TaxMatters@EY - February 2013
The new family caregiver tax credit
Maureen De Lisser and Janna Krieger, Toronto
If you’re a caregiver of a dependant with a mental or physical infirmity, you may be eligible to claim the new family caregiver amount in your 2012 personal tax return. The family caregiver amount is not a standalone tax credit, but rather is included as an enhancement to the calculation of certain existing dependency-related credits.
More specifically, if you have a qualifying dependant and otherwise qualify for one or more of the following non-refundable credits, you may claim an additional amount of $2,000 when calculating those credits:
- Spouse or common-law partner credit
- Eligible dependant credit (also known as the equivalent-to-spouse credit)
- Caregiver tax credit (also known as the in-home care credit)
- Child tax credit (for children under 18)
In addition, the maximum amount for the infirm dependant credit (for dependants aged 18 or over) is increased by $2,000 for 2012 and subsequent years (to automatically include the family caregiver amount).
You may claim the additional $2,000 family caregiver amount for more than one qualifying dependant, but only one family caregiver amount may be claimed for each dependant.
Note also that the additional $2,000 family caregiver amount will be indexed after 2012 on the same basis as other personal tax credits.
Who is a qualifying dependant?
The family caregiver amount may be claimed for a spouse, common-law partner, child or other person who is dependent on the individual because of an impairment in mental or physical functions.
If the qualifying dependant is under 18 years of age (a child), the family caregiver amount may only be claimed if, because of an impairment in mental or physical functions, the child is likely to be dependent on others for a long and indefinite period, and for significantly more assistance in attending to his or her personal needs and care when compared with other children of the same age.
The family caregiver amount is not tied to the disability tax credit. Other than the above guidelines, impairment for the purposes of the family caregiver amount is not defined, making it generally less onerous to qualify for the family caregiver amount than for the disability tax credit.
What documentation is required?
To claim the family caregiver amount, you must complete the appropriate parts of Schedule 1, Federal Tax, and Schedule 5, Amounts for spouse or common-law partner and dependants, and include those schedules when filing your tax return.
In addition, the CRA requires that you obtain a signed statement from a medical doctor indicating the nature of the impairment, when the impairment began and how long it is expected to last. For dependants under 18 years of age, the statement should show that the duration of the impairment is expected to be indefinite, and because of the impairment the dependant requires significantly more assistance with personal needs and care than other children of the same age. The CRA may request this statement in processing the claim, but does not require it to be filed with the return.
Combined credit amounts
The following table summarizes the 2012 maximum federal amount that may be claimed for each of the dependency-related credits that may be enhanced by the family caregiver amount. The maximum federal credit is equal to 15% of the amounts specified in the table.
The following are examples of situations in which the family caregiver amount (FCA) may be claimed. They are based on examples provided on the CRA website:
John has been taking time off from work to take his wife Judy, who has a physical impairment and no income, to appointments and to attend to her personal needs. Judy’s doctor certified in writing that she is dependent on her husband for her personal needs because of her impairment. John can claim the additional FCA of $2,000 when he calculates the spouse or common-law partner amount (line 303 of his Schedule 1).
One of Mike’s children, Paul, is 10 years of age, has an impairment, and is eligible for the disability amount. Because of his impairment, Paul requires significant help from his father to attend to his personal needs. Mike has a signed letter from their doctor indicating his son’s impairment, when it began, and what the duration of the impairment is expected to be. The letter also states that Paul needs much more help for his personal needs and care than children of the same age.
Mike, who is separated, claims for Paul on schedule 1 the amount for children (line 367) and the amount for an eligible dependant (line 305). As only one FCA is permitted per dependant, Mike claims for Paul the additional FCA amount of $2,000 on line 367.