Principal Issues: (1) In a situation in which an estate pays a claim for homecare expenses previously rendered to the deceased individual, and/or home renovations related to such homecare, to what extent can the estate use such expenses as a deduction from income or as a credit against tax payable by the estate?
(2) To what extent can the Disability Supports Deduction be used if the homecare allowed the deceased to earn investment income?
Position: (1) The expenses cannot be deducted by the estate from its income nor used as a credit against its tax payable. Provided the expense otherwise qualifies as an expense eligible for the medical expense tax credit for the deceased individual, and was paid by the estate within 24 months of the individual's death, the deceased's terminal return can be revised to include such amounts in the claim for the medical expense tax credit.
(2) The disability supports deduction is not available to the estate as it is only available where the amount paid benefits the taxpayer taking the deduction. Further, the deduction was not available to the deceased if the homecare only enabled him or her to earn investment income.
Reasons: (1) The medical expense tax credit is available only to an individual, not to a trust.
(2) The Disability Supports Deduction in section 64 is available only to the particular taxpayer who benefits from the outlay. The outlay did not enable the Estate to earn one of the specified types of income and therefore cannot be used by the Estate as a deduction. Furthermore, it does not appear that the decedent was eligible for the deduction, given that the expense was not incurred for homecare that allowed the individual to earn the types of income specified in the legislation.
XXXXXXXXXX Renée Shields
December 13, 2006