More tax support for caregivers, seniors

This year’s federal budget offers extra support for seniors, disabled people, and their caregivers.

“The government is seeing the aging demographics in Canada, and recognizing the importance of people being able to stay in their homes and get more assistance,” says Paul Woolford, tax partner at KPMG.

One measure that’s been proposed is the 15%, non-refundable Home Accessibility Tax Credit, which would allow seniors, disabled people, or their families, to claim expenses incurred while making homes safer and more accessible.

You’ll qualify if:

• you collect income;
• you’re a senior or are disabled, or have a dependant who is a senior or disabled; and
• you pay for long-term home improvements made to your, or a family member’s, permanent residence. That includes adding necessities such as wheelchair ramps, walk-in bathtubs, wheel-in showers and grab bars.

For expenses paid January 1, 2016 and later, you would be able to claim renovation costs of up to $10,000 (per calendar year, per qualifying individual and per dwelling), and get savings of up to $1,500.

If you or your dependant family member is disabled, then you or they must first be eligible for the existing Disability Tax Credit—CRA classifies disabled people as those who have severe or prolonged ailments that are expected to last longer than 12 months and that inhibit mobility.

“The new [accessibility] credit is similar to the home renovation credit that came out in 2009 as a result of the recession,” says Woolford. “To make claims for that credit, you had to name your contractor, why renovations were made and how much you spent. In this case, you’d have to provide similar information.”

David Ablett, director of tax and estate planning at Investors Group, adds that the new accessibility credit, as proposed, could be used alongside the existing Medical Expenses Tax Credit, which also applies to renovation costs.

But, says Ablett, you have to plan how to split expenses between those two credits. To be eligible for the Medical Expenses Tax Credit (METC) in 2015, costs must total more than $2,208 or 3% of your net income (for the full list of eligible expenses, click here), whichever is lower. For the new accessibility credit, costs must be no more than $10,000.

Let’s say you spent $12,000 on expenses eligible under both credits. If you claim $10,000 under the new accessibility credit, then $2,000 may not be enough to qualify for the METC.

Also be wary of who performs the renovations. The budget says, “Expenditures will not be eligible […] if they’re for goods or services provided by a person not dealing at arm’s length with the eligible individual, unless that person is registered for GST/HST under the Excise Tax Act.” (Arm’s length people are those not related to you by blood.)

Woolford notes, “It will be interesting to see how they define ‘home’ when determining eligibility.” He suspects those living in rental properties may not be covered, since their property managers and landlords are responsible for home improvements.

For more on provincial home renovation tax credits, click here.

More support for caregivers

The budget has proposed to extend Employment Insurance Compassionate Care Benefits from six weeks to six months.

So, someone who earns $49,500 and who is eligible for EI could now be able to receive benefits of $524 per week for up to six months, providing a total benefit amount of $13,624. Under the current policy, they receive benefits of up to $3,144.

Woolford says, “The benefit on a per-week basis doesn’t change, but [this] gives people more time if they’re in a position to support a parent who’s in the later stages of life. This also takes the pressure off retirement and long-term care facilities.”

Ablett says the current EI benefits are often used when a parent is terminally ill (click here for eligibility requirements). “If I find out a client has to care for a parent,” he adds, “I explain how EI compassionate care benefits work, mention the time limit, and say it’s a way for him to not dip into savings.”

However, “with the new six-month length of time, there may also be the introduction of a new reporting system clients will have to be aware of. This would be announced through Service Canada, so people should watch for that.”