For example, unpaid caregivers of seniors can spend several hours per week taking care of their elderly parents or relatives. And that’s on top of their own everyday workload and routine.
Many caregivers also pay out of their own pockets for their parents’ necessities like:
- prescription and over-the-counter drugs,
- specialized devices,
- rehab and
- home renovations.
Of course, seniors aren’t the only ones who need care. Perhaps you have a child or a spouse with a disability or special needs. Regardless of the situation, there’s no denying that looking after someone can take up a great deal of your time and money.
But how can you help relieve some of the financial challenges you may face as a caregiver? For starters, tax season gives you a chance. Take advantage of all the non-refundable tax credits available for caregivers. Here are a few to keep in mind when you file your taxes.
Non-refundable tax credits for caregivers
What’s a non-refundable tax credit? It’s a credit that reduces your tax bill.
For example, a tax credit of $500 will directly lower your tax bill by $500. (Compare that to a tax deduction, which lowers your income, so you pay less tax. How much less depends on your tax bracket.)
It’s important to remember that a non-refundable tax credit will reduce what you owe. But it won’t result in the government paying you money. In other words, if you would have owed $400 in tax, a $500 non-refundable tax credit will knock your bill down to zero, not give you back $100. (That’s the “non-refundable” part.)
These tax credits are meant to help even out the tax burden. How? By allowing some relief for medical and disability costs, since these are extra expenses that most other taxpayers don’t have to shoulder.
Here are four non-refundable tax credits to be aware of as you’re preparing your tax return:
1. Medical expense tax credit (METC)
Are you paying out-of-pocket for a loved one’s dentist bills? What about their nursing home care? In such cases, you may be able to find some tax relief through the medical expense tax credit (METC).
What is the METC and how much is it worth? The METC provides a non-refundable tax credit for “qualifying medical expenses” – medical expenses that exceed a certain threshold – 3% of net income or $2,479, whichever is less. (2022 threshold, indexed to inflation, $2,635 for 2023, provincial thresholds may vary).
In Quebec, the threshold for provincial tax purposes is 3% of both spouses combined net income. But in this case, there’s no “whichever is less.” This means there’s no dollar threshold for Quebec’s provincial determinations.
What can you claim as a medical expense? You can claim all eligible medical expenses for which you haven’t been reimbursed by a health insurance plan or in any other way.
You can claim your own expenses, and those of your spouse and children under age 18. You can also claim the credit for others who depend on you for support, such as:
- children or grandchildren over age 18 (yours or your spouse’s or common-law partner’s),
- your parents or your spouse’s parents (provided the parents are Canadian residents at some time during the year).
For instance, let’s say you took your dependent parent to a dentist who charged $700. You could count the $700 you paid towards a claim for the METC.
Your parents or dependants don’t have to live with you for you get this credit. But they must depend on you throughout the year for financial support. The Canada Revenue Agency (CRA) says that whether someone is dependent on you is a question of fact. But the CRA states that in general terms support involves regularly and consistently providing the necessities of life, such as food, shelter, and clothing. You can provide support voluntarily or under a legal commitment. If the dependant had income during the year, you must show that their income was insufficient to meet their needs.
Your METC claim for dependants will be subject to the same thresholds as your METC claim for your family. But the government bases thresholds on your dependants’ net incomes shown on their tax returns, not on yours or your spouse’s or common-law partner’s.
Here’s a look at some of what counts as an eligible medical expense:
- Payments to a health professional (e.g., dentist, nurse, pharmacist, optometrist, psychologist, chiropractor, podiatrist, therapist, dietician)
- Medical services not covered by insurance (e.g., laser eye surgery)
- Medical services outside of Canada
- Health aids or devices (e.g., prescription eyeglasses, wheelchair, hearing aids, crutches)
- Prescription drugs or medications
- Nursing home care (just the cost of nursing care, not the cost for room and board)
- Service animals
- Ambulance fees
- Wigs made for hair loss due to disease treatment
For the full list of medical expenses, see the Canada Revenue Agency’s (CRA) medical expense page. You’ll be able to:
- search for any particular expense and
- find out whether you can count it as a medical expense on your tax return.
2. Disability tax credit (DTC)
What is the disability tax credit (DTC)? The non-refundable disability tax credit (DTC) lets you reduce your tax bill if you’re taking care of someone who:
- is dependent on you, and
- has a persistent physical or mental disability.
How much is the disability tax credit (DTC) worth? Depending on your province, the DTC is worth between $1,500 and $2,000 of combined federal and provincial tax relief.
Here’s what you need to qualify for the DTC:
- A medical professional* must fill out a form and certify that your care-receiver has a severe and prolonged impairment. This means they must have a condition that has lasted a year at the very least.
- The CRA must approve this form. Once you get the green light, you can:
- claim the disability amount as a caregiver, or
- transfer the credit to your spouse or common-law partner.
*Please note that a medical professional can also state on their form that a person has had a disability for a number of years. This may allow you, or the person with the disability, to claim either DTC or nursing home expenses from previous years.
Thinking of claiming the DTC and claiming your parent’s nursing home care as a medical expense? Someone who depends on you may be able to transfer some or all of the DTC to you. But the CRA has special rules when it comes to claiming both disability and nursing care as medical expenses. In most cases there’s no double dipping. So you’ll have to choose between:
- your relative claiming the DTC and transferring it to you, or
- counting the expense towards a claim for the METC.
3. Home accessibility tax credit (HATC)
Did you have a wheelchair ramp, walk-in bathtub or grip bar built into your home last year? Or maybe you paid to have one installed in your dependent relative’s home? Then make the most of the non-refundable home accessibility tax credit (HATC).
What is the HATC and how much is it worth? Home renovation, addition, or alteration. Call it what you want, but it’s worth a federal credit that can reduce your tax bill by up to $3,000 per calendar year. Although more than one individual may claim the credit, no more than $3,000 can be claimed for anyone dwelling.
To claim this credit, your renovation must be made to help a senior or a disabled person who’s already approved for the DTC, or who turns age 65 or older during the year. This means it’s there to make things easier for the care-receiver, whether it’s:
- gaining better access to a home,
- being more mobile within that space or
- reducing the risk of harm or injury.
What counts as an eligible renovation under the HATC?
- Grab bars
- Walk-in tubs
- Wheel-in showers
- Widening doorways for wheelchairs
- Lowering cabinets
What happens if you take out a loan to cover the renovation? Unfortunately, you can’t claim any interest charged on that loan. The HATC also doesn’t apply to the cost of household appliances, housekeeping or gardening.
Can you claim both HATC and METC? Yes, you can double-dip these credits. This means that wheelchair ramp you had built in counts as a medical expense and a home-accessibility renovation.
4. Canada Caregiver Credit (CCC)
Do you provide food, shelter or clothing for a loved one with a disability, injury or illness, and who depends on you for support? The CRA refers to them as “infirm dependants.” This means the person you’re caring for has some kind of physical or mental condition. And, this condition prevents them from doing basic tasks or providing for themselves. It could be a senior with Alzheimer's disease or a child with a birth defect. Various factors and situations can apply.
You can claim Canada Caregiver Credit (CCC) if you have an infirm dependent. It can be your partner, child, grandchild, parent, sibling or other close relative, so long as:
- they’re dependent on you as a caregiver, and
- you regularly and consistently provide them with some or all of the basic necessities of life.
You can even claim this credit for taking care of non-blood relatives, like your stepchildren or in-laws.
It’s also worth noting that the person receiving your care doesn’t have to live with you for you to qualify for the CCC. What matters is that you’re financially supporting his or her basic needs.
How much is the CCC worth? That depends on your relationship.
Canada Caregiver Credit (2022 amounts)
|The care-receiver's relationship to you||Amount by which you can reduce your tax bill (federal)|
|Spouse or common-law partner||up to $1,129 per person|
|Adult dependents (e.g., your parents or adult children age 18 or older)||up to $1,129 per person|
|Dependents under 18 years of age at the end of the year (e.g., your children or grandchildren)||up to $2,350 per person|
Can you share the CCC with someone else? In some cases, more than one caregiver can share the CCC. But you can only claim one CCC amount per care-receiver.
So, let’s say you’re claiming the maximum amount ($1,129) for paying your aging parent’s rent. And you’re sharing this financial responsibility equally with your sibling. Then, in this case, each of you can claim $564.50 on your federal taxes.
Do you need any special documentation to get the CCC? After you’ve filed your tax return, the CRA might ask you for a signed statement from your doctor. This statement may include details about your relative’s impairment. But they won’t ask for this if they’ve already approved your relative for the DTC.
How much will you save with these tax credits?
There’s a bit of math involved in this. But it depends on how much you’re claiming and the federal and provincial tax rates. In Canada, the federal tax rate currently stands at 15% while the provincial tax rate varies across the nation.
Caregiver tax credit savings by province
|Province||Provincial tax rate|
|Newfoundland and Labrador||8.7%|
|Quebec||15% (see details)|
So, let’s say you live in Alberta where the provincial tax rate is 10%. And you’re claiming an amount of $8,870 for the federal DTC. The Alberta DTC is $15,284. In this situation, how much are you saving with your federal and provincial tax credits? Here’s how it works:
- The federal tax rate is 15%. Multiply $8,870 by 15% to get $1,330.50.
- The Alberta tax rate is 10%. Multiply $15,284 by 10% to get $1,528.40.
- Add the credit amounts together for a combined federal/provincial tax credit of $2,859.30. This assumes that you already owed more than $1,330.50 in federal taxes, and more than $1,528.40 in Alberta taxes.
- Remember that provincial and territorial disability amounts and tax rates differ across the country, so the actual tax savings will vary.
Learn more about what tax credits are available for you
To get a better sense of what you can claim as a caregiver and what lines on the tax form you need to fill out, check out the CRA’s page on credits, deductions and expenses.
You’ll also want to consider working with a tax professional, like an accountant. They can help ensure you’re following the rules and getting the most from these credits.
And be sure to keep all your receipts – you never know when you’ll have to produce them.
Do you need help managing your own medical expenses?
Talk with an advisor about health insurance. It’s an important way to protect your income against unexpected medical expenses – not covered by government plans. This is especially vital if you have dependents.
An advisor can look at your unique situation to help you build a customized plan that includes health insurance.
This article is meant to only provide general information. Sun Life Assurance Company of Canada does not provide legal, accounting, taxation, or other professional advice. Please seek advice from a qualified professional, including a thorough examination of your specific legal, accounting and tax situation.