As a social worker I have worked with differently-abled individuals of all ages. Growing older with a disability raises questions for parents and adult children alike. For many parents raising a child with special needs, they worry who will look after their adult child when they are no longer capable. As well, many of us are looking after parents or other family members who require caregiving assistance. For both groups, there are questions as to which specialized services are available and concerns about accessing them as well as related costs. I have asked Ken Pope, lawyer and tax expert to provide answers to some commonly asked questions regarding the Disability Tax and the Caregiver Tax credit.
Are you providing caregiving assistance to your parent? If you are, you may be eligible for a tax credit.
Scenario 1: You and your parent live under the same roof- they are on a limited income and you provide assistance with: grocery shopping, meal preparation, transportation to doctor’s appointments as well as some assistance with their activities of daily living. Do you or your parent qualify for a tax credit?
CTC: Yes, if your parents each have income of less than $14,000 to $17,000, and if ‘at any time in the year’ one or both live with you, then you qualify for the ‘caregiver’ tax credit. You’ll find it on line 315 of your tax return.
If you pay income tax, this non-refundable tax credit may be used by you to reduce your taxes. You can back file this credit for up to 10 years, recapturing up to $5,000, and saving about $600 per year going forward. If you stay at home to care for your parents, and do not pay income tax, then the credit can be used by your tax paying spouse.
No medical approval is required to use this credit.
DTC: If you parent is ‘markedly restricted” or ‘significantly restricted in more than one way’ then they will likely qualify for the ‘disability’ tax credit. If they have limited income, they will most likely not be paying income tax. This credit can then be transferred to you, to be used on line 318 of your tax return.
The degree of disability must be approved by Canada Revenue Agency before it can be used, and this process requires the completion and submission of a form, as you would expect. This is form T 2201, which must be completed by a doctor or other approved professional.
Your parents do not have to reside with you to make this credit transferable, but you need to be a supportive family member. Assisting with food, shelter or clothing, among other supports, will help to confirm your qualification for the transferability of this credit.
The disability or marked restriction for older parents tends to sneak up on them, and it may be only after the restriction has been in place for a few years that you realize that the tax credit should be used. The recapture is now approximately $1,600 per year, and the potential recapture going back ten years is $13,000.
Scenario 2: You and your parent live apart. You provide assistance with: grocery shopping, meal preparation, transportation to doctor’s appointments as well as some assistance with their activities of daily living. Do you or your parent qualify for a tax credit?
Yes, the fact that your parent doesn’t live with you does not disqualify you or them from using the disability tax credit if applicable. The caregiver credit would not be applicable unless at some time in the year they reside with you. It’s unfortunate, but being a caregiver and using the caregiver tax credit while your parent lives solely in their own home is not allowed. While aging in place is a very important part of remaining independent as we get older, the Income Tax Act doesn’t quite reflect this journey.
Scenario 3: You are an older person living on your own; you receive assistance from the CCAC for weekly supervision during bathing. You require additional assistance on a private pay basis. Do you qualify for a tax credit?
Yes, if you pay for attendant care beyond the modest supports provided by the CCAC services you can use these expenses as medical tax credits. Be careful that they do not exceed $10,000 per year unless necessary if you use the disability tax credit. An attendant care expense of $10,001 disqualifies you from using the disability tax credit, so govern yourself accordingly.
Scenario 4: You are an older couple and you have an adult child (over age 18) with special needs, who lives with you and is dependent on you for care and guidance. Do either of you qualify for a tax credit?
A child with special needs who lives with their parents most commonly qualifies for the disability tax credit, and the parents would certainly qualify for the caregiver credit. This is a very common scenario, and typically results in the recapture of $5,000 for the caregiver credit and $13,000 for the disability tax credit.
The second most common scenario is that the parents used the disability and caregiver tax credits before the child went into supported living arrangements and left the family home, and the parents then stopped using the disability and caregiver credits. If the parents continue to provide supports for the child while in supported living, and have the child home to stay with them regularly or occasionally during the year, then both credits will still apply. It is very common for parents to believe or be advised that they cannot continue to use these credits, which is completely incorrect.
For more information Ken Pope: www.kpopelaw.ca
Audrey Miller: www.eldercaring.ca
Keywords: disability, tax credits, caregivers