If you have ever completed a medical claim on your personal tax return you likely know that it’s not a straightforward process.
The claim involves many rules, and many variations on those rules.
This leads to one of the top reasons for Canada Revenue Agency (CRA) to review tax returns. So, misinterpreting or ignoring the rules is not a good idea.
Two of the more complex medical expenses to make a claim for are attendant care expense and nursing home expense.
Fees paid to a person or business to provide professional caregiving in-home or at a residential facility may be considered attendant care expense if a person can provide a doctor’s letter stating the person requires “long-term full-time care.”
The practical interpretation means the need for prolonged regular care that includes meal preparation, house cleaning, and transportation in addition to typical day to day caregiving services.
Further, a person approved for the Disability Tax Credit (DTC) by default qualifies for an attendant care claim with no doctor’s letter required.
To add some detail regarding the DTC, it is a non-refundable tax credit of about $8,662 used to offset the extraordinary costs that surround a life debilitating issue. CRA approves a DTC when a doctor provides detail of a medically diagnosed physical or mental condition that markedly restricts a person’s ability to perform basic activities of daily life.
As straightforward as the preceding description may appear, if a person has an approved DTC and also has attendant care costs, there are rules that add flexibility on how to make a claim.
Here are some of the most typical scenarios.
Scenario one — for someone living at home with a DTC, they can claim the $8,662 DTC and a maximum of $10,000 of in-home attendant care costs, or if the attendant care costs are greater than $18,662 they can claim the full attendant care expense and not claim the DTC in this case.
Scenario two — for someone living at home without an approved DTC but having a doctor’s letter as described above. They can claim the full attendant care expense.
Scenario three — for someone living in a retirement home or other assisted living facility with a DTC, they can claim the DTC or the attendant care expense but not both.
Scenario four — for someone living in a full care nursing home with a DTC, they can claim the $8,662 DTC and a maximum of $10,000 of attendant care expense.
Regarding full care nursing home expenses.
Someone living in a full care nursing home with or without an approved DTC, can claim key components of the total nursing home expense beyond the attendant care expense, but no DTC can be claimed if this is the route taken.
Noteworthy, for a person having an approved DTC, if the DTC is claimed with or without a claim for attendant care expense or other medical expenses, it may be possible to transfer any balance over what the person needs to make their situation non-taxable, to an in-home supporting person.
In fact, in the case of a totally disabled person, a transfer to an out-of-home supporting person may be possible.
Finally, to be successful with any medical claim, receipts are critical.
The paper trail must be explicit in detail of services rendered and the payment of them.
Also, in the case of transfer to a supporting person, proof of payment by that supporting person for medical expenses is needed.
Ron Clarke, owner of JBS Business Services in Trail, provides accounting and tax services.