Canada Caregiver Credit-New Non-Refundable Tax Credit For Tax Year 2017

Last year Budget has introduced new Canada Caregiver Credit as a non-refundable tax credit for individual taxes. This is going to be effective from the year 2017. Before we discuss about the Canada Caregiver Credit, let us understand the nature of this credit.

Canada Caregiver Credit is a non-refundable tax credit for individuals. Non-refundable tax credit means it can reduce your tax payable to zero but can not create any tax refund.

Canada Caregiver credit is a credit for supporting your infirm spouse or common law partner or other eligible relatives.

Specifically, the claim is allowed for following categories:

1)      Infirm spouse or common-law partner (when anyone lives with his/her partner for a continuous period of 12 months unless child is involved)

2)      Infirm dependants to whom you can claim as an eligible dependant. An eligible dependant claim can be made when you are either single, separated, widowed or divorced at any time during the year and supported one eligible dependant during the time that you had one of the above marital status. The eligible dependant could be either child under the age of 18 years of age, parent or grand parents, uncle, aunt, niece or nephew, brother or sister.

3)      Other infirm dependants who can not be claimed as an eligible dependant by anyone on his or her tax return.

Of course, this claim is subject to the income of the above-mentioned dependants. Dependant’s income reduces the amount of this claim.

There will only one claim of maximum $6,883 can be allowed for any taxpayer.

 Line 304 of Individual Income Tax and Benefit Return:

Canada Caregiver Amount for Spouse/Common Law Partner or Eligible Dependant of age 18 years and older:

Total claim of $6,883 is allowed (subject to the income of the dependant) for infirm spouse or common law partner or eligible dependant. This claim is reduced by the amount of claim already made for the above category of person on line 303 (spousal amount claim) or Line 305 (Eligible Dependant claim as explained in 2) above)

Line 307 of Individual Income Tax and Benefit Return:

Canada Caregiver Amount for other infirm dependants of age 18 years and older:

Total claim of $6,883 is allowed (subject to the income of the dependant) for claiming parents,       grand parents, uncle, aunt, niece, nephew, brother, sister who are infirm. This claim starts        reducing after net income of dependant from $16,164 or more and is completely phased out at income of $23,046.

The same rules of calculations apply for calculation of claim on Line 367 which deals with the claim of credit for infirm dependent child under the age of 18 years of age.

Few other points to keep in mind are as follows:

1)      Healthy seniors over 65 years of age can no longer be claimed under the new rules for Canada Caregiver credit.

2)      The requirement for you to live with the dependant is no longer a precondition to claim this credit.

3)      While filing your individual tax return it is not required to attach any proof of infirmity of spouse or common law partner or other eligible relatives claimed until at a later date when Canada Revenue Agency (CRA) asks you to show the proof of the same.

4)      Infirmity is different from disability. Instances of infirmity could be Parkinson, Alzheimer, Multiple Sclerosis etc. It simply requires the letter from doctor to prove it. The disability is far more strict and is allowed only when the disability is substantial and prolonged ( more than 12 months)

5)      If any of the above mentioned dependants are disabled (where CRA has approved the disability in writing), separate disability amount of $8,113 can be claimed in addition to claiming Canada Caregiver amount.

Disclaimer: Any discussion on this blog relating to tax matters is purely for educational purposes and not taking any specific actions based the general tax rules described therein. Your tax situation could be different and as a result there may be different tax strategies applicable in your case. We do not claim the tax situations described above to be exhaustive or conclusive. In case of any specific tax situations or problems, you are advised to seek professional advice.