MEDICAL EXPENSES, DISABILITY TAX CREDITS, AND ATTENDANT CARE - - PDF document

Marlene L. Grant Professional Corporation, April 2013

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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

Marlene L. Grant Professional Corporation, April 2013

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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
• rganizations 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

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

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/ncm- tx/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/lns300- 350/330/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 self- assessed 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
• ther 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.

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.

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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 Marlene L. Grant Professional Corporation, April 2013

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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/lns300-

350/330/menu-eng.html?=slnk

• Disability Tax Credit: http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/ddctns/lns300-

350/316/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
• Follow us on Twitter – http://twitter.com/marlenelgrant
• Follow us on Facebook - http://www.facebook.com/pages/Marlene-L-Grant-Professional-Corporation-

CGA/

• Follow us on LinkedIn - http://ca.linkedin.com/in/mlgpc

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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?