2020-0854171M4 Canada caregiver credit & spousal income

Principal Issues: Why does a spouse’s net income limit an individual’s ability to claim the Canada caregiver credit as part of the spouse or common-law partner tax credit?

Position: Question of tax policy - referral to Finance

Reasons: The wording of paragraph 118(1)(a); 118(1)(e): for the top-up amount)

Author: El-Kadi, Randa
Section: 118(1)(a) and 118(1)(e)

August 25, 2020

XXXXXXXXXX

Dear XXXXXXXXXX:

Thank you for your correspondence of June 12, 2020, written on behalf of your constituents, XXXXXXXXXX and XXXXXXXXXX, about the Canada caregiver credit (CCC).

I understand your constituents’ concern is that XXXXXXXXXX supports XXXXXXXXXX because of her disability, yet his claim for the CCC has been denied because of XXXXXXXXXX income level. In their view, they should qualify for the CCC regardless of their income.

The CCC is a non-refundable tax credit that may be available to individuals who support a spouse or common-law partner or a dependant with an impairment in physical or mental functions. The CCC is part of other tax credits, which means that individuals also have to meet the conditions for claiming those other tax credits.

An individual who supports a spouse or common-law partner who depends on them because of an impairment in physical or mental functions may be eligible to claim the CCC up to $2,230 in the calculation of the spouse or common-law partner amount. Please see line 30300, “Spouse or common-law partner amount,” of Schedule 5 - Amounts for Spouse or Common-Law Partner and Dependants, for the 2019 tax year. In the calculation of the amount at line 30300, the spouse’s or common-law partner’s net income reduces the amount that may be claimed. The individual may also be entitled to an additional amount on line 30425, “Canada caregiver amount for spouse or common-law partner, or your eligible dependant age 18 or older,” which is also calculated on Schedule 5, if their spouse or common-law partner’s net income is between $7,159 and $23,906. The additional amount that may be claimed on line 30425 is reduced dollar-for-dollar by the spouse or common‑law partner’s net income above $16,766 and is completely phased out at a net income of $23,906.

The question you raise on behalf of your constituents relates to tax policy and would require changes to the Income Tax Act. The Canada Revenue Agency is responsible for administering and enforcing the Income Tax Act and its regulations, while the Department of Finance Canada is responsible for developing federal tax policy and amending the legislation. Therefore, I am sending a copy of our correspondence to the Honourable Bill Morneau, Minister of Finance, for his consideration.

I trust the information and the referral I have provided are helpful.

Sincerely,

The Honourable Diane Lebouthillier

c.c.: The Honourable Bill Morneau‚ P.C.‚ M.P.
Minister of Finance

Prepared by:
Randa El-Kadi
343-543-2506
2020-085417

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