Canadians who financially contribute to the care of a loved one due to advanced age or illness are out of pocket $430 per month on average – an expense many aren’t planning for, finds a new CIBC poll.
“Providing care for someone you love can be a rewarding experience, but it can be costly and lead to family disputes about how the work and costs should be shared,” says Jamie Golombek, Managing Director, Tax & Estate Planning, CIBC Financial Planning and Advice. “The best way to support a loved one is to plan ahead and discuss arrangements well before any care is needed. Planning for expenses and knowing what funding and tax relief is available can help everyone feel better prepared for the care years ahead.”
The poll found that one-third of Canadians either currently provide caregiving support or expect to in the next five years.
“The good news is that you may be able to take advantage of some tax credits to lessen the financial burden, even if you’re sharing the costs,” says Golombek.
For example, if a parent requires full-time care from a personal support worker and you choose to split the bill with your parent or siblings, then you may each be able to claim the Medical Expense Tax Credit (METC) for these costs. You may each also be eligible for a 15% non-refundable Canada Caregiver Credit up to a shared maximum of $6,986.
In addition, the Home Accessibility Tax Credit may provide up to a $1,500 credit for renovations and other one-time expenses, and the Disability Tax Credit (DTC) may provide tax savings of $1,235 federally, plus provincial or territorial tax savings, for individuals with a disability or those who care for them.
“Don’t let caregiving be the blind spot in your financial plan. In addition to any out-of-pocket expenses, consider how providing care could impact your own retirement plans if you or your partner had to reduce time at work or even retire earlier than planned to provide full-time care for an aging relative,” says Golombek. “Having a clear plan in place can help ensure your own financial priorities don’t get sidelined.”