Many of our clients mention that they are caring for an aging parent or relative. When we hear this, we first look at our clients’ tax returns to see if they are claiming the caregiver amount.
The Canada Revenue Agency (CRA) provides a tax credit that caregivers might be eligible for. When the caregiver’s income is too high, they are not eligible to claim this. For those who are eligible to claim it, many have not been claiming it.
Caregiver amount
One commonly overlooked tax credit is the caregiver amount. This tax credit is intended to create additional tax savings for Canadians who are supporting infirm or dependants at home.
We have many situations where a client is caring for a relative. When we hear about this, we obtain a few details regarding their situation to see if they are eligible to claim the caregiver amount.
One question we ask is whether the person they are caring for has any earned income, and if they have, how much.
Eligibility to claim the caregiver amount
To be eligible for the Canada caregiver amount, a family member must have relied on you for support because of an impairment in their mental or physical functions during the year.
This means they needed your help with the activities of daily living, such as cooking, getting to appointments, or bathing. It used to be a requirement that the relative lived with you, but this is no longer the case.
For the purposes of this tax credit, a dependant can be you or your spouse’s:
• Child
• Grandchild
• Parent
• Grandparent
• Brother/sister
• Uncle/aunt
• Niece/nephew
An important point is that the dependant must have lived in Canada at any time during the year.
We ask whether the person being cared for has applied or is eligible for the disability tax credit (DTC). One of the first things a caregiver should do is ensure the person they are caring for completes the disability tax credit application. In our opinion, this is the very first step for the caregiver.
We wrote an article that outlines the different methods of applying (digital application, printed/hard copy application mailed, and by phone).
If the CRA already has an approved disability tax certificate (T2201) on file for the person for whom you’re claiming the amount, you won’t need a doctor’s note confirming their condition. You can also claim their unused disability tax credit in addition to the Canada caregiver amount.
Below are some additional notes to consider regarding the caregiver amount that can be claimed.
Dollar amount to claim
If your dependant is 18 or older and is not your spouse or common-law partner or someone you have also claimed as an eligible dependant, you can claim a caregiver amount of $7,276 for 2023.
Keep in mind, this amount is reduced by every dollar your dependant’s net income is more than $17,085. This means if your dependant’s income is more than $24,361, you won’t be able to claim this credit.
If your dependant is your spouse or common-law partner, you can claim an additional $2,273 to help with their care.
If your dependant is younger than 18, you can claim $ 2,273. In this case, the amount is not reduced by their net income.
Frequently asked questions
My elderly parent lives with me, but they don’t have a mental or physical infirmity. Can I claim the caregiver amount?
It used to be that you could claim a caregiver amount for a parent who is 65 or older, regardless of their state of health. This is no longer the case. You can only claim the Canada caregiver amount for a family member who relied on you for support because they had a mental or physical infirmity during the year.
My husband’s mother moved in. Who can claim the caregiver amount?
The Canada caregiver amount is a non-refundable credit, meaning it lowers the total amount of taxes you owe when you file your return. If your tax payable is more than your husband, it makes more sense for you to claim this amount. You’ll be able to do so if you both live in the same household.
If your family is caring for more than one dependant, either you or your spouse can claim the credit for all of the eligible relatives, or you can each claim separate relatives, but each dependant relative can only be claimed once.
We recommend that you speak with your accountant if you feel you are considered a caregiver and may qualify.
Kevin Greenard CPA CA FMA CFP CIM is a Senior Wealth Advisor and Portfolio Manager, Wealth Management with The Greenard Group at Scotia Wealth Management in Victoria. His column appears every week at timescolonist.com. Call 250-389-2138, email [email protected], or visit greenardgroup.com.
