1. INCOME TAX ISSUES FOR SENIORS
presented by Susan McInnes, CPA, CGA

2. Top tax issues Disability tax credit Medical expenses
What happens to your assets when you die
Disability tax credit – how to apply and the process to have it backdated and claim the credit for prior years
Medical expenses – including what is allowable and nursing care and attendant care
Estate planning – what happens to your assets when you pass away

3. Disability tax credit

4. How to claim Form can be found online at www.cra-arc.gc.ca
Must be filled out by doctor and signed by both doctor and individual applying
Submit to Canada Revenue Agency (CRA) for approval

5. Benefits Provides a tax credit of $7,899 – refund between $1300 -$1500
Transferable to spouse if entire credit is not required
Credit can be applied to past years if doctor indicates impairment began in the past
- If you receive CPP disability benefits or other types of insurance benefits you may not be eligible for the DTC – these programs are based on other criteria such as your inability to work
Adjustments can be made to prior year returns if doctor backdates the eligibilty
Credit is applied against taxable income – if you don’t have taxable income you won’t benefit from this credit.

6. Criteria
Mental or physical impairment which impacts basic daily activities
Impairment has to have lasted or be expected to last 12 continuous months
If you are unclear if you are eligible – talk to your doctor and apply

7. Medical expenses Must be greater than 3% of net income
Expenses are combined between spouses
Can be claimed for any 12 month period that ends in the taxation year

8. Travel medical Travel over 40 km one way – claim $0.49 per km
Travel over 80 km one way – same rate – meals and hotels are also claimable
Simplified or detailed method can be used – either keep receipts or keep a log of appointments
- Under simplified method, keep a log and claim a per km rate for the mileage and a claim a per meal amount. $15 per meal up to 3 per day
- If it is necessary that you are accompanied to you appointment and it is over 80km one way, you are eligible to claim meals for that person as well.

9. Receipts to keep Debit slips alone are not acceptable receipts
Appointment cards or appointment letter from doctor are acceptable for travel

10. Refundable medical expense supplement
Maximum supplement is $1,172 or 25% of medical expense if income is between $3,421 - $25,939
Income must be employment income – pension income doesn’t qualify
Completely refundable amount, even if no taxes are payable

11. Attendant care/Nursing home
Retirement homes and Assisted living homes are considered separate by CRA.
Nursing Care you receive in a Retirement home or Assisted living facility can be a medical expense

12. Nursing home Offers 24 hour care to patients
All regular fees qualify as an eligible medical expense
Must qualify for the disability tax credit or have other certification from the doctor
Additional attendant fees – up to $10,000 eligible of the salaries paid - $20,000 in the year of death
Regular fees include – food, accommodation, nursing care, administration, maintenance, social programming and activities
Expenses not eligible – hairdressing

13. Attendant care
Care provided by an attendant who performs personal tasks that the patient is unable to do
May include meal preparation, cleaning services, transportation
Companionship is also a service
If a person is already employed as a single service provider – such as a maid – the provision of such service is not considered attendant care

14. Retirement home Does not provide 24 hour care to patients
Attendant care is an eligible medical expense if itemized on invoice
Attendant care is limited to $10,000 per year, or $20,000 in the year of death
Example would be an assisted living facility

15. Attendant care or DTC??
Where remuneration for attendant care is claimed the disability tax credit may not be claimed
However, an exception exists, where the attendant care expense is limited and the DTC may be claimed
Needs to be determined based on individual circumstances

16. What happens when you die
All assets will roll over automatically to surviving spouse unless an election is filed
Rollovers occur at original cost – any capital gains will be deferred until surviving spouse dies
All assets – including RRSPs – are deemed disposed of on the date of death

17. Principal residence Capital gains do not apply
Deemed disposed of upon death
Will transfer to the trust at the value on the date of death
Capital gain is based on any increase in value of the property

18. TFSA Tax free savings account is not taxable upon death
Disbursement will go straight to named beneficiary in the TFSA
Spouse or common law partner can be named as successor holder – keeping the tax exempt status
Any increase in the TFSA balance between date of death and payout is taxable to the beneficiary
Successor holders contribution room is not affected by the transfer.

19. RRSP & RRIF Deemed disposed of at the time of death
Will roll over to surviving spouse
Taxable on the date of death
Will transfer to the named beneficiary – does not become part of the estate

20. RESP No tax implications upon death Become part of estate
Treatment should be stated in will