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"Family caregivers make special sacrifices, often leaving the workforce temporarily and forgoing employment income," Finance Minister Jim Flaherty said in his budget speech in Ottawa on Tuesday. "They deserve some extra help."
Caregivers will benefit from the Family Caregiver Tax Credit by claiming an enhanced amount for an infirm dependant under one of the following existing dependency-related credits: the Spousal or Common-Law Partner Credit, the Child Tax Credit, the Eligible Dependant Credit, the Caregiver Credit or the Infirm Dependant Credit.
The government estimates that more than 500,000 caregivers will benefit from the new credit. It will cost an estimated $200 million over the next two years.
The 2011 budget also provides caregivers with tax relief related to the medical and disability-related expenses that they incur, through enhancements to the Medical Expense Tax Credit.
Canadians spend millions every year on medical and disability-related expenses for family members, such as prescription drugs and special medical equipment, according to the government.
A taxpayer can claim the 15% Medical Expense Tax Credit in respect of eligible expenses that exceed the lesser of 3% of the taxpayer's net income for the year, or $2,052 (in 2011).
There is currently no limit on the amount of eligible expenses a taxpayer can claim for himself or herself, a spouse or common-law partner or a dependent child under the age of 18. However, caregivers who incur medical and disability-related expenses for an aging parent, sibling or other financially dependent relative currently face a $10,000 limit on the amount that can be claimed.
As a result, some caregivers who incur extraordinary medical and disability-related expenses do not receive full tax recognition for these expenses.
The 2011 budget proposes removing the limit on the amount of eligible expenses a taxpayer can claim under the credit.
This measure will apply for the 2011 and subsequent taxation years, and is estimated to cost $7 million over three years.
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