Income Tax Folio S1-F4-C1, Basic Personal and Dependant Tax Credits

Series 1: Individuals

Folio 4: Personal Credits

Chapter 1: Basic Personal & Dependant Tax Credits

Summary

Individuals are entitled to claim certain non-refundable tax credits in calculating taxes payable for a tax year. These credits reduce the amount of income tax an individual must pay. If the total of these credits is more than the income tax the individual would otherwise pay for the year, the individual will not get a refund for the difference.

This Chapter discusses the eligibility requirements and the amounts and calculations for the basic personal & dependant tax credits (which are collectively referred to as the personal tax credits) under subsection 118(1) including:

  • the basic personal tax credit;
  • the spouse or common-law partner tax credit;
  • the eligible dependant tax credit;
  • the caregiver tax credit;
  • the infirm dependant tax credit (also referred to as the tax credit for infirm dependants age 18 or older); and
  • the family caregiver tax credit (also referred to as the family caregiver tax credit for a child under 18 years of age).

Information on the medical expense tax credit, disability tax credit, education and textbook tax credits, and tuition tax credit can be found in other Folio chapters.  Information on the remaining tax credits for individuals can be found in the General income tax and benefit package for the relevant tax year.

The Canada Revenue Agency (CRA) issues income tax folios to provide technical interpretations and positions regarding certain provisions contained in income tax law. Due to their technical nature, folios are used primarily by tax specialists and other individuals who have an interest in tax matters. While the comments in a particular paragraph in a folio may relate to provisions of the law in force at the time they were made, such comments are not a substitute for the law. The reader should, therefore, consider such comments in light of the relevant provisions of the law in force for the particular tax year being considered. 

Important notice

Bill C-44, passed by Parliament on June 22, 2017, replaced the family caregiver amount (¶1.22), the family caregiver tax credit (¶1.23), the caregiver tax credit (¶1.59), and the infirm dependant tax credit (¶1.70) with the new Canada caregiver tax credit. The amounts under the new Canada caregiver tax credit are consistent with the amounts that could have been claimed in respect of infirm dependants under the former caregiver tax credit, family caregiver amount and family caregiver tax credit.  The new Canada caregiver tax credit will apply for the 2017 and subsequent tax years.
 
More information on the proposed changes is available on the 2017 Budget website.

Please note that the content of this Chapter does not reflect these legislative changes for 2017 and subsequent tax years.  For information on the basic personal and dependant tax credits for the 2017 tax year, refer to the General income tax and benefit package for 2017

A new Chapter for 2017 and subsequent years is being prepared for publication.

 

Table of Contents

Discussion and interpretation

Calculation of credits

1.1 Subsection 118(1) sets out the formulas for calculating the basic personal tax credit, the spouse or common-law partner tax credit, the eligible dependant tax credit, the caregiver tax credit, the infirm dependant tax credit, and the family caregiver tax credit.

1.2 The personal tax credits for an individual are calculated by multiplying the total of the applicable dollar amounts for each of the personal tax credits by the lowest tax rate referred to in subsection 117(2). The lowest tax rate is 15% for years after 2006. The dollar amounts of the different personal tax credits are set out in the relevant provisions of subsection 118(1). Where applicable, the amounts are reduced by the income for the year (in excess of certain limits) of the spouse or common-law partner or the dependant.

Annual indexation

1.3 The dollar amounts and the income limits for each of the personal tax credits are subject to annual indexation. Basically, under section 117.1, these amounts will be increased to reflect inflation based on the increase, if any, in the Consumer Price Index. The CRA’s indexation chart provides these indexed amounts for each of the personal tax credits for the last four tax years. 

Example 1

 

Lucie and Richard were living as common-law partners.  On November 1, 2016, Lucie moved out of their residence and they began living separate and apart due to a breakdown in their relationship.  If the couple continues to live separate and apart for 90 consecutive days, the effective day of the separation is November 1, 2016. If they reconcile prior to the end of the 90 day period, they would not be considered separated in that period. 

1.15 For the purposes of the personal tax credits under subsection 118(1), when a marriage or common-law partnership has been dissolved by death, the family relationships created by the marriage or common-law partnership are considered to continue to exist. For example, a man or woman is considered to remain a child of his or her deceased spouse's mother or father.  However, if a marriage or common-law partnership ends for a reason other than death, such as divorce, annulment, or separation, the family relationships created by the marriage or common-law partnership cease to exist.

Example 2

 

Cheryl is confined to a hospital for most of the year because of a physical infirmity. The cost of Cheryl’s hospitalization is paid by the provincial government under a provincial hospital plan. All of Cheryl’s additional expenses, such as for clothing, comforts, and medical and hospital plan premiums, are paid for by her husband Michel. Michel pays for all of Cheryl’s expenses on those occasions when she was able to be out of the hospital. Although the cost of her hospitalization is paid for under her provincial hospital plan, it would be recognized that Michel supports Cheryl during the year, both when she is in the hospital, by paying for her additional expenses, and when she is out of the hospital, by paying for all of her expenses.

1.19 Whether an individual supports another individual is a question of fact.  A person is generally dependent for support on an individual if the individual has actually supplied necessary maintenance, or the basic necessities of life to the person on a regular and consistent basis. The basic necessities of life are generally understood to include food, shelter and clothing.

1.20 An individual might contribute amounts to a household which can be regarded as being for their own accommodation and meals. In this situation, the amounts should not be considered to have been paid by the individual for the support of another person in the household.

Example 3

 

Elise owns a home and lives with her adult children, François and Marcel.  Marcel is unable to support himself because of a mental infirmity, and has to rely on others for support.  François pays rent to Elise to cover François’s share of household expenses (such as for his room, and utilities) and regularly contributes amounts to cover the cost of his own groceries.  In this example, François only contributes amounts that can be regarded as being for his own accommodation and meals.  Therefore, no amount should be considered to have been paid by François for the support of Marcel.  Marcel is not dependent for support on François.  

1.21 The term mental or physical infirmity is not specifically defined for the purposes of subsection 118(1). Therefore, it takes its ordinary meaning. For a person to be dependent on an individual because of mental or physical infirmity, the dependency must be brought about solely by reason of the infirmity. The degree of the infirmity must be such that it requires the person to be dependent on the individual for a considerable period of time. Temporary illness or injury is not considered to be an infirmity for purposes of the personal tax credits.

1.22 The family caregiver amount is an additional amount that may be added when calculating a personal tax credit being claimed in respect of a dependant with a mental or physical infirmity.  This additional dollar amount is available as part of the calculation to determine the spouse or common-law partner tax credit, the eligible dependant tax credit and the caregiver tax credit.  The requirements for claiming the family caregiver amount are discussed in each of the specific tax credit sections in this Chapter.

1.23 If the dependant with a mental or physical infirmity is a child under 18 years of age, the family caregiver amount is a separate tax credit.  The family caregiver tax credit is explained in ¶1.80 - 1.85.

1.24 The term self-contained domestic establishment is defined in subsection 248(1).  It means a dwelling-house, apartment or other similar place of residence in which a person as a general rule sleeps and eats. The size of the establishment is of no consequence and even a one-room bachelor apartment could qualify if it is self-contained. Generally, a self-contained domestic establishment is a living unit with restricted access that contains a kitchen, bathroom and sleeping facilities.  A room (or rooms) in a hotel or boarding house would not ordinarily be a self-contained domestic establishment.

Basic personal tax credit

1.25 An individual is entitled to a basic personal tax credit under paragraph (c) of the description of B in subsection 118(1). This credit is calculated using the formula:
A x B

where:  

A is the Basic personal amount

B is the lowest tax rate (15% for years after 2006).

Spouse or common-law partner tax credit

1.26 An individual may be entitled to claim a spouse or common-law partner tax credit under paragraph (a) of the description of B in subsection 118(1). The credit is available if at any time in the year the individual:

  • is married or is in a common-law partnership;
  • supports their spouse or common-law partner; and
  • is not living separate and apart from that spouse or common-law partner because of a breakdown of their marriage or common-law partnership.

1.27 The spouse or common-law partner tax credit is calculated using the following formula: 

(C - D) x E

where:  

C is the applicable maximum spouse or common-law partner amount (see ¶1.28)

D is the amount, if any, of the spouse or common-law partner’s income for the year (see ¶1.29); and

E is the lowest tax rate (15% for years after 2006).

1.28 The maximum spouse or common-law partner amount available to the individual depends on whether the individual is eligible for the family caregiver amount in respect of the individual’s spouse or common-law partner. The family caregiver amount is available to the individual as part of the spouse or common-law partner tax credit when an individual’s spouse or common-law partner is dependent on the individual because of a mental or physical infirmity.  If an individual is eligible to claim the family caregiver amount, the individual would use the Spouse or common-law partner amount (maximum if eligible for the family caregiver amount) for variable C in the formula described in ¶1.27. Otherwise the individual would use the Spouse or common-law partner amount (maximum).   

1.29 An individual’s claim for the spouse or common-law partner tax credit will be reduced if the spouse or common-law partner has income for the year. It will be eliminated when the income is equal to or greater than the spouse or common-law partner amount for the year used in variable C in the formula described in ¶1.27.

1.30 Either spouse or common-law partner (but not both) may claim a spouse or common-law partner tax credit in respect of the other, provided the spouse or common-law partner making the claim supported the other.

Changes to relationship status

1.31 The requirements for claiming the spouse or common-law partner tax credit only need to be met at some point in the year. This means that the credit may be available in a year in which an individual marries or becomes a common-law partner.  Similarly, the credit may be available in a year in which a breakdown in a marriage or common-law partnership occurs.

1.32 It should be noted however, that if the individual is required to pay a support amount in respect of a former spouse or common-law partner in the year of the breakdown of a relationship, the individual must choose whether to claim the spouse or common-law partner tax credit, or the deductible support amounts for the year.  The individual can claim whichever is more beneficial. Income Tax Folio S1-F3-C3, Support Payments provides information about support amounts.

1.33 Where two individuals are living separate and apart at the end of a year because of a breakdown of their marriage or common-law partnership that occurred in the year, only the income for the period of the year before the breakdown is included in the calculation of the spouse or common-law partner tax credit. In all other cases, the income of the spouse or common-law partner for the entire tax year must be taken into account in calculating the spouse or common-law partner tax credit.

1.34 The determination of whether individuals live separate and apart as a result of a breakdown of their relationship is a question of fact.  Where a separation is for reasons other than a breakdown of the relationship, the individuals would not be considered to be living separate and apart for purposes of the spouse and common-law partner tax credit.  This may be the case, for example, where there is a separation for attendance at school or for work, or where there is an involuntary separation such as for medical reasons or incarceration.

Taxable dividends received by a spouse or common-law partner

1.35 Under subsection 82(3), an individual can elect to have all taxable dividends from taxable Canadian corporations received by their spouse or common-law partner included in the individual’s income for the year.  In order to make this election, the inclusion of the dividends in the individual’s income must result in an increase in the individual’s spouse or common-law partner tax credit.  If the individual elects to include these dividends in their income, the dividends are excluded from their spouse or common-law partner’s income.  This allows the individual to maximize the spouse or common-law partner tax credit and dividend tax credit for the year.  Subsection 82(3) is discussed in Interpretation Bulletin IT-295R4, Taxable Dividends Received after 1987 by a Spouse.

Example 4

 

Khalid and Sabina are married and have a ten year old son, Samir.  In June of 2015, Khalid and Sabina separate, and Samir lives with Sabina after the separation.  Sabina meets the requirements for claiming the spouse or common-law partner tax credit in respect of Khalid for the period of the year before the separation.  Sabina also meets the requirements for the eligible dependant tax credit in respect of Samir for the period of the year after the separation.

In this case, Sabina can claim whichever of the two credits is more beneficial to her for the year.  Whichever credit she chooses to claim, she will be unable to claim the other credit for that year.

1.38 There are certain restrictions in subsection 118(5) that can prevent an individual from claiming a personal tax credit under subsection 118(1) (such as the spouse or common-law partner tax credit) for a particular person for a tax year.  These restrictions apply if the individual is required to pay a support amount for that person to his or her current or former spouse or common-law partner. For an exception to these restrictions in the year of a breakdown in a marriage or common-law partnership, refer to ¶1.31 and 1.32.  For more information regarding these restrictions, refer to ¶3.73 - 3.77 of Income Tax Folio S1-F3-C3

Support of an eligible dependant

1.46 For an individual to claim the eligible dependant tax credit, a person must be wholly dependent for support on the individual. As discussed in ¶1.18, support involves providing the basic necessities of life, such as food, shelter, and clothing. Wholly dependent for support on the individual generally means the person is financially dependent on the individual such that the individual provides almost entirely for the person’s well-being. For example, in order for a child to be considered wholly dependent for support on a parent, the parent must be responsible for the usual day-to-day activities of raising the child, such as ensuring the child attends school, and providing necessities such as food, shelter and clothing.

1.47 Where an individual receives support payments from a government agency responsible for a person’s care, in order to care for that person, the person is generally not considered to be wholly dependent for support on the individual. For example, a foster child is not considered to be wholly dependent for support on a foster parent who receives payments from an agency responsible for the child’s care.

1.48 A child born alive (even if alive only briefly after birth) is considered to be dependent for support on an individual. An individual may claim the eligible dependant tax credit for a newborn child provided the other requirements to claim that credit are met.

1.49 An individual may support an eligible dependant who moves away to attend school. If the eligible dependant ordinarily lives with the individual during the year when not in school, and the other requirements to claim the eligible dependant tax credit are met, the individual may claim the eligible dependant tax credit for that person.

Limitations affecting the eligible dependant tax credit 

1.50 Paragraph 118(4)(a) prevents an individual from claiming an eligible dependant tax credit in a tax year for more than one person.

1.51 As noted in ¶1.37, an individual cannot claim the eligible dependant tax credit for the year if they claim a spouse or common-law partner tax credit in that year. An individual may choose to claim either the spouse or common-law partner tax credit or the eligible dependant tax credit in a tax year if the requirements for both credits are met. The individual can choose whichever is more beneficial to claim for the year.

Example 5

 

Gregory and Lisa have been married for five years, and have a three year old daughter Rachel. Gregory and Lisa separate during May of the current year, and Gregory has full custody of Rachel after the separation. No support amounts are paid by either individual. Gregory and Lisa both have income in excess of the spouse or common-law partner amount for the year.

Gregory is eligible to claim the spouse or common-law partner tax credit in respect of Lisa for the portion of year that they were together. Gregory would also be eligible to claim the eligible dependant tax credit in respect of Rachel for the period after his separation when he has custody of Rachel. 

However, because Lisa’s income for the portion of the year that they were together is in excess of the spouse or common-law partner amount for the year, the actual credit that Gregory would be able to claim for the spouse or common-law partner tax credit would be zero. 

Therefore, Gregory chooses to claim the eligible dependant tax credit in respect of Rachel as he would be able to claim the full amount of this credit for the year.

 

1.52 Paragraph 118(4)(a.1) also prevents an individual from claiming an eligible dependant tax credit in a tax year for a person if:

  • another individual is claiming the spouse or common-law partner tax credit for that same person, and
  • that person and the other individual are married or in a common-law partnership throughout the year and are not living separate and apart because of a breakdown of their relationship.

Example 6

 

Stan is single and has no children of his own. Stan’s retired parents, Clark and Martha, live with him. Stan owns the home where they live, but both Clark and Stan contribute towards the maintenance of the home. Clark and Martha are both under 65 years of age. Clark has pension income of $31,000 in the year, and Martha has no income. As a result, Martha is wholly dependent for support on both Stan and Clark.

Clark claims the spouse or common-law partner tax credit in respect of Martha for that year. This means that although Stan would otherwise be entitled to claim the eligible dependant tax credit in respect of Martha, paragraph 118(4)(a.1) prevents him from doing so.

 1.53 Under paragraph 118(4)(b) only one individual can claim the eligible dependant tax credit:

  • for a particular person; or
  • within the same domestic establishment.

1.54 This means that if more than one individual is entitled to claim the eligible dependant tax credit for the same person, only one of those individuals can claim the credit in respect of that person. Similarly, if two or more individuals jointly maintain a domestic establishment where they reside, and more than one individual in that domestic establishment is eligible to claim an eligible dependant tax credit for an eligible dependant living there, only one individual can make a claim for the credit in the tax year.

1.55 In either case discussed in ¶1.53 and 1.54, the eligible dependant tax credit may only be claimed by one individual. The credit cannot be shared by having individuals each claim a portion of the credit on their returns, even if there is agreement to share the claim. If the individuals are unable to agree as to who should claim the tax credit, neither can claim it.

Example 7

 

Paulo and Maria are divorced and share custody of their six year old son Cristiano. Cristiano resides with Paulo for approximately 50% of the year, and with Maria for the remainder of the year. No child support payments are made by either parent.

Maria lives in a self-contained domestic establishment that she maintains alone. Paulo lives with his sister Rebecca and her twelve year old daughter Elizabeth. Both Paulo and Maria meet the requirements to claim the eligible dependant tax credit in respect of Cristiano for the time during the year that he lives with, and is supported by, each of them. Rebecca meets the requirements to claim the eligible dependant tax credit in respect of her daughter, Elizabeth.

Paulo and Maria agree that Paulo will be the one to claim the eligible dependant tax credit in respect of Cristiano for the current tax year. Because only one eligible dependant tax credit can be claimed within a domestic establishment, Rebecca and Paulo agree that she will not make a claim for the credit in respect of Elizabeth in the current tax year.

1.56 Where parents live separate and apart due to a breakdown in their marriage or common-law partnership, and share custody of two or more minor children, one parent may be able to claim the eligible dependant tax credit for one child, and the other parent may be able to claim the credit for another child. However, a particular parent must meet all of the requirements to claim a particular child and ensure that the limitations listed in subsections 118(4) and 118(5) do not apply (see ¶1.58 for a discussion of subsection 118(5)). 

1.57 If an individual is entitled to claim an eligible dependant tax credit for a person, paragraph 118(4)(c) prevents any individual from claiming either the caregiver tax credit or the infirm dependant tax credit for that same person for the tax year. However, as discussed in ¶1.65 and 1.66, an individual may be able to claim an amount in addition to the eligible dependant tax credit if the restriction in paragraph 118(4)(c) results in the eligible dependant tax credit being less beneficial to the individual compared to claiming either the caregiver tax credit or the infirm dependant tax credit for that same person.

1.58 There are certain restrictions in subsection 118(5) that can prevent an individual from claiming a personal tax credit under subsection 118(1) (such as the eligible dependant tax credit) for a particular person for a tax year. These restrictions apply if the individual is required to pay a support amount for that person to his or her current or former spouse or common-law partner. For more information regarding these restrictions, refer to ¶3.73 - 3.77 of Income Tax Folio S1-F3-C3.

Caregiver tax credit

1.59 The caregiver tax credit is provided under paragraph (c.1) of the description of B in subsection 118(1). An individual will be eligible for the credit if at any time in the tax year the individual maintains a self-contained domestic establishment as the ordinary place of residence of the individual and of a cared-for person. The residence can be maintained alone or jointly with one or more persons. Although the requirements to claim this credit can be met at any time during the year, all of the requirements must be met at the same time in order to be eligible.

1.60 A cared-for person is a person who is 18 years of age or older and is:

  1. the child or grandchild of the individual or of the individual’s spouse or common-law partner and who is dependent on the individual because of a mental or physical infirmity;
  2. the parent or grandparent of the individual or of the individual’s spouse or common-law partner, and who is resident in Canada, and is 65 years of age or older; or
  3. the parent, grandparent, brother, sister, aunt, uncle, nephew or niece of the individual or of the individual’s spouse or common-law partner and who is resident in Canada, and dependent on the individual because of a mental or physical infirmity.

1.61 Whether an individual ordinarily resided at a residence is a question of fact that can only be determined by reviewing the facts of the particular situation. The notion of ordinarily resided must be given the meaning assigned by the Supreme Court of Canada in Thomson v Minister of National Revenue, [1946] S.C.R. 209, 2 DTC 812. In Thomson, Estey J. held that, “one is ‘ordinarily resident’ in the place where in the settled routine of his life he regularly, normally or customarily lives.”

1.62 The caregiver tax credit is calculated for each cared-for person using the following formula:
(I – J) x K

where:  

I is the applicable maximum caregiver amount (see ¶1.63); 

J is the amount, if any, of the cared-for person’s income in excess of the Net income threshold for caregiver amount (see ¶1.64); and

K is the lowest tax rate (15% for years after 2006).

1.63 The maximum caregiver amount available to the individual depends on whether the individual is eligible for the family caregiver amount in respect of the cared-for person. The family caregiver amount is available as part of the caregiver tax credit when the cared-for person is dependent on the individual because of a mental or physical infirmity. If an individual is eligible to claim the family caregiver amount, the individual would use the Caregiver amount (maximum per dependant eligible for the family caregiver amount) for variable I in the formula described in ¶1.62. Otherwise the individual would use the Caregiver amount (maximum per dependant).

1.64 If the cared-for person’s income is less than the Net income threshold for caregiver amount, the cared-for person’s income will not reduce the amount of the individual's caregiver tax credit. In other words, the cared-for person’s income will only reduce the amount of the individual's caregiver tax credit when it is greater than the threshold.

Limitations affecting the caregiver tax credit

1.65 If an individual is entitled to claim an eligible dependant tax credit for a person, paragraph 118(4)(c) prevents any individual from claiming either the caregiver tax credit or the infirm dependant tax credit for that same person for the tax year.

Example 8

Joanne and Jamie are common-law partners who have been living with their adult child Benjamin. Benjamin is dependent on them because of a physical infirmity. Joanne and Jamie separated during the current year. Since the separation, Benjamin has been living with Joanne in a self-contained domestic establishment that Joanne owns and maintains. Joanne is entitled to claim the eligible dependant tax credit for Benjamin. 

Although Jamie may have been eligible to make a claim for either the caregiver tax credit or the infirm dependant tax credit in respect of Benjamin for the period of the year before the breakdown of the relationship, paragraph 118(4)(c) prevents Jamie from making such a claim. 

1.66 The restriction discussed in ¶1.65 might result in the eligible dependant tax credit being less than what would have been available for either the caregiver tax credit or the infirm dependant tax credit. In that case, in addition to the eligible dependant tax credit, the individual may be able to claim an additional tax credit under paragraph (e) of the description of B in subsection 118(1). This additional tax credit is equal to the amount by which either the caregiver tax credit or the infirm dependant tax credit that the individual would have been able to claim exceeds the eligible dependant tax credit being claimed. 

Example 9

Marilyn is divorced, and lives with her 25 year old daughter, Abigail. Abigail is dependent on Marilyn due to a mental infirmity. Abigail had a net income of $8,000 in 2016 that she earned from a job she had until the end of October.

Marilyn meets the requirements for the eligible dependant tax credit, the caregiver tax credit and the infirm dependant tax credit with respect to Abigail. In addition, because Abigail is dependent on her due to a mental infirmity, Marilyn is eligible for the family caregiver amount.   

Because Marilyn is entitled to claim the eligible dependant tax credit for the 2016 tax year, paragraph 118(4)(c) prevents her from claiming the infirm dependant tax credit or caregiver tax credit in respect of Abigail for the 2016 tax year. 

Marilyn’s eligible dependant tax credit is calculated as follows:

(Amount for an eligible dependant (maximum if eligible for the family caregiver amount) – Abigail’s net income) x the lowest tax rate for the year

= ($13,595 – $8,000) x 15%

= $839

To determine whether Marilyn is entitled to an amount in addition to the eligible dependant tax credit, she must know what she could have claimed for the caregiver tax credit or the infirm dependant tax credit.

Marilyn’s infirm dependant tax credit in respect of Abigail would have been calculated as follows:

[Infirm dependant amount (maximum per dependant) – (Abigail’s net income – net income threshold for infirm dependant amount)] x 15%

= [$6,788 – ($8,000 - $6,807)] x 15%

= $839

Marilyn’s caregiver tax credit would have been calculated as follows:

Caregiver amount (maximum per dependant eligible for the family caregiver amount) x 15%

= $6,788 x 15%

= $1,018

(Note that Abigail’s income does not exceed the Net income threshold for caregiver amount, and therefore her income does not reduce the calculation for the Caregiver amount for Marilyn)

Additional tax credit
Paragraph 118(4)(c) prevents Marilyn from claiming the caregiver tax credit. Therefore, she can claim the additional tax credit, calculated as follows:

Caregiver tax credit – eligible dependant tax credit

=   $1,018 - $839

=   $179

Total tax credit

The total tax credit Marilyn can claim in respect of Abigail is therefore $1,018.

1.67 If an individual is entitled to claim the caregiver tax credit in respect of a person for a tax year, paragraph 118(4)(d) prevents any individual from claiming the infirm dependant tax credit in respect of that person for the year.

1.68 Where two or more individuals are entitled to a caregiver tax credit for the same dependant in a tax year, the caregiver tax credit may be shared by those individuals. Under paragraph 118(4)(e), the total amount claimed by all individuals for the caregiver tax credit for a particular dependant cannot be more than the amount that would have been claimed if only one individual had made the claim. If individuals cannot agree as to what portion of the tax credit each can claim, paragraph 118(4)(e) allows the Minister of National Revenue to determine the portions.

Example 10

Ricardo is a widower who is 67 years of age and lives with his son Xavier and daughter-in-law Stefania. In 2016, Ricardo had total income of $15,000 from his pension. In June of 2016, Xavier and Stefania had a baby. Two months after the birth of the baby, Ricardo moved into his daughter Carla’s home, to live with her and her family. Xavier and Carla would each be entitled to claim a caregiver tax credit in respect of Ricardo for the 2016 tax year.

The total caregiver tax credit available in respect of Ricardo is calculated as follows:
Caregiver amount (maximum per dependant)  x 15%

= $4,667 x 15%

= $700

If Xavier and Carla share the caregiver tax credit, they can choose any combination of amounts between them, as long as the total combined amount does not exceed the $700 available.

1.69 There are certain restrictions in subsection 118(5) that can prevent an individual from claiming a personal tax credit under subsection 118(1) (such as the caregiver tax credit) for a particular person for a tax year. These restrictions apply if the individual is required to pay a support amount for that person to his or her current or former spouse or common-law partner. For more information regarding these restrictions, refer to ¶3.73 - 3.77 of Income Tax Folio S1-F3-C3.

Infirm dependant tax credit

1.70 An individual may be entitled to claim an infirm dependant tax credit under paragraph (d) of the description of B in subsection 118(1). This credit is also referred to as the tax credit for infirm dependants age 18 or older. The credit is available for each dependant who was 18 years of age or older before the end of the year and dependent on the individual for the year because of mental or physical infirmity. Although usually the case, it is not necessary that the dependant live in the same residence as the individual for the purposes of this credit.

1.71 Under subsection 118(6), for the purposes of the infirm dependant tax credit, a person qualifies as a dependant of an individual for a tax year if the person is dependent on the individual for support at any time in the year and is:

  • the child or grandchild of the individual or the individual's spouse or common-law partner; or
  • resident in Canada at any time in the year and is the parent, grandparent, brother, sister, uncle, aunt, niece or nephew of the individual or of the individual's spouse or common-law partner.

1.72 The infirm dependant tax credit is calculated for each dependant using the following formula:

(L – M) x N

where:

L is the Infirm dependant amount (maximum per dependant) (see ¶1.73)

M is the amount, if any, of the dependant’s income in excess of the Net income threshold for infirm dependant amount for the year (see ¶1.74); and

N is the lowest tax rate (15% for years after 2006).

1.73 Due to the nature of this credit, the infirm dependant amount (maximum per dependant) includes the family caregiver amount.

1.74 If the dependant's income is less than the Net income threshold for infirm dependant amount, the dependant's income will not reduce the amount of the individual's infirm dependant tax credit. In other words, the dependant's income will only reduce the amount of the individual's infirm dependant tax credit when it is greater than the threshold.

Limitations affecting the infirm dependant tax credit

1.75 If an individual is entitled to claim an eligible dependant tax credit for a person, paragraph 118(4)(c) prevents any individual from claiming either the caregiver tax credit or the infirm dependant tax credit for that same person for the tax year.

Example 11

 

Kimberley owns and maintains her own self-contained domestic establishment. She is unmarried but lives with and supports her wholly dependent and physically infirm father, Frank.

In this situation, Kimberley meets the requirements of the eligible dependant tax credit, the caregiver tax credit and the infirm dependant tax credit in respect of Frank.

Because Kimberley is entitled to claim the eligible dependant tax credit in respect of Frank, paragraph 118(4)(c) prevents Kimberley, or any other individual, from claiming the caregiver tax credit or the infirm dependant tax credit in respect of Frank.

1.76 As discussed in ¶1.65 and 1.66, an individual may be able to claim an additional tax credit along with the eligible dependant tax credit. This additional tax credit is available if the restriction in paragraph 118(4)(c) results in the eligible dependant tax credit being less beneficial to the individual compared to claiming either the caregiver tax credit or the infirm dependant tax credit for that same person. See Example 9

1.77 If an individual is entitled to claim the caregiver tax credit in respect of a person for a tax year, paragraph 118(4)(d) prevents any individual from claiming the infirm dependant tax credit in respect of that person for the year.

1.78 Where two or more individuals are entitled to the infirm dependant tax credit for the same dependant in a tax year, the credit may be shared by those individuals. Under paragraph 118(4)(e), the total amount claimed for the infirm dependant tax credit by all individuals for a particular dependant cannot be more than the amount that would have been claimed if only one individual had made the claim. If individuals cannot agree as to what portion of the tax credit each can claim, paragraph 118(4)(e) allows the Minister of National Revenue to determine the portions.

1.79 There are certain restrictions in subsection 118(5) that can prevent an individual from claiming a personal tax credit under subsection 118(1) (such as the infirm dependant tax credit) for a particular person for a tax year. These restrictions apply if the individual is required to pay a support amount for that person to his or her current or former spouse or common-law partner. For more information regarding these restrictions, refer to ¶3.73 - 3.77 of Income Tax Folio S1-F3-C3.

Family caregiver tax credit

1.80 An individual may be entitled to claim the family caregiver tax credit under paragraph (b.1) of the description of B in subsection 118(1). This credit is also referred to as the family caregiver tax credit for an infirm child under 18 years of age. It is available for each child of the individual: 

  • under the age of 18 at the end of the tax year; and
  • who, by reason of mental or physical infirmity, is likely to be, for a long and continuous period of indefinite duration, dependent on others for significantly more assistance in attending to the child’s personal needs and care, when compared to children of the same age.    

1.81 In addition to the requirements described in ¶1.80, one of the following three conditions must be met for each child in order for the individual to claim the family caregiver tax credit for that child: 

  1.  the child ordinarily resides with the individual throughout the tax year together with another parent of the child;
  2.  the child did not ordinarily reside throughout the year with the individual and another parent of the child, and the individual is entitled to claim the eligible dependant tax credit for that child; or
  3. the child did not ordinarily reside throughout the year with the individual and another parent of the child, and the individual would have been entitled to claim the eligible dependant tax credit for that child if one (or more) of the following applied:
    • the individual had not made a claim for the tax year for the spouse or common-law partner tax credit or the eligible dependant tax credit for another dependant;
    • the individual had not lived in the same domestic establishment with another individual who claimed the eligible dependant tax credit for another dependant for the tax year; or
    • the child had no income for the year. (For example, the child did not have income for the tax year that was equal to or greater than the maximum amount for an eligible dependant).  

Example 12

Frederick is 15 years of age. His doctors have determined that because of a physical infirmity, he is likely to be, for a long and continuous period of indefinite duration, dependent on others for significantly more assistance in attending to his personal needs and care, when compared to children of the same age.

The following three separate scenarios will show three different sets of circumstances where the family caregiver tax credit can be claimed in respect of Frederick. 

Scenario A
For the entire tax year, Frederick lives with his mother, Robyn, and father, Johan. 

In this situation, either Robyn or Johan (but not both) can claim the family caregiver tax credit in respect of Frederick, as described in ¶1.81(a).

Scenario B
Frederick’s parents, Robyn and Johan, are divorced. They share equal custody of Frederick throughout the year, and neither parent pays a support amount in respect of Frederick.  Robyn and Johan agree that Johan will claim the eligible dependant tax credit in respect of Frederick for the current tax year. 

In this situation, because Johan will be claiming the eligible dependant tax credit, he will also be entitled to claim the family caregiver tax credit for Frederick for the current tax year, as described in ¶1.81(b). However, because Johan will claim the family caregiver tax credit in respect of Frederick, he will not be allowed to claim the family caregiver amount under the eligible dependant tax credit (as described in ¶1.44).

Reminder:  the family caregiver tax credit and the family caregiver amount are two separate amounts. 

Scenario C
Frederick’s parents, Robyn and Johan, divorced when Frederick was 10 years of age. Both parents share custody of Frederick throughout the year, and Johan pays support amounts to Robyn in respect of Frederick. Therefore, Johan is prevented from claiming any of the personal tax credits in respect of Frederick.

Robyn currently lives with her sister, Stacy, and her two children. Stacy claims the eligible dependant tax credit in respect of one of her children. Because they share a domestic establishment, Robyn is not entitled to claim the eligible dependant tax credit in respect of Frederick. 

However, Robyn would have been entitled to claim the eligible dependant tax credit in respect of Frederick had Stacy not claimed the eligible dependant tax credit for one of her children. This means that Robyn would be entitled to claim the family caregiver tax credit in respect of Frederick as described in ¶1.81(c).

1.82 For the purposes of the family caregiver tax credit, subsection 118(9.1) states that where a child is born, adopted or dies during the year, the phrase throughout the year means throughout the portion of the year that is after the child’s birth or adoption or before the child’s death. This means that the requirement described in ¶1.81(a) can be met if the child ordinarily resides with the individual and another parent of the child throughout the portion of the year after birth or adoption or before death.   

1.83 The family caregiver tax credit is calculated using the following formula:

O x P 

where:

O is the Family caregiver amount for children under age 18

P is the lowest tax rate (15% for years after 2006).

Limitations affecting the family caregiver tax credit

1.84 Paragraph 118(4)(b.1) prevents more than one individual from claiming the family caregiver tax credit for the same child. Where two or more individuals are entitled to claim the credit for a particular child, the individuals must agree as to who will claim the credit for the year. In situations where the individuals cannot agree as to who will claim the credit for the year, no credit will be allowed for either individual.

1.85 There are certain restrictions in subsection 118(5) that can prevent an individual from claiming a personal tax credit under subsection 118(1) (such as the family caregiver tax credit) for a particular person for a tax year. These restrictions apply if the individual is required to pay a support amount for that person to his or her current or former spouse or common-law partner. For more information regarding these restrictions, refer to ¶3.73 - 3.77 of Income Tax Folio S1-F3-C3.

Application

This Chapter, which may be referenced as S1-F4-C1, is effective April 29, 2017 and replaces and cancels Interpretation Bulletin IT-513R, Personal Tax Credits.

Any technical updates from the cancelled interpretation bulletin can be viewed in the Chapter History page.

Except as otherwise noted, all statutory references herein are references to the provisions of the Income Tax Act, R.S.C., 1985, c.1 (5th Supp.), as amended

and all references to a Regulation are to the Income Tax Regulations, C.R.C., c. 945, as amended.

Links to jurisprudence are provided through CanLII.

Income tax folios are available in electronic format only.

Reference

Subsections 118(1), 118(4), 118(5), 118(6), and the definitions of common-law partner and self-contained domestic establishment in subsection 248(1) (also section 117.1, subsections 82(2), 117(2), 250(1), 252(1), and 252(2)).

Income Tax Folio S5-F1-C1, Determining an Individual’s Residence Status

Income Tax Folio S1-F3-C3, Support Payments

Interpretation Bulletin IT-295R4, Taxable Dividends Received after 1987 by a Spouse

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