Today's Q&A: claiming relatives as caregivers

Q in my inbox just now: I hope you don't mind if I ask, can we claim any tax credits for my mother-in-law who is taking care of my children while we work? Can she be considered like a nanny? We give her money too on a regular basis. She is a landed immigrant and has been helping us with the kids as well as household chores since June 2012. Thanks a lot! I am looking for all possible ways to raise money for my child who was diagnosed with Autism Spectrum, therapy cost has been really overwhelming, ASD funding is not enough. Thanks so much for your advice and help!
A: Claiming relatives as caregivers is always an interesting topic. There are so many sides to this one. The claim might be for child care S. 63, disability support S. 64 or medical expense which is S. 118.2(2) (b) through (e) as various types of attendant care.
You'll find more information about each of those on the CRA website. Attendant care is covered off pretty thoroughly in the guide RC4064 with examples. Here's one example of where you can claim a caregiver as a medical expense in S. 118.2(2)(b.1)
http://laws-lois.justice.gc.ca/eng/acts/I-3.3/section-118.2.html
If you change the 118.2 part of this link (above) to 63 or 64, you can read the rules about child care and disability supports, and also see form T929 for disability supports for a list and more information, which is only applicable where the taxpayer who requires support works or goes to school. (not likely in your case, but someone else reading this might not know about that expense claim option)
(b.1) as remuneration for attendant care provided in Canada to the patient if
(i) the patient is a person in respect of whom an amount may be deducted under section 118.3 in computing a taxpayer’s tax payable under this Part for the taxation year in which the expense was incurred,
(ii) no part of the remuneration is included in computing a deduction claimed in respect of the patient under section 63 or 64 or paragraph (b), (b.2), (c), (d) or (e) for any taxation year,
(iii) at the time the remuneration is paid, the attendant is neither the individual’s spouse or common- law partner nor under 18 years of age, and
(iv) each receipt filed with the Minister to prove payment of the remuneration was issued by the payee and contains, where the payee is an individual, that individual’s Social Insurance Number,
to the extent that the total of amounts so paid does not exceed $10,000 (or $20,000 if the individual dies in the year);
Notice that the attendant can't be a spouse or partner, nor under 18, so it could be a mother-in-law,
and that receipts must have the SIN # of the individual, in other words, unless you are prepared for that person to report their income, and likely, your best way to ensure that, is to report their income on a T4 Slip to cover yourself.
There's nothing worse that reporting the caregiver expense, and then finding that the relative never reported the income, because they really didn't take you seriously.
Why wouldn't they refuse to report the income? Because their benefits and programs depend on their calculation of net income, and if you increase their income, their benefit programs decrease. That includes provincial and federal programs; Pharmacare which covers their prescriptions they may not be telling you they take, BC Medical premium reduction plans, OAS, GIS, GST/HST credits, and I'm sure there's more that I haven't listed here.
On the upside, if the caregiver has working income reported on a T4, they may be entitled to the Working Income Tax Benefit and the Refundable Medical Expense Supplement, real dollars when they haven't even paid any tax but they worked the right amount as an employee with a T4.
I'm thinking about doing a 3 hour workshop in three parts over 3 weeks, recording it with a live audience in May and I'll include more on this topic in that workshop. If that interests you, send me an email to get an invitation. I'll be recording it for sale, so you'll be able to type questions but won't be able to speak. There will be a nominal charge to be determined.