Your Personal Finances

Family Issues

A number of my friends live in multi-generational households. In fact, even in my family it seems to be a tradition. My grandfather lived with my Aunt Cathy and her family until he died when he was in his nineties. My aunt's son, his wife and their three kids also shared a home with my aunt and uncle and actually continue to do so. And even my father and his wife lived with my stepsister and her husband and two sons for 12 years before they recently moved out on their own to a retirement community.

Many grandparents, parents and their children all live under one roof. In fact, according to Statistics Canada, in 2003 over 500,000 grandparents lived with their grandchildren. Sometimes this is by choice and in many instances it is a cultural norm to have three generations living together. However, often the three generations come together out of necessity. A friend of mine is facing the prospect of having her in-laws move in with her and her husband and their toddler due to the grandparents' financial difficulties.

It is a huge life-altering decision to have your parents move into your home with you, especially if they are disabled or ill. You may end up spending a great deal of your time looking after them. In fact Human Resources and Social Development Canada says 23% of Canadians aged 45-64 provide care to seniors. On average these family members spend almost 30 hours per month providing this care.

Of course, your relatives moving in with you will also impact your finances. It is crucial to get financial advice if you are going to start supporting your parents. Your financial advisor as well as an experienced accountant should be consulted. If you do find yourself supporting your parents in your home, ask your advisors about ways to reduce the financial hit through these tax credits or other financial assistance.

1. Caregiver tax credit: There are both federal and provincial tax credits that can reduce your taxes if you are looking after a low-income dependent relative who is at least 65 years of age. The credit is reduced once the dependent's income reaches a certain threshold.
2. Medical expenses credit: Some costs can be reduced via medical and disability credits if you are a caregiver to another person. The amount you can claim depends on your income and amount of the expense. The current maximum claim is $10,000. The government provides a list of expenses you could claim. For example, you may be able to claim 20% or up to $5,000 of the cost of a van that is or will be adapted for transporting someone using a wheelchair.