Category: Federal Funding

One of the most overlooked tax breaks for parents with children who qualify for the Disability Amount is Attendant Care.

Some examples of Attendant Care include:

• Hiring a nanny to care for your child (full time or part time)
• Paying a babysitter or child care worker
• House cleaning services (Yes, it’s true! Check out 2007 Tax Court of Canada case, Zaffino v. the Queen)
• Full or part time care in a school, institution, or other establishment (to claim these expenses, a medical practitioner must confirm the person’s need for the equipment, facilities, or personnel available in the establishment)
• Transportation services
• Maid service
• Meal preparation
• Care or supervision in a group home
• Respite

Attendant Care is claimed as part of the Medical Expense Tax Credit. This means that you will get about 20% of your money back.

You may claim up to $10,000 and still receive the Disability Amount. Note that this is per paying individual. Each spouse may contribute the $10,000 for a total of $20,000. This amount may then be combined and claimed as a medical expense. To do this, each supporting individual must have receipts to back up their claim.

Claiming attendant care costs higher than $2,578 (for the 2012 tax year) will reduce the Disability Amount Supplement.

You may claim more than the $10,000 however this will reduce the Disability Amount. I do not recommend that you claim more than this amount unless the attendant care expenses go beyond $17,546 (for the 2012 tax year).

Tax Tip

Hire a relative to care for your disabled child. The individual must not be your spouse or common-law partner and must be at least 18 years of age. You also have to provide invoices with the individual’s SIN number.

Today we will have a look at Child Care Expenses and why you should be claiming them. Firstly, let’s review the basics of such a claim.

• Expenses for child care may be claimed if both spouses work, go to school or carry out research
• Up to $10,000 may be claimed if your child is eligible for the Disability Amount

Tax Tip#1

If you hire someone to care for your child even in the context of ABA therapy or tutoring, you should adjust the invoice and receipts to reflect child care until you reach the $10,000 limit.

Tax Tip#2

Child care expenses are a tax deduction and not a tax credit. That means for every dollar you spend on child care it will reduce your taxes owing by your marginal rate. For the highest tax bracket, this means you will get a tax savings of $0.43 for every dollar claimed. This is significantly more than the maximum 20% that you would receive for a medical expense claim. Refer to TaxTips.ca for your personal combined Federal and Provincial tax rates.

Tax Tip#3

Hire a relative aged 18 or older (or other person of any age) and claim these costs as a child care expense. Note that you must have proper invoices and receipts including the person’s SIN number.

Tax Tip#4

Other eligible care child expenses include

• caregivers providing child care services;
• day nursery schools and daycare centres;
• educational institutions, for the part of the fees that relate to child care services;
• day camps and day sports schools where the primary goal of the camp is to care for children
• boarding schools, overnight sports schools, or camps where lodging is involved (other than education costs)

Refer to my page Child Care Expenses for more detail.

Next time: Attendant Care Expenses

 

There is a new tax credit for 2012 called the Family Caregiver Amount (FCA). It is a tax credit for people who have a child with physical or mental impairments. The credit is worth $2,000 in non-refundable tax credits and may be claimed under one of the following lines:

• spouse or common-law partner amount (line 303);
• amount for an eligible dependant (line 305)
• amount for children born in 1995 or later (line 367); and
• caregiver amount (line 315)

The child must have an impairment that is prolonged and indefinite and the child must be dependent on you for assistance in attending to personal needs and care when compared to children of the same age.

You must have a signed statement from a medical doctor showing when the impairment began and what the duration of the impairment is expected to be. For children under 18 years of age, the statement should also show that the child, because of an impairment in physical or mental functions, is dependent on others for an indefinite duration. This dependence means they need much more assistance for their personal needs and care compared to children of the same age. For your convenience, there is a sample letter on my Files page, which you can complete before the doctor’s appointment and present to him/her for a signature.

For more information refer to page 33 of the 2012 Tax Guide

For those of you that use Turbo Tax here is a detailed guide on how to apply for the credit: http://support.intuit.ca/turbotax/en-ca/iq/Dependants/Family-caregiver-amount/INF21867.html

 

A sharp eyed reader alerted me to this tax credit which I had completely overlooked.

This $5,000 tax credit is normally for first time buyers, however if you acquired the home for the benefit of a related person who is eligible for the disability amount you may claim the amount. The purchase must be made to allow the person eligible for the disability amount to live in a home that is more accessible or better suited to the needs of that person. Refer to CRA – Home Buyers’ Amount.

Thanks and keep the tips coming!