7. Who are eligible to claim deductions under “Elderly Residential Care Expenses”(ERCE)? What is the maximum deduction?
With reference to Section 26D of the Inland Revenue Ordinance, persons may claim deductions for elderly residential care expenses paid by them (or their spouses) to residential care homes in respect of their parents or grandparents or (their spouses' parents or grandparents). The deduction may be allowed under salaries tax and Personal Assessment. A person subject to tax at the standard rate is also entitled to the deduction.
The following conditions must be satisfied before the deduction is granted:
- A natural father or mother of the taxpayer or his/her spouse; or
- A parent by whom the taxpayer or his/her spouse was legally adopted; or
- A step-parent of the taxpayer or his/her spouse; or
- A parent of the taxpayer's deceased spouse.
- A natural grandfather or grandmother of the taxpayer or his/her spouse; or
- An adoptive grandparent of the taxpayer or his/her spouse; or
- A step-grandparent of the taxpayer or his/her spouse; or
- A grandparent of the taxpayer's deceased spouse.
Allowable deduction amounts
The deduction allowed is for expenses actually paid in the year of assessment to a residential care home in respect of the residential care received, subject to a maximum of $80,000 for the year of assessment 2014/15 and onwards for each parent or grandparent . The deduction covers only the cost of care provided to the parent or grandparent who is resident in a residential care home. Medical expenses, for example, paid to doctors and/or hospitals are not deductible.
In respect of the same dependant, you can claim Dependent Parent Allowance or ERCE, but not both.