All About Estates

Care expenses paid to a retirement home

The Canada Revenue Agency (CRA ) was asked if care expenses paid to a retirement home for an individual suffering from Alzheimer disease could qualify as an eligible medical expense. The question is particularly apppropriate given the time of year when trustees and executors may be filing terminal tax returns for those who died in 2015.

In the hypothetical situation the patient required the help of another person for his needs and personal care, and lived on a floor of the retirement home reserved for non-self-sufficient seniors. Medical expenses covered the Income Tax Act (the Act) include only expenses paid to a nursing home. However, the term “nursing home” is not defined in the Act. The term is defined in administrative material as an establishment providing full-time maintenance or nursing home care for patients unable to care for themselves.

The question of whether a retirement home is a nursing home is one of fact and can only be determined after a careful review of the relevant information. The CRA noted that the fact that an individual lived in a retirement home, suffered from Alzheimer disease, and required the assistance of others for his needs and personal care could indicate that he or she was living in a nursing home, but the following factors would also have to be considered:

– number of persons working in the establishment
– skills and equipment available to those persons providing nursing care around the clock.

The retirement home could be considered a nursing home provided the floor where the individual lives meets the above criteria. If this was the case, the related care expenses could be eligible as medical expenses and properly incuded in the terminal tax return.

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About Derek de Gannes
Derek A. de Gannes: Senior Director, Private Client Services 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: