Personal Caretakers at Home: Tips and Tricks
Growing older brings a slew of changes, the principal change being the loss of autonomy. This loss varies greatly from one person to another and sometimes, outside help becomes a necessity. For many people, leaving their home is a difficult thing to do and so, the first step often is to hire people to help while they remain in their own home. As the cost for this help can be steep, both the federal and Quebec governments currently grant credits to help those who are or are becoming dependent on others.
In this tax highlight, we will look at what must be taken into account from a tax perspective when looking to hire an attendant, in order to avoid pitfalls and to be able to claim as many tax credits as possible.
To be able to claim the tax credits, the help from the attendant must be prescribed by a medical practitioner. This can take the form of a letter prepared by the medical practitioner that indicates that “by reason of mental or physical infirmity, [the person] is and is likely to be for a long-continued period of indefinite duration dependent on others for his personal needs and care and requires the services provided by a full-time attendant”.
If one needs the help of an attendant, it is also recommended to discuss one’s eligibility for the disability tax credit with the medical practitioner, if it hasn’t been done already.
Should the person be 70 years old or older, whether or not he or she is dependent on others, he or she may still be able to claim the Quebec Home-Support Services tax credit. For more information on this credit, please contact a Crowe BGK professional.
The services provided
Two distinct types of medical expenses claimable for attendants working in their client’s home are available depending on whether the service is provided part-time or full-time. Courts have determined that full-time means that the dependent person receives services for 8 hours per day. The difference between the two categories is that part-time services are capped at $10,000, but can be claimed along with the disability tax-credit, while the full-time services eligible expenses are not capped, but cannot be claimed along with the disability tax-credit. Because of this difference, in some cases, it becomes an exercise to optimise what should be claimed.
It must be noted that, if there are two attendants working at the same time, only the payments made to one of them for that time are eligible to be claimed as medical expenses.
Furthermore, the expenses deductible as medical expenses in the tax return are limited to the services provided and do not include the products used in providing these services, such as the food, the cleaning products, etc.
In Quebec, there are other credits through which certain payments made can be claimed, such as the Home-Support Services tax credit mentioned previously. An optimisation of the expenses can be made by determining through which credits the expenses should be claimed in the federal and Quebec tax returns. We recommend to discuss this with a Crowe BGK professional to optimize based on how all these different credits interact with one another.
The attendant: an employee or a service provider?
The consequence of hiring an attendant is often overlooked. If you select a specific person to hire, chances are that you will become his or her employer, with all the payroll deductions and filing obligations that entails. If those filings and those deductions are not made on time, then you expose yourself to potential penalties and interest.
It is not in all cases, however, that an individual performing such services would be your employee. This determination is a question of fact, and professional help should be sought to make such a determination. If you are not the employer, then you should receive receipts from the service provider.
If the receipts are issued by an individual, they must include that individual’s Social Insurance Number. Otherwise, the receipt will not be considered valid to claim the corresponding credits. It is also recommended to keep a schedule for each attendant’s hours worked.
Finally, only the payer of the expenses (or his/her spouse) can claim the corresponding credits in his or her tax returns.
Should you be in a situation where you are looking to hire an attendant, please contact your Crowe BGK professional to help guide you through all the tax analyses needed to optimize the tax assistance available.
Daniel A. Brisebois, L.L.B., D.D.N., M. Tax, is a Tax Specialist at Crowe BGK
Connect with him: [email protected]