If some of your clients care for a dependant with a physical or mental impairment, there used to be three tax credits that awarded your clients financial help for this kind of care. Starting in 2017, these credits were merged into the Canadian Caregiver Credit (CCC).
Understanding the Major Differences
The Canada Revenue Agency used to give three tax credits: the caregiver tax credit, infirm dependant tax credit, and family caregiver tax credit. These three credits didn’t have the same requirements and were all different from each other. The goal of the change is to simplify the process for your clients to claim the credit.
There’s a few important changes to know. First, to receive the CCC, your client’s dependant has to be infirm. Dependants over the age of 65 are no longer eligible unless they have a medical condition. Second, your client’s dependant doesn’t have to live with them. Third, the old credits excluded people who made too much money. Now, as of 2018, the income limits are higher to get the full credit of $16,163, and if your client makes less than $23,046, it is eligible for a partial credit.
Meeting the Dependant Requirements
To get the credit for your client, the dependant has to have a physical or mental impairment. The credit extends to care for your client’s spouse, common-law partner, children, grandchildren, parents, grandparents, brothers, sisters, aunts, uncles, nieces, and nephews. The dependant needs to rely on your client for basic necessities including food, shelter, and clothing.
How Much Can Your Client Claim?
The amount of the CCC depends on your client’s relationship with the dependant:
- If the dependant is a spouse or common-law partner, the credit can be as high as $9.033.
- If the dependant is 18 years of age or older, the credit can be as high as $9,033.
- If there is more than one dependant 18 years of age or older, the credit for each additional dependant can be as high as $6,883.
- If the dependant is under 18 years of age, the credit can be as high as $2,150.
Don’t Forget About Documentation
The CRA doesn’t want you to send in backup paperwork when you file your client’s taxes. The government will ask for paperwork if it needs it. It may also ask for a signed statement from a doctor that outlines how long your client’s dependant will be impaired. It’s acceptable if the doctor’s statement says the impairment is indefinite. If your client already has an approved Form T2201 (Disability Tax Credit Certificate), it won’t need a signed statement from a doctor.
How to Claim the Credit
To get the credit for your client, you’ll most likely fill out Schedule 5 (Amounts for Spouse or Common Law Partner and Dependants). This form feeds lines 303, 304, 305, and 307 on your client’s tax return. If your client has an infirm child under the age of 18, you’ll have to complete Schedule 1 before claiming the credit on line 367.
It can be a financial burden to care for somebody with disabilities. For your clients who are undertaking this noble cause, see if they are eligible to receive tax help through the Canadian Caregiver Credit.