You might be eligible for the Caregiver Credit if you provide in-home care for a relative who
resides with you, and the relative is yours or your spouse’s:
- parent or grandparent age 65 or older; or
- dependent aged 18 or older who is dependent on you because of mental or physical impairment.
Generally, if you claim the caregiver credit for your relative, no individual will be allowed to claim the ‘equivalent-to-spouse’ credit or the ‘infirm dependent’ credit for the same relative.
You can claim the caregiver credit for more than one eligible dependent. For example, if both parents qualify, you can claim the credit for both of them.
The combined Federal and British Columbia caregiver credit will reduce your taxes payable by up to $911 (for each relative claimed). However, the tax credit will be reduced where the relative’s income for 2015 exceeds $15,735 for federal tax purposes and $14,717 for BC tax purposes. The credit is completely eliminated when the relative’s income reaches $20,343 for federal tax purposes and $19,066 for BC tax purposes.
Check to see if you qualify for the Caregiver Credit. Consult with one of our knowledgeable Chartered Professional Accountants for more information.
Family Caregiver Tax Credit
The Family Caregiver Tax Credit will allow people taking care of infirm, dependent relatives to claim a non-refundable tax credit based on an amount of up to $2,093 in 2015, resulting in tax savings of up to $314 a year for qualifying individuals. Only one family caregiver tax credit may be claimed per eligible dependent.
A dependent who is a minor child will be considered to be infirm only if the dependent is likely to be, for a long, continuous and indefinite time period, dependent on others for significantly more assistance in attending to the dependent’s personal needs and care than is generally the case for a person of the same age.
Caregivers will be able to claim the Family Caregiver Tax Credit for an infirm dependent as a supplement to their existing dependency-related credit (such as the Spousal or Common-Law Partner Credit, the Child Tax Credit, the Eligible Dependent Credit, the Caregiver Credit, and the Infirm Dependent Credit). The dependent’s income level at which the credit amounts are phased out will be increased to reflect the amount of the Family Caregiver Tax Credit.
Consult one of our knowledgeable Chartered Professional Accountants if you currently support and provide care for dependent relatives and would like more information.
Individuals with Disabilities
In addition to the disability tax credit, parents and others will be able to establish Registered Disability Savings Plans (RDSP) to provide for the long-term security of a child who is eligible for the disability tax credit.
RDSP contributions will not be tax deductible, but investment income can be earned within the plan on a tax-free basis. Upon withdrawal only the accumulated investment income will be taxable to the beneficiary. The contributions to the RDSP will be paid to the beneficiary tax-free. Anyone can contribute to the RDSP and there is no annual limit on the contributions; however, contributions on behalf of any one beneficiary are capped at a lifetime maximum of $200,000. Contributions can continue until the end of the year in which the beneficiary reaches age 59.
The beneficiary must begin receiving “lifetime disability assistance payments” (LDAP) from the plan by the end of the year he or she reaches age 60, subject to maximum annual limits based upon life expectancy and the value of the RDSPs assets.
A Canada Disability Savings Grant (CDSG) is an amount that is contributed by the federal government to the RDSP. Contributions to the RDSP will earn CDSGs at matching rates of 100 per cent, 200 per cent, and 300 per cent depending on family income and the amount contributed. The annual maximum CDSG is $3,500 where family income is less than $89,401 and $1,000 otherwise.
An RDSP beneficiary can accrue up to $70,000 of CDSGs in their RDSP over their lifetime. No CDSGs will be paid to an RDSP after the year in which the beneficiary reaches the age of 49. Lower income families might also be entitled to receive Canada Disability Savings Bonds (CDSBs) of up to $1,000 per year (to a maximum of $20,000 over the beneficiary’s lifetime). Eligibility for CDSBs will be linked to family net income, rather than amounts contributed.
Home Accessibility Tax Credit
Qualifying taxpayers have an opportunity to plan for a new non-refundable tax credit that will be available in 2016 and subsequent tax years when they make certain expenditures to their dwelling.
The Home Accessibility Tax Credit (HATC) is available to individuals 65 years or older at the end of the tax year and individuals who are eligible to claim the disability tax credit when they incur qualifying renovation expenditures. These expenditures must relate to gaining access to, improving mobility within, or reducing risk of harm within the dwelling.
Qualified taxpayers may claim up to $10,000 in qualifying expenditures per year, which could result in a maximum non-refundable tax credit of $1,500. As well, if those expenditures happen to also qualify for the medical expense tax credit, both credits can be claimed in respect of the expenditures.
The HATC credit determination can be complex. Consult one of our knowledgeable Chartered Professional Accountants for more information.
For more really useful tax tips, visit https://www.bccpa.ca/CpaBc/media/CPABC/News_Events_Publications/Publications/TaxTipsandRRSP/Tax-Tips-2015.pdf .
This post has been prepared for general information purposes. It is not advice. The information presented may not fit your unique situation, please consult one of our trusted business advisors at RHN CPA for further clarification and interpretation of your circumstances.