iSavta Blog / Complete guide on tax deductions for taking care of elderly parents in Canada
Complete guide on tax deductions for taking care of elderly parents in Canada
James Hallen | 12.08.2019
Canada has an aging population, with the over 85s being the fastest-growing age range in the senior population. This has seen a huge increase in people becoming caregivers for their parents as they age. Individuals may be paying more than $3000 per year from their own personal money. If you are caring for an elderly parent, you may be spending much more than other taxpayers.
There have been reports that caring for elderly parents cost Canadians over $33 billion dollars every year in personal expenses and lost income.
These figures are only set to rise as the population grows, which is why it is important for you to learn about tax deductions for taking care of elderly parents in Canada.
Unpaid carers spend, on average, 17 to 24 hours a week caring for older parents or relatives. Tax deductions may help you to pay for things like medication, other medical bills, nursing care or adaptations to your parents’ home.
If you live in Canada and you are caring for an elderly parent, it will be highly beneficial for you to identify whether you are entitled to any tax deductions for the care that you provide.
This guide will give you a complete breakdown on the tax breaks that you may be entitled to when caring for an aging parent.
What is a tax deduction?
otherwise known as a non-refundable tax credit, this amount of money lowers the amount of tax that you pay. For example, if you get a tax credit of $200, you pay $200 less in tax.
They are non-refundable, which means that if you owe $300 in tax, but get a credit of $400, you don’t get any tax refund of $100.
What tax deductions are available for taking care of elderly parents in Canada?
Canada Caregiver Credit
This is a recent tax credit available for caregivers, so if you are taking care of elderly parents in Canada, it is highly worthwhile applying for this tax deduction.
This is a tax credit for if you have a dependent (including a parent) with a physical or mental impairment who is dependent on you for their day-to-day living, for example, food, shelter, and so on.
For an elderly parent that you are looking after, you may be able to claim a tax deduction of up to $7,140 under this particular tax credit. However, if you are sharing the caring responsibilities with someone else (such as a sibling), you will have to split this amount.
Medical Expense Tax Credit
If you are paying for your parent’s medical costs, such as trips to the dentist or for an in-home caregiver, you might be entitled to the medical expense tax credit.
If they are classed as an ‘infirm dependent’, (that is, someone 18 years or older who is dependent on you because they are infirm), you may be able to claim up to $6,986 per year in medical expenses.
These are for expenses that have not been covered by a health insurance plan and can include:
- Nursing care or payments to other health professionals, such as psychologists, podiatrists, and so on.
- Medical services outside of the country
- Ambulance fees
- Service animals
You may be able to claim for medical equipment, such as wheelchairs.
Further information on this tax credit, including a comprehensive list of the expenses that can be claimed for, can be found on the Deductions, Credits, and Expenses section of the Canadian government website.
Disability Tax Credit
The aim of the disability tax credit is to reduce the tax bill for people living with a disability. People can be eligible to receive $8,235 of tax credits for living with a disability, although the full amount can depend on the province in which you live.
Your parent is eligible for the disability tax credit, if they meet one of the following criteria:
- They are blind
- They are seriously restricted in one basic daily activity
- They are significantly restricted in two or more daily activities
- They need therapy to keep them alive.
A medical professional must certify that your parent has a severe and prolonged impairment, and this certification will require approval by the government.
For more information on eligibility, check out the government website for the full details.
What if they do not use their full deduction?
If your parent does not use their full amount of disability tax credit and they are dependent on you to help them to meet the basic necessities of life, this tax credit may be transferred to you. You can find information on whether you can claim part of this disability allowance in the tax section of the Canadian government website.
Home Accessibility Tax Credit
This tax deduction is for those in receipt of the disability tax credit and who need to make adaptations to their home in order to make it accessible for the disabled person. For instance, if your parent has lost their mobility, up to $10,000 in tax reductions can be granted for making adaptations to their home, such as installing a ramp.
Similar to the disability tax credit, you can claim this on behalf of a dependent parent.
Other adaptations might include:
- Widening doorways
- Installing grab rails
- Installing walk-in bathtubs
- Lowering cabinets for easy reach
Housekeeping, gardening and appliances cannot be claimed for under this tax credit. Neither can any interest taken out on loans to pay for any adaptations.
Note that it may even be possible to claim for an adaptation under the home accessibility tax credit and the medical expense tax credit, so that you double the amount of credit received. This can vary from state to state.
More information on eligibility for home accessibility tax credits as well as how to apply can be found here.
Provincial or Territorial benefits
Some states and provinces provide additional credits for people taking care of elderly parents. You can look up your particular location and find out what additional tax deductions that you might be entitled to.
In addition, the amounts that you are entitled to for the above tax deductions may be influenced by the state, territory or province that you live in.
Your state or province may be able to provide you with additional tax deductions.
What do I have to do to apply for these credits?
To apply for these credits, you need to file your tax return with the relevant information that proves that you are eligible to receive these tax benefits. All of the relevant documentation and forms that you will need to fill in can be found on the Completing a Tax Return page on the Canadian government website.
It is really important to keep your supporting documents, and make copies of them if you have to submit them, as these are essential proof of your eligibility for support.
That sums up our complete guide to tax deductions for taking care of elderly parents in Canada.
If you are looking after aging parents, it is vital to check which tax deductions that you’re entitled to. Remember, you can apply for:
- Canadian Caregiver Credit
- Disability Tax Credit
- Medical Expense Tax Credit
- Home Accessibility Tax Credit
- Territorial and Provincial Tax Credits
Try to put in your application as soon as possible, as you may need to make claims for the previous year.