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Page 1: Simplifying the caregiver credits - Home | Empire Life · PDF fileSimplifying the caregiver credits ... Sales Tax Estate Planning Underwriting & Product Newsletter STEPUP ... (not

PG 1 | EMPIRE LIFE INVESTMENTS

For advisor use only

Vol. 17, No. 6

Simplifying the caregiver credits The current income tax system in Canada has three basic

tax credits that provide tax relief to individuals serving as

caregivers for family members.

Caregiver tax credits are designed to help individuals who provide

support to low income family dependants who are dependent on

them due to physical and/or mental infirmity. These tax credits are

adjusted for inflation annually. They are meant to offset some of the

out of pocket, non-discretionary expenses that caregivers incur when

supporting dependent family members. Tax credits reduce the actual

income tax you pay once you go through all the other calculations

that tell you how much income tax you owe each year. The three tax

credits are non-refundable which means that once you reach the

point where you don’t pay income tax in a given year, any balance on

a non-refundable tax credit is lost.

Each province or territory in Canada can top up the federal amounts

quoted or add their own tax credits. They must at least offer the

same basic credits as individuals would receive from the federal

government. The regulations around caregiver credits are complicated

and many find them confusing. The federal government hopes

to address some of these issues with a new tax credit system for

caregivers announced in the 2017 Federal Budget.

The new system will replace the three current tax credits for caregivers

with one new Canada Caregiver Credit. Like the current system, only

one amount is available for each infirm dependant and it can be

shared by multiple caregivers who may support the same relative up

to the maximum allotted for each infirm dependant. The new Canada

Caregiver Credit will not be available in cases where non-infirm

seniors live with their adult children. The table below, taken from

information provided in the Federal Budget 2017, summarizes how the

current and new tax credits work.

Sales Tax Estate Planning Underwriting & Product Newsletter

STEPUP

Peter works with independent

advisors and other professionals

raising awareness on issues and

concerns faced by affluent individuals,

professionals and business owners.

He supports efforts in researching and

developing optimal solutions for clients

aimed at improving their financial well-

being and supporting their personal

wishes and lifestyles. He annually

provides 100’s of workshops, seminars

and technical support throughout the

country on tax, retirement income

and estate planning issues, concepts

and strategies to both advisors and

consumers. As a Registered Financial

Gerontologist, a good deal of his time

is spent on building awareness and

educating people of all professions

who  work with or specialize in the

needs, expectations and issues of

elders. Comprehensive lifestyle

planning is an important element

of these processes.

The Sales, Tax, Estate Planning,

Underwriting & Product (STEPUP)

team provides internal and broker

support, including seminars, education,

advanced concept illustrations & Client

case technical consultations.

Peter can be reached at [email protected]

Peter A. Wouters,

Director, Tax

Retirement &

Estate Planning

Services, Wealth

Page 2: Simplifying the caregiver credits - Home | Empire Life · PDF fileSimplifying the caregiver credits ... Sales Tax Estate Planning Underwriting & Product Newsletter STEPUP ... (not

PG 2 | EMPIRE LIFE INVESTMENTS

For advisor use only

Canada Caregiver Benefit

Current Benefits How non-refundable tax credits work

Caregiver creditFor individuals providing in-home care to family dependent on you due to physical or mental infirmity: (grand)parents age 65+, adult siblings, aunts, uncles, nieces, nephews

Limits15% credit on $4667 or $6788 if dependant eligible for family caregiver amount; reduced dollar for dollar by dependant’s net income over $15,940 (2016 figures)

Family caregiver credit

15% tax credit of $2121 as top up to other dependency related tax credits including: caregiver credit, eligible dependant credit, spousal/common law partner credit, infirm dependent credit

Can be standalone credit to caregiver for infirm minor child (2016 figures)

Infirm dependant credit

15% tax credit for individuals supporting adult (not spouse/common law partner) dependent on you due to physical or mental infirmity. Dependant need not live with you.

Limits $6788 reduced dollar for dollar by dependant’s net income over $6807 (2016 figures)

Proposed benefits

Canada Caregiver Credit

Replacing all three current tax credits for individuals providing support:

1. for infirm family dependants who are (grand)parents, siblings, aunts, uncles, nieces, nephews, adult children or

2. for infirm dependant spouse/common law partner, infirm child under age 18 or infirm dependant when eligible dependant credit claimed

Limits

1. $6883

2. $2150 (remember, caregiver may already be getting other tax credits here)

Reduced dollar for dollar by dependant’s net income over $16,163; dependant need not live with caregiver (2017 figures)

If you are a caregiver or potential caregiver, make a point of sitting down with your professional advisors to see how

you can optimize this benefit as part of your financial and tax planning.

© 2017 by Peter A Wouters

Empire Life Investments Inc. is a wholly-owned subsidiary of The Empire Life Insurance Company. Segregated fund contracts are issued by The Empire Life Insurance Company. Empire Life Investments Inc. is the Portfolio Manager of the Empire Life segregated funds.

This document reflects the views of Empire Life Investments Inc. as of the date published. The information in this document is for general information purposes only and is not to be construed as providing legal, tax, financial or professional advice. Empire Life Investments Inc. assumes no responsibility for any reliance on or misuse or omissions of the information contained in this document. Information obtained from and based on third party sources are believed to be reliable, but accuracy cannot be guaranteed. Please seek professional advice before making any decisions. A description of the key features of the individual variable insurance contract is contained in the Information Folder for the product being considered. Any amount that is allocated to a Segregated Fund is invested at the risk of the contract owner and may increase or decrease in value.

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