If your loved one is in a care home of some sort, some or all of the monthly expenses may be deductible as medical expenses subject to some conditions.
The first condition is in respect to the care home.
The Canada Revenue Agency (CRA) has defined the kinds of care homes and the services that must be provided in order to make the amount deductible.
The most obvious is the nursing home where there is 24-hour care provided to patients unable to care for themselves.
A retirement home is defined as serving individuals that don’t require constant care and attention but may provide some of the same services as a nursing home.
In addition, care services could also be provided in a school or institution or a group home, or even in a private home.
The homes don’t necessarily need to be licensed.
Several cases were brought forward arguing that the services provided in a retirement home and other kinds of care homes were equal to the services provided in a nursing home should be deductible.
The CRA ruled that the following items provided by an establishment would be deductible.
These items are: your share of salaries or wages paid to the employees of the establishment, food preparation, housekeeping services for personal living space, health care services, social services, salon services if included in the monthly fee, transportation and security.
The establishment must provide a bill that is detailed enough so that you can distinguish between the items that are deductible from those that are not.
The next condition pertains to the person who received the care.
Payment of expenses must have been made for yourself, your spouse (common-law partner) or a dependent.
A dependent is further defined as your or your spouse’s (common-law partner) child or grandchild or parent, grandparent, brother, sister, uncle aunt, nephew or niece who lived in Canada during the year.
The next condition pertains to the attendant giving the care and that person can be anyone over the age of 18 as long as it is not your spouse or common-law partner. If you hire an attendant to come into the home, that attendant would become your employee and you would need to remit the appropriate deductions to the CRA monthly.
In some cases, people requiring care are also disabled and have applied for and received the disability tax credit.
If you receive the disability tax credit, the amount of care that you can deduct as a medical expense is limited to $10,000 plus your disability tax credit.
You can claim the entire cost of the nursing home, or the disability amount, but not both.
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Gabriele Banka is a CPA, CGA and the owner of Banka & Company, CPA. She can be reached at 250-763-4528 or info@bankaco.com.
