In part 1 of this series, which discussed the various tax treatments of medical related expenses, Caregiver amount was identified as a tax credit and not a tax deduction. In this article, we will focus on the details of the Caregiver amount Tax Credit.

There are a number of conditions you have to satisfy before the tax credit can be claimed. These include:

• You provided home care for you or your spouse's parent or grandparent who was 65 or older and the parent or grandparent lives with you.
• You provided home care for a mentally or physically infirm dependant age 18 or over and the dependant lives with you. If the dependant is your child or grandchild, he/she does not have to be a resident of Canada for tax purposes.
• If you and another person supported the same dependant, you can split the claim for the dependant but the total claim cannot exceed the maximum tax credit (discussed below).
• You may be eligible to claim both the Caregiver amount Tax Credit and the tax credit for an eligible dependant for the same dependant but the former must be reduced by the latter tax credit.
• You cannot claim the Caregiver amount Tax Credit and tax credit for infirm dependants for the same dependant.
• If someone other than yourself claims the tax credit for an eligible dependant for the dependant, you cannot claim the caregiver amount for that dependant.

If the above conditions are satisfied, you can claim a Caregiver amount Tax Credit of $3663 (2003 and indexed) less, in the case of a dependant, the dependant's net income in excess of $12,509 (2003 and indexed).

From a tax planning perspective, depending on the income of the dependant, it may be more beneficial to claim the tax credit for infirm dependants rather than the Caregiver amount Tax Credit.

Next Part (Disability Tax Credit transfer)

*CA PrimePlus Services is a registered trademark of the Canadian Institute of Chartered Accountants. Eldercare/CA PrimePlus Services is a customizable range of financial management services for elderly and disabled persons.

Anne Chun, C.A. CFP is the principal of Anne Chun Professional Corporation, providing financial, tax, estate and Eldercare services. She is also the co-author of "Planning your Financial Future".