Explaining the caregiver amount

Based on my experience, the caregiver amount is one of the most commonly overlooked credits. It is meant to give a little tax savings to Canadians supporting aging relatives or a disabled dependant at home, rather than within the healthcare system.

To qualify for the caregiver amount, the person must live with you and you need to be responsible for maintaining the home. So if you are supporting elderly parents but they are not living with you, you cannot claim this credit.

If you are supporting a dependant other than a parent or grandparent, he or she must be older than 18, depend on you because of a physical or mental infirmity and earn less than $18,906 annually. For example, one of my clients was supporting a 25-year-old daughter with muscular dystrophy. The daughter qualified for the Disability Tax Credit and transferred it to her parents, but they didn’t realize they could also claim the caregiver amount.

If the relative who is living with you is a parent or grandparent age 65 or older, he or she does not have to be infirm. If your elderly mother moves in with you and she earns less than $18,906 during the year, you are now eligible to claim the caregiver amount for her. It can also be your spouse’s or common-law partner’s mother who moves in. You are allowed to split the credit but you cannot claim more than the maximum amount of $4,282 for the dependant, which is about $640 in tax savings. If the dependant’s income is less than $14,624, you can claim the full $4,282. If the dependant’s income is greater than this amount, it is gradually phased out.

If you are caring for a spouse, the caregiver credit does not apply even if the person earns less than the minimum. The Tax Act assumes that spouses will take care of each other. However, you may be able to claim the spouse or common-law partner amount.

Brenda Bryant
Senior tax pro and community supporter