Eligible Dependent Tax Credit Objectives and Description
The eligible dependent credit is a federal non-refundable tax credit designed to take into account the fact that a “taxpayer who does not have a spouse or common-law partner, but who provides support of young child, parent, grandmother, grandfather or other dependent due to mental or physical impairment is less able to afford tax that a taxpayer with the same income and without such dependents.
For the 2019 taxation year, the cost of the credit for an eligible dependent is estimated at $ 995 million. For the 2016 taxation year, approximately 955,000 individuals claimed this credit. Women (84%) were significantly more likely than men (16%) to request it.
Parameters and calculation
The child and dependent tax credit is available to an individual who, at any time in the year, does not have a spouse or common-law partner  , who supports a dependent and who lives with that dependent.
An eligible dependent may be a parent or grandmother or grandfather who lives with the individual and for whom the individual is dependent, as well as a child, grandchild, brother or sister who lives with the individual and who is either under the age of 18 or who is fully dependent due to a mental or physical impairment.
The eligible dependent credit is equal to the product of multiplying the base rate for the year by the amount for an eligible dependent ($ 12,069 for 2019). The maximum value of the credit for the 2019 taxation year for a Quebec individual, taking into account the abatement for residents of Quebec, is $ 1,512. The amount for an eligible dependent is reduced by the dependent’s net income at the rate of one dollar for each dollar earned.
Only one person can claim this credit for the same dependent. It cannot be shared and it is possible to claim only one amount for an eligible dependent per unit. Aside from the year of separation, the individual must not have paid support for the eligible dependent.
If the dependent of the individual has a mental or physical infirmity, an amount of $ 2,230 is added to the amount for an eligible dependent. The credit therefore goes from $ 12,069, if the dependent is not disabled, to $ 14,299 if the dependent is disabled.
On December 9, 2019, the federal government made changes to the Income Tax Act which will increase the amount for an eligible dependent as of 2020. For individuals whose net income for the year is less than or equal to the amount from which the 29% tax rate applies ($ 150,473 for 2020), the amount for an eligible dependent will increase to $ 13,229 for 2020, $ 13,808 for 2021, $ 14,398 for 2022 and $ 15,000 for 2023. The amount will be indexed after 2023. For individuals whose net income is greater than the amount above which the 29% tax rate applies ($ 150,473 for 2020), the increase in the amount for an eligible dependent will be phased out so that the amount for Eligible charge for individuals whose income is above the threshold of the following tax bracket ($ 214,368 for 2020) remains unchanged ($ 12,298 for 2020).
Good to know and points to remember
Here is a non-exhaustive list of some things to know and remember.
In order for an individual to claim the credit, a person must be fully dependent. However, this condition does not have to be met throughout the year.
Under this credit, providing for a person involves meeting basic living needs such as food, shelter and clothing, while being fully dependent on an individual generally means that a person is financially dependent on the individual so that his well-being is almost exclusively assured by him. For example, for a child to be considered to be fully dependent on their father or mother, that parent must be responsible for the day-to-day activities of their education, such as ensuring that the child goes to school. School and provide for basic needs such as food, the shelter and cloth.