The federal and Ontario governments have tax credits available to taxpayers, including those paid for medical expenses. The Medical Expense Tax Credit (METC) can be claimed for costs associated with nursing and retirement homes that are paid by you or your spouse.
METC claims depend on several factors, including the kind of facility you reside in, your medical condition, the level of your income, and dependency on others.
The differences between a nursing home or long-term care facility and a retirement home can be determined by level of care, cost, and medical situation.
Level of care
A nursing home or long-term care facility is intended for individuals who require significant day-to-day attention and medical care. The facilities have 24-hour nursing care and supervision. A retirement home is for more independent and healthy seniors who need minimum to moderate day-to-day assistance.
Nursing homes or long-term care facilities are more affordable because they are government funded and regulated. Retirement homes in Ontario are private and not typically subsidized by the government.
You may find yourself in one of the following three scenarios when considering what can be claimed:
• You have a disability certificate approved by the Canada Revenue Agency (CRA); • You are not eligible for a disability certificate, but have a letter from a qualified medical practitioner; or • You are without a disability certificate and a letter from a medical practitioner.
Disability Tax Credit Certificate
You can obtain a Disability Tax Credit Certificate (DTC Certificate) from a medical doctor, certifying that you have a severe and prolonged impairment in physical or mental function. The completed DTC Certificate, Form T2201, must be approved by CRA.
Letter from a qualified medical practitioner
Some medical conditions may not meet the stringent conditions to be eligible for the DTC Certificate. In those situations, you should obtain a letter from a qualified medical practitioner, certifying that due to a physical or mental infirmity you are in need of a full-time attendant or care in a facility. Nursing home or long-term care facility You are able to claim 100% of the costs paid to a nursing home or a long-term care facility if you have a CRAapproved DTC Certificate, or a letter from a qualified medical practitioner. Without them, you are unable to claim expenses paid to a nursing home or long-term care facility.
If you have a DTC Certificate, or a letter from a qualified medical practitioner, you are able to claim expenses related to “care by an attendant” paid to the retirement home on your tax return.
There is an exception for retirement home residents who live on a critical care floor in that CRA treats those taxpayers the same as those in a nursing home for tax purposes. Critical care floor residents with a DTC Certificate, or a letter from a qualified medical practitioner, can claim 100% of the total fees paid to the retirement home as medical expenses.
Claiming medical expenses can be confusing. Consult your tax advisor to determine what you can and cannot claim to maximize your tax savings.