Consolidation of Caregiver Credits

Currently, the tax system provides the following non-refundable tax credits that can be claimed by caregivers (using Schedule 1, Federal Tax):

For 2017 and subsequent taxation years, the budget proposes to consolidate these three credits as part of the new Canada caregiver credit (CCC).

1. What is the Canada Caregiver Credit?

For 2017 and subsequent taxation years, the budget proposes to consolidate the infirm dependant credit, the caregiver credit (for in-home care of a relative) and the family caregiver credit as part of the new Canada caregiver credit (CCC).

The Canada caregiver credit is available in respect of an individual’s spouse or common-law partner, minor child or eligible relative (see question 7) who is dependent on the individual because of a mental or physical infirmity at any time in the year.

The CCC will be based on two amounts:

CCC Higher Amount:

A higher maximum amount of $6,883 (in 2017) can be claimed by a caregiver in respect of each infirm dependant who is an eligible relative. This amount will be reduced dollar-for-dollar by the amount of the dependant’s net income above $16,163 (in 2017).

The dependant will not be required to live with the caregiver in order for the caregiver to claim the credit. However a credit will no longer be available in respect of a non-infirm individual over 65 years of age who resides with their adult child (caregiver).

CCC Lower Amount Plus Top-Up:

A lower maximum amount of $2,150 (currently known as the family caregiver amount) for infirm dependants will remain as part of the following amounts (on Schedule 1, Federal Tax):

  • The maximum spouse or common-law partner amount (line 303);
  • The maximum amount for an eligible dependant (line 305);
  • The amount for infirm children under age 18 at the end of the tax year (line 367).

In cases where an individual claims an amount for an infirm spouse or common-law partner or an amount for an eligible dependant who is infirm, the individual must claim the CCC at the lower amount (maximum $2,150 for 2017). Where this results in less tax relief than would be available if the CCC higher amount (maximum $6,883 for 2017) were claimed instead, a top-up will be provided to offset this difference.

Note: the top-up does not apply with respect to an amount claimed for an eligible dependant who is age 18 or under at the end of the year.

The CCC amounts are consistent with the amounts that could have been claimed in respect of these dependants for 2017 under the current caregiver amount (for in-home care of a relative) and family caregiver amount, respectively.

The amounts and the net income threshold will be indexed to inflation after 2017.

2. How do I calculate the CCC?

Under the new CCC you may be able to claim the lesser of $6,883 and the amount by which the base amount of $23,046 (the total of the income threshold of $16,163 and the maximum amount of $6,883) exceeds your dependant’s net income.

Example:

Lisa is married and supports an infirm adult child whose net income for the year is $18,000.

Canada caregiver amount

Base amount (income threshold of $16,163 plus the maximum amount $6,883)
 
23,046
A
 
Dependant’s net income
-
18,000
B
 
Line A minus line B (if negative, enter 0)
=
5,046
C
 
Maximum amount
 
6,883
D
 
Canada caregiver amount – Lesser of line C or D
 
5,046
E
 

Lisa can claim $5,046 as a Canada caregiver amount. The amount will be claimed on Schedule 1, Federal tax, as part of the T1 income tax and benefit return for 2017 (available early in 2018). To calculate the Canada caregiver credit, multiply by 15%:

$5,046 x 15% = $756.90

The total relief available for Lisa is up to $756.90. Since the CCC is a non-refundable credit, it is used to reduce tax owing, but any excess is not refunded.

3. Previously, I was able to claim the family caregiver credit. Will I still be able to claim this credit for an infirm spouse or common-law partner or eligible dependant?

If you are eligible for a credit under the current rules for an infirm spouse or common-law partner or an infirm eligible dependant, you will be eligible for the lower amount of the CCC (maximum $2,150 for 2017), which is consistent with the family caregiver credit.

Where this results in less tax relief than would be available if the higher amount of the CCC (maximum $6,883 for 2017) were claimed instead (if you are otherwise eligible), a top-up will be provided to offset this difference. To calculate the top-up, calculate the allowable spouse or common-law partner amount and then the Canada caregiver amount. Then subtract the allowable spouse or common-law partner amount from the Canada caregiver amount to get the top-up amount.

Example 1: Marie-Josée’s infirm spouse earns $18,000 in the year.

Spouse or common-law partner amount

Base amount (with lower amount of the CCC), which is $11,636 plus $2,150 for 2017
 
13,785
 
LESS: Spouse or common-law partner’s net income
-
18,000
 
Allowable spouse or common-law partner amount (if negative, enter 0)
 
0
 

Canada caregiver amount

Base amount (income threshold of $16,163 plus the maximum amount $6,883)
 
23,046
A
 
Dependant’s net income
-
18,000
B
 
Line A minus line B (if negative, enter 0)
=
5,046
C
 
Maximum amount
 
6,883
D
 
Canada caregiver amount – Lesser of line C or D
 
5,046
E
 

As the Canada caregiver amount is more than the spousal amount (of 0), Marie-Josée can claim a top-up:

Canada caregiver amount – Top-up

Canada caregiver amount from line E above
 
5,046
F
 
Spousal or common–law partner amount
-
0
G
 
Top-up – Line F minus line G (if negative, enter 0)
 
5,046
H
 

Marie-Josée can claim the Canada caregiver top-up amount on Schedule 1, Federal tax, as part of the T1 income tax and benefit return for 2017 (available early in 2018). To calculate the actual Canada caregiver credit top-up, multiply by 15%:

$5,046 x 15% = $756.90

The total relief available for Marie-Josée is up to $756.90. Since the CCC is a non-refundable credit, it is used to reduce tax owing, but any excess is not refunded.

Example 2: Mohammed’s infirm spouse earns $13,000 in the year.

Spouse or common-law partner amount

Base amount (with lower amount of the CCC), which is $11,636 plus $2,150 for 2017
 
13,785
 
LESS: Spouse or common-law partner’s net income
-
13,000
 
Allowable spouse or common-law partner amount (if negative, enter 0)
 
785
 

Canada caregiver amount

Base amount (income threshold of $16,163 plus the maximum amount $6,883)
 
23,046
A
 
Dependant’s net income
-
13,000
B
 
Line A minus line B (if negative, enter 0)
=
10,046
C
 
Maximum amount
 
6,883
D
 
Canada caregiver amount – Lesser of line C or D
 
6,883
E
 

As the Canada caregiver amount is more than the spousal amount (of $785), Mohammed can claim a top-up:

Canada caregiver amount – Top-up

Canada caregiver amount from line E above
 
6,883
F
 
Spousal or common–law partner amount
-
785
G
 
Top-up – Line F minus line G (if negative, enter 0)
 
6,098
H
 

Mohammed can claim the spousal amount of $785 and the Canada caregiver top-up amount of $6,098 on Schedule 1, Federal tax, as part of the T1 income tax and benefit return for 2017 (available early in 2018).

To calculate the actual credits, multiply by 15%:

Spousal credit $785 x 15% = $117.75

Canada caregiver credit top-up $6,098 x 15% = $914.70

The total relief available for Mohammed is up to $1,032.45. Since the CCC is a non-refundable credit, it is used to reduce tax owing, but any excess is not refunded.

Example 3: Linda’s infirm spouse has no income in the year.

Spouse or common-law partner amount

Base amount (with lower amount of the CCC), which is $11,636 plus $2,150 for 2017
 
13,785
 
LESS: Spouse or common-law partner’s net income
-
0
 
Allowable spouse or common-law partner amount (if negative, enter 0)
 
13,785
 

Canada caregiver amount

Base amount (income threshold of $16,163 plus the maximum amount $6,883)
 
23,046
A
 
Dependant’s net income
-
0
B
 
Line A minus line B (if negative, enter 0)
=
23,046
C
 
Maximum amount
 
6,883
D
 
Canada caregiver amount – Lesser of line C or D
 
6,883
E
 

Since the spousal amount is more than the Canada caregiver amount, a top-up cannot be claimed.

Canada caregiver amount – Top-up

Canada caregiver amount from line E above
 
6,883
F
 
Spousal or common–law partner amount
-
13,785
G
 
Top-up – Line F minus line G (if negative, enter 0)
 
0
H
 

Linda can claim the spousal amount of $13,785 on line 303 of the Schedule 1, Federal tax, as part of the T1 income tax and benefit return for 2017 (available early in 2018). Since the spousal amount is more than the Canada caregiver amount, a top-up cannot be claimed.

To calculate the actual spousal credit, multiply by 15%:

$13,785 x 15% = $2067.75

The total relief available for Linda is up to $2,067.75. Since the CCC is a non-refundable credit, it is used to reduce tax owing, but any excess is not refunded.

4. Under the current conditions for the caregiver credit for in-home care, in order to qualify, a dependant has to live with me. Will the dependant have to live with me under the new CCC?

No, under the new CCC, a dependant does not have to live with you, but must be dependent on you for support by reason of infirmity.

5. Previously I could claim the caregiver credit (for in-home care of a relative) for my elderly mother who lives with me but is not infirm. Can I claim the Canada caregiver credit for her?

No. The CCC may only be claimed for dependants who are infirm.

6. Are there other rules that may affect my claim?

A number of features, similar to the current caregiver credits, apply to the new CCC:

  • Only one claim for the higher amount (maximum $6,883 in 2017) will be available in respect of each infirm dependant. If more than one individual is eligible for the credit, the credit can be shared provided that the total claim does not exceed the maximum annual amount for that dependant.
  • Where a claim for an eligible dependant credit or spousal or common-law partner credit is made in respect of an infirm dependant, no individual other than an individual who has claimed the eligible dependant credit or the spousal or common-law partner credit will be allowed to claim the Canada caregiver credit in respect of that dependant.
  • An individual will not be able to claim the Canada caregiver credit in respect of a particular person if the individual is required to pay a support amount for that person to their former spouse or common-law partner.
7. Who are the eligible relatives that can be claimed for this credit if they otherwise qualify?

Generally, this has not changed. An eligible relative is a person over the age of 18 who at any time in the year is dependent on you for support because of a mental or physical infirmity, and is:

  • your or your spouse’s or common-law partner’s child or grandchild or;
  • if they are resident in Canada at any time in the year, your or your spouse’s or common-law partner’s parent, grandparent, brother, sister, uncle, aunt, niece or nephew.
8. Previously, I filled out a Form TD1, Personal Tax Credit Return and gave it to my employer so they could adjust my tax deductions because I planned on claiming the caregiver amount for in-home care. Do I need to revise my TD1 and provide it to my employer?

Filing a new Form TD1 will make sure that tax deductions on payments to you by your employer are about the same as the taxes calculated on your T1 income tax and benefit return for 2017. Note that your employer will adjust their tax deductions once they process the revised Form TD1 but will not adjust their prior 2017 tax deductions. You may also need the Form TD1-WS, Worksheet for the Personal Tax Credit Return to help you fill in the revised Form TD1. The revised Form TD1 and worksheet will be available on the CRA website very soon.

9. What do all these changes really mean?

If your circumstances have not changed from 2016, the proposed changes will not restrict your credits, except for the following case:

  • A caregiver amount for in-home care of your parent or grand-parent who is not infirm is no longer available. However, if – at any time in the year – you do not have a spouse or common-law partner or, if you did, you were not living with, supporting, or being supported by that person, you may be able to claim the amount for an eligible dependant in respect of your parent or grand-parent.

Other than this one restriction, claims under the new credit will generally remain consistent with prior year claims, subject to adjustments that reflect indexation. Certain claims will increase:

  • As the top-up is being extended to claims for your infirm spouse or common-law partner;
  • The income threshold above which the higher amount is reduced is more generous than the threshold currently used for the calculation of the infirm dependant credit; and
  • You are no longer required to live with the dependant to claim the Canada caregiver credit.
10. Where can I get more information on the CCC?

The CRA is committed to providing taxpayers with up-to –date information. The CRA encourages taxpayers to check its Web pages often. All new forms, policies and guidelines will be posted as they become available.

In the meantime, please consult the Department of Finance Canada’s Budget 2017 documents for details.

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