18 January 2005 External T.I. 2004-0101081E5 - Attendant care-retirement residences

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.

Principal Issues: The retirement home operator asked for clarifying comments on the calculation of cost of attendant care in a retirement residence.

Position: Attendant care covers the salaries and wages to employees of a retirement home for health care, meal preparation, housekeeping for the resident's personal living space, laundry service for resident's personal items, transportation driver and security in unsecured units.

Reasons: A breakdown is required because the entire amount does not qualify. CCRA issued a fact sheet on April 17, 2003 setting out the details of this calculation

XXXXXXXXXX 2004-010108

January 18, 2005

Dear XXXXXXXXXX:

Re: Attendant Care Expenses-Retirement Home

This is in reply to your correspondence of October 28, 2004 in which you inquired about the calculation of attendant care expenses for purposes of the medical expense tax credit under paragraph 118.2(2)(b.1) of the Income Tax Act (the Act), for taxpayers residing in a retirement home.

You indicated that you are the owner of a private retirement home. On an annual basis, you provide a detailed breakdown of the services provided to your residents, including an allocation for attendant care. There is, however, some misunderstanding among your residents and family members, because some of them assume that the entire amount paid should be regarded as attendant care. You asked for some clarifying comments.

In general terms, we agree with your approach in providing a breakdown of costs, including a calculation of the amount for attendant care, since the entire amount paid for the retirement home would not qualify.

A retirement home operator will have to provide the following details to the residents in order for them to be allowed a claim for attendant care:

Proof of payment, such as a receipt, that shows the actual amount paid for attendant care (as opposed to rent, for example). As the service provider, the retirement home operator will have to determine the amount paid specifically for attendant care.

Generally, attendant care covers the salaries and wages paid to employees of a retirement home who provide the following:

-Health care
-Meal preparation
-Housekeeping for the resident's personal living space
-Laundry services for the resident's personal items
-Transportation driver
-Security (in secured units)

The claim for attendant care is the portion of the salary and wages of all such attendants that can reasonably apply to the senior, but is limited to $10,000 per year ($20,000 in the year of death).

Any of your residents intending to make a claim for attendant care must be eligible to claim the disability tax credit under section 118.3 of the Act. Form T2201, Disability Tax Credit Certificate, certified by a qualified person must be submitted and approved by the Canada Revenue Agency. For more information on this credit, please refer to the most current version of interpretation bulletin, IT-519, Medical Expense and Disability Tax Credits and Attendant Care Expense Deduction, at www.cra-arc.gc.ca/E/pub/tp/it519r2-consolid/README.html.

We hope the foregoing comments will be of assistance.

Yours truly,

John Oulton, CA
For Director
Business and Partnerships Division
Income Tax Rulings Directorate