The federal government is expanding and modifying certain tax credits, with a focus on enhancing the tax benefits available to caregivers, persons with disabilities and students.
In Budget 2017, tabled in Ottawa on Wednesday, the federal government revealed plans to overhaul the tax benefits available to caregivers.
"Though our universal health care system is a source of pride for many Canadians, we know that more can be done for families caring for aging or disabled loved ones," said Finance Minister Bill Morneau in his budget speech on Wednesday. "It's why this budget provides support for caregivers helping loved ones at home, and makes it easier for Canadians living with disabilities to get the tax relief they need."
Specifically, the government is proposing to simplify the caregiver tax credit system, which currently includes the caregiver credit, infirm dependent credit and family caregiver tax credit — each of which have different eligibility rules.
"It's very complex," says Debbie Pearl-Weinberg, executive director of tax and estate planning with Canadian Imperial Bank of Commerce's wealth-strategies group in Toronto.
Budget 2017 proposes to replace the three existing caregiver credits with a single new non-refundable credit: the Canada caregiver credit.
"This makes it less complex for those involved," says Pearl-Weinberg. "It's positive for a person who has to navigate their way through that tax credit system."
The new credit will provide tax relief this year on an amount of:
- $6,883 on expenses for care of dependent relatives with infirmities, including parents, brothers and sisters, adult children, and other specific relatives.
- $2,150 on expenses for care of a dependent spouse/common-law partner or minor child with an infirmity.
The new credit will also extend tax relief to more caregivers, and particularly those providing care to dependent relatives who do not live with their caregivers. Specifically, the income threshold for the dependent at which the credit begins to phase out will be increased to $16,163 in 2017. This threshold, along with the amounts for the credit, will be indexed to inflation for future tax years.
Read: Budget 2017
Clients will be able to take advantage of the new caregiver tax credit as soon as the 2017 taxation year. This measure will provide $310 million in additional tax relief over the 2016–17 to 2021–22 period, according to the government.
Budget 2017 also includes various other changes to existing tax credits. For example, the budget proposes to expand access to the disability tax credit by adding nurse practitioners to the list of eligible medical practitioners who can certify the impacts of impairments for individuals applying for this credit.
"For many Canadians, nurse practitioners are the first and most frequent point of contact with the health-care system, but today, these professionals are not allowed to certify application forms for individuals with impairments who are applying for the Disability Tax Credit," the budget document says. "This is an important step to improve access to the credit in areas where, due to a shortage of medical doctors, nurse practitioners may be the primary care provider."
The measure will apply to disability tax credit certifications made on or after Budget Day.
The budget also proposes broadening access to the tuition tax credit by expanding the range of courses eligible for this credit. Specifically, students who take occupational skills courses below the postsecondary level at a college or university, such as training in a second language or in basic literacy and numeracy to improve job skills, will now be able to claim the credit.
In addition, the budget expands the eligibility of the medical expense tax credit as it pertains to the use of reproductive technologies. Specifically, the budget proposes to clarify the application of the credit so that individuals who require medical intervention in order to conceive a child are eligible to claim the same expenses that would generally be eligible for individuals on account of medical infertility.
This measure will apply to the 2017 and subsequent taxation years.
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