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Overview of the Canadian Caregiver Credit

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At the federal level, this tax credit is non-refundable.

It can be claimed in the case of an impairment in the physical or mental functions of the person you are caring for.

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Specifics

This tax credit is non-refundable. It can be claimed for one or more of the following persons, if they are dependent on you because of a physical or mental disability:

  • your spouse, common-law partner, child or grandchild (including those of your spouse or common-law partner);
  • a parent, grandparent, brother, sister, aunt, uncle, niece or nephew of yours (including your spouse’s or common-law partner’s), who was a resident of Canada at any time in the year.

Eligibility criteria

To be eligible, the taxpayer must have dependents. The dependent is not required to live with the taxpayer, but it must be demonstrated that at least one of the person’s basic needs (shelter, clothing, food) is being provided for. There is no fixed criterion for establishing this link, it must simply be demonstrated within reason.

Only one application for the caregiver tax credit can be made per person being cared for. If there is more than one caregiver, the amount of the tax credit may be divided or transferred. Please consult with your accountant.

The amount of the tax credit is deductible based on your income and that of the eligible family member. It is a good idea to discuss this with your accountant before making any decisions.

Once the Disability Tax Credit Certificate is accepted, if the impairment is permanent, it will be valid for subsequent years.

Mini glossary

  • Refundable tax credit: amount paid to you if you are entitled to it. If you do not pay taxes during the tax year, this amount will still be issued to you;
  • Non-refundable tax credit: reduces the amount of tax you pay on your taxable income, but does not entitle you to a refund.

Process

Have the required documents filled out:

  • the Disability Tax Credit Certificate (T2201 F) for assistance by a health professional. The purpose of this form is to certify that the person has a physical or mental impairment or is no longer able to live on their own. Once the form is completed, it must be submitted to the government for approval.
  • The federal government will then send you the Notice of Determination, which is their decision regarding the eligibility of the person you are caring for.
  • If your application is approved, you must contact your accountant to apply for the caregiver tax credit. To do this, you must complete Schedule 5. Note that the Disability Tax Credit Certificate may allow for other tax credits.
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