can be applied: the infirm dependent credit, the caregiver credit and the family caregiver tax credit.
If you’re confused about how those are different, that’s the problem the government is trying to solve by consolidating them into one: the Canada Caregiver Credit. To qualify for this tax credit, the person in question must be dependent on you due to either a mental or physical impairment.
One of the changes to the legislation is that one no longer has to live with the person who is dependent. This is a good change because previously if your parents were in a nursing home, you likely couldn’t claim the tax credit. Most people don’t have the resources of time to take good care of elderly parents.
As an accountant, I am used to asking if people have kids. Dependent parents, or a grandparent, brother, sister, uncle, aunt, nephew, or niece are less common, but the tax credit can be applied if you’re a caregiver for any of these relatives.
The maximum credits vary depending on your relationship with the dependent. For instance, the maximum credit available if you’re a caregiver for a spouse or child under 18 is $2,150. If you’re a care giver for other relatives, the maximum credit is $6,883.
Two other aspects of the credit to be aware of: you can no longer claim a parent who lives with you if they are not infirm. Second, if the dependent has an income of over $16,163, the tax credit is reduced by one dollar for every dollar the dependent earns over that amount.
If you think you may qualify for the Canada Caregiver Credit and have any questions, please get in touch.
Ian Edmonds is a CPA, CA and CPA (NC) working in Toronto with small and medium-sized businesses, individuals, and not-for-profit organizations in Canada and the US to provide personalized, approachable tax and accounting advice and services and help people avoid expensive tax situations.