medical expenses, disability tax credits, and attendant care expense

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MEDICAL EXPENSES, DISABILITY
TAX CREDITS, AND ATTENDANT
CARE EXPENSE DEDUCTIONS
Presented by
Marlene L. Grant, CGA
Marlene L. Grant Professional Corporation
April 1, 2013
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Marlene L. Grant Professional
Corporation, April 2013
BRIEF HISTORY ABOUT MYSELF
I am the owner of a small accounting practice.
Graduated from Algonquin in 1992 and obtained my Certified General
Accounting designation in 2002.
Over 18 years accounting and taxation experience in the Ottawa area in
public accounting as an auditor and controllership positions within the
private sector.
Work extensively with owner-managed businesses, not-for profit
organizations and professionals.
Providing accounting, assurance, taxation, business startup assistance
and software services to clients.
2009, 2010, 2011 and 2012 Nepean Chamber of Commerce award
nominee.
2011 Nepean Chamber of Commerce Business Woman of the Year
Nominee and Winner
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SUMMARY
The medical expense tax credit on line 332, the disability tax credit on line
316 and the attendant care expense deduction on line 332 all provide tax
relief for individuals.
The medical expense tax credit applies to individuals who have sustained
significant medical expenses for themselves or certain dependants.
The amount of the medical expense tax credit is determined by multiplying the
lowest personal tax rate percentage (15%) by the amount of qualifying medical
expenses in excess of $2,109 or 3% of net income on line#236 or whichever is
less.
The disability tax credit applies to individuals who have a “severe and prolonged
mental or physical impairment” or for individuals who support certain dependants
with such an impairment as certified by an appropriate medical practitioner .
The amount of the disability tax credit is determined by multiplying the lowest
personal tax rate percentage (15%) by $7,436.00.
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SUMMARY continued
In addition, any unused portion of the disability tax credit may be transferred to a
spouse or to a “supporting individual.”
The attendant care expense deduction is available to individuals or their
dependants who are entitled to claim the disability tax credit and who have
incurred expenses for personal care for dependants that are necessary to enable
them to work. The maximum that can be claimed is $5,000.00.
You may also be able to claim the caregiver amount for a dependant by multiplying
the lowest personal tax rate to $2,000 for each dependant.
An individual may be entitled to receive a refundable medical expense tax credit in
respect of the same medical expenses for which a medical expense tax credit was
claimed for lower income families
A person entitled to a disability tax credit under the Income Tax Act mat not qualify
for a disability pension under the Canada or Quebec Pension Plan or under an
insurance policy.
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ELIGIBLE MEDICAL EXPENSES
You can claim eligible medical expenses paid in any 12-month period ending in
2012 and not claimed for 2011. Generally, you can claim all amounts paid, even if
they were not paid in Canada.
You can only claim the part of an expense for which you have not been or will not
be reimbursed. However, you can claim the full expense if the reimbursement is
included in your income, such as a benefit shown on a T4 slip, and you did not
deduct the reimbursement anywhere else on your income tax and benefit return.
You may also claim the premiums paid to a private health services plan for the
period ending in the year.
If more than one person supports the dependant, each supporting person may
claim the allowable amount of medical expenses as long as the total amount
claimed by all supporting persons is not more than the total expenses paid.
Travel expenses incurred
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ELIGIBLE MEDICAL EXPENSES
continued
The most common medical expenses are:
Prescriptions drugs and medications;
Dental expenses;
Ophthalmology expenses;
Expenses paid to qualified medical practitioners or hospitals;
Transportation and travel expenses
Premiums to a private health insurance plan relating to medical and dental.
For a detail list of eligible expenses visit: http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncmtx/rtrn/cmpltng/ddctns/lns300-350/330/llwbl-eng.html
For a list expenses that are commonly claimed as medical expenses in error visit:
http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/ddctns/lns300350/330/ntllwbl-eng.html
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ATTENDANT CARE
You can claim amounts you or your spouse or common-law partner paid for
attendant care.
The amounts must have been paid for the care of yourself, your spouse or
common-law partner, or a dependant.
You can claim amounts paid to an attendant only if the attendant was not your
spouse or common-law partner and was 18 years of age or older when the
amounts were paid.
An attendant who is hired privately will probably be considered an employee. See
Guide RC4110, Employee or Self-Employed?, for more information.
The fees claimed must be for salaries and wages paid for attendant care services.
If an individual issues a receipt for attendant care services, the receipt must
include the attendant’s name and social insurance number.
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TRAVEL AND MEAL EXPENSES
If you had to travel at least 40 kilometres (one way) from your home to obtain
medical services, you may be able to claim the public transportation expenses you
paid (for example, taxis, bus, or train) as medical expenses. Where public
transportation is not readily available, you may be able to claim vehicle expenses.
If you had to travel at least 80 kilometres (one way) from your home to obtain
medical services, you may be able to claim accommodation, meal, and parking
expenses in addition to your transportation expenses as medical expenses.
To claim transportation and travel expenses, the following conditions must be met:
substantially equivalent medical services were not available near your home;
you took a reasonably direct travelling route; and
it is reasonable, under the circumstances, for you to have travelled to that place
for those medical services.
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TRAVEL AND MEAL EXPENSES
Continued
You can choose to use the detailed method or the simplified method for
calculating meal and vehicle expenses.
If you use the detailed method, you have to keep all receipts and records for your
12-month period.
You must provide receipts for all accommodation expenses and you must be able
to show that the amount paid for accommodation is necessary because of the
distance travelled and your medical condition. Claim the amount for
accommodation as shown on your receipts.
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FAMILY CARE GIVER AMOUNT
For 2012 and subsequent years, the family caregiver amount (FCA) may increase
the maximum for one or more of the following non-refundable tax credits by $2,000
for each of your dependants (including spouse,common-law partner, and minor
children) who have an impairment in physical or mental functions.
Your dependant must be:
a person 18 years of age or older, and dependent on you because of an
impairment in physical or mental functions; or
a child under 18 years of age with an impairment in physical or mental
functions. The impairment must be prolonged and indefinite and the child must
be dependent on you for much more assistance in attending to personal needs
and care when compared to children of the same age.
You must have a signed statement from a medical practitioner showing when the impairment began and what the duration of the impairment is expected to be.
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DISABILITY TAX CREDIT
Form T2201 Disability Tax Credit Certificate must be prepared and certified by a
qualified practitioner that a dependant has a prolong impairment and certifies its
effects.
CRA is determines if the individual qualifies for the disability tax credit and
approves the form. To determine if your dependent is eligible review the selfassessed questionnaire included in the form.
You should review the form in its entirety and discuss with the primary doctor of
your dependant because not all of the criteria has to be met in order for CRA to
approve the form.
The impairment does not have to be indefinite it can be for a definite period. In a
lot of cases the individual is markedly restricted in mental and physical functions
necessary for everyday life.
The certification must indicate the date of impairment.
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DISABILITY TAX CREDIT
If the impairment is prior to 2012 and CRA approves the certificate, the prior years
tax returns can be amended to obtain refunds on those previous returns.
You may be able to claim all or part of your dependant’s (other than your spouse or
common-law partner) disability amount if he or she was resident in Canada at any
time in 2012 and was dependent on you for all or some of the basic necessities of
life (food, shelter, and clothing).
You cannot claim the disability amount transferred from a dependant for a child for
whom you have to pay child support. However, if you were separated from your
spouse or common-law partner for only part of the year because of a breakdown in
your relationship, special rules apply.
You can split the claim for the dependant. However, the total of your claim and the
other person’s claim cannot be more than the maximum amount allowed for that
dependant.
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QUESTIONS RECIEVED
Q. It is likely my child won’t qualified for the disability tax credit is there other credits
that can sign up for.
A. The Canada Revenue Agency is the only one who can make the
determination if an individual qualifies for the credit, the individual
impairment does not have to meet the legal definition of disability that would
qualify for Canada Pension Plan or a private group insurance.
Q I was just made aware of the Disability Tax Credit Certificate recently can we apply
for the disability tax credit in Quebec for 2011 and 2012?
A. You will be able to claim it on the federal portion of the tax return as for the
Quebec return you should speak to your tax preparer.
Q In a shared custody arrangement does both parents need to apply for the
certificate?
A. No only one certificate will be issued, the parents can agree on who will
apply for the certificate.
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QUESTIONS RECIEVED
Q What happens if one parent applies without the other parent involvement?
A. In order for the certificate to be granted the primary doctor (oncologist) will
have to be consulted in preparing the form and or providing information to
the CRA and I would imagine that the doctor would have to get both parents
consent before they can release medical information to a third party. This
will alert the parent who was not involved.
Q Once the certificate is issued how is the benefit calculated?
A. The benefit is calculated 15% of $7,546.00 and in special circumstances it
can be shared with separated spouses. The best option is the parents
discuss and agree who will make the claim and the parent who makes the
claim then give the other parent 1/2 of the amount.
PERSONAL TAX RATES - 2012
Basic personal amount Federal $10,822 & Provincial $9,405.00.
Maximum CPP of $2,306.70 & Maximum EI $839.97
Pension income amount $2,000.00
Federal Tax on taxable income:
– $42,707 or less taxed at 15%
– $42,707 to $88,414 taxed at 22%
– $85,414 to $132,406 taxed at 26%
– Over $132,406 taxed at 29%
Provincial Tax on taxable income:
– $39,020 or less taxed at 5.05%
– $39,020 to $78,043 taxed at 9.15%
– $78,043 to $500,000 taxed at 11.16%
– Over $500,000 taxed at 12.16%
– Surtax 20% -$4,213 on taxable income >$68,719
– Surtax 36% - $5,392 on taxable income >$80,963
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PERSONAL TAX RATES - 2013
Basic personal amount Federal $11,038 & Provincial $9,574.
Maximum CPP of $2,306.70 & Maximum EI $839.97
Pension income amount $2,000.00
Federal Tax on taxable income:
– $43,561 or less taxed at 15%
– $43,561 to $87,123 taxed at 22%
– $87,123 to $135,054 taxed at 26%
– Over $135,054 taxed at 29%
Provincial Tax on taxable income:
– $39,723 or less taxed at 5.05%
– $39,723 to $79,448 taxed at 9.15%
– $79,448 to $509,000 taxed at 11.16%
– Over $509,000 taxed at 13.16%
– Surtax 20% -$4,289 on taxable income >$69,963
– Surtax 36% - $5,489 on taxable income >$82,422
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Reference Material Located on
Various website
Medical Expenses: http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/ddctns/lns300350/330/menu-eng.html?=slnk
Disability Tax Credit: http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/ddctns/lns300350/316/menu-eng.html?=slnk
Disability Tax Credit Certificate: http://www.cra-arc.gc.ca/E/pbg/tf/t2201/README.html?=slnk
Medical and Disability Related Information: http://www.cra-arc.gc.ca/E/pub/tg/rc4064/README.html
Federal Tax Schedule -1 http://www.cra-arc.gc.ca/E/pbg/tf/5000-s1/5000-s1-10e.pdf
Ontario Tax Schedule ON428 - http://www.cra-arc.gc.ca/E/pbg/tf/5006-c/5006-c-10e.pdf
Ontario Personal Tax Rates -http://www.taxtips.ca/taxrates/on.htm
http://www.cra-arc.gc.ca/ebci/cjcm/srch/bscSrch?lang=en&bscSrch=medical+expenses
Motor Vehicle Expense Log - http://www.accounting.mlgpc.ca/vehicle-expense-recording.html
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MEDICAL EXPENSES, DISABILITY
TAX CREDITS, AND ATTENDANT
CARE EXPENSE DEDUCTIONS
Presented by
Marlene L. Grant, CGA
Marlene L. Grant Professional Corporation
April 1 , 2013
THANK YOU
Any Questions?
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medical expenses, disability tax credits, and attendant care expense

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