All About Estates

Attendant care payments

With an aging population comes the importance of attendant care of the elderly and disabled. The Canada Revenue Agency (CRA) was recently asked about the taxation of amounts received for attendant care services provided to a spouse or child and returned with a pleasantly surprising answer.

A child received a non-taxable award of damages to facilitate the continuous care of the child. A monthly amount was paid out of the award and deposited to the parent’s personal bank account that was specifically set up to receive and disburse funds for the care, maintenance, and housing of the child in the family home. In a subsequent judgement, the parent was awarded a lump-sum amount in satisfaction of past attendant care services and a monthly amount for future attendant care services.

Generally, it is the CRA view that amounts received by a parent or spouse for the attendant care services he or she provides to his or her child or spouse represents income from employment or a business (i.e., as a self-employed individual). The courts, however, have taken the view that amounts paid to a parent (out of a non-taxable award for damages) for the care of a child, who was mentally and/or physically handicapped after an accident, are not considered income from employment or a business, and therefore, not taxable.

In the end the CRA took the view that amounts received by the parent, under the circumstances outlined above, would not be included in the income of the parent.

About Derek de Gannes
Derek A. de Gannes: Director, Domestic & International Tax of RSM Canada. RSM Canada is committed to the highest level of integrity, quality and professionalism and provides clients with solutions in the area of Audit, Tax and Transaction Services. Email: derek.degannes@rsmcanada.com