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Details On Claiming Child Care

by Evelyn Jacks

Going back to school this fall? If so, you might be paying child care to do so. The good news is that those expenditures may be deductible. The rules below are important so you can keep the receipts and make a claim for child care expenses come tax time:

An eligible child for the purposes of claiming child care must be

  • a child of the taxpayer, the taxpayer's spouse or the taxpayer's common-law partner or
  • a child who was dependent on the taxpayer, the taxpayer's spouse or common-law partner.

The definition of child includes an adopted child or the spouse of a child of the taxpayer. The definition of a dependant child is one whose net income is less than the Basic Personal Amount.

Child care must be for services provided in Canada (although special rules exist for deemed residents and US-Canada commuters) by:

  • a day nursery school or day-care centre,
  • a day camp or day sports school,
  • a boarding school or camp (including a sports school where lodging is involved),
  • an educational institution for the purpose of providing child care services, or
  • an individual who is not
    • the child's father or mother,
    • a supporting person of the child,
    • a person in respect of whom the taxpayer or a supporting person of the child has claimed a personal amount or
    • a person who is under 18 years of age and related to the taxpayer.

The following are specific expenses that may be claimed:

  • baby-sitting costs, day care costs, costs of a live-in nanny; which may include advertising, salary and benefits including the employer's portion of CPP and EI,
  • lodging paid at boarding schools, day camps, overnight sports school and overnight camps to a maximum of:
    • $100 per week for each child age seven to 16 for which the Disability Amount cannot be claimed, plus
    • $175 per week per child under seven for which the disability amount cannot be claimed, plus
    • $250 per week for each disabled child

Maximum claim. The maximum claim for child care expenses is the least of:

  • the eligible child care expenses paid to eligible child care providers,
  • two-thirds of earned income and
  • the following limits:
    • $4,000 for each child aged seven to 16 for which the Disability Amount cannot be claimed
    • $7,000 for each child under seven for which the Disability Amount cannot be claimed
    • $10,000 for each disabled child

Limitations for Students who are Parents. In addition to the limitations for all taxpayers, students have the following limitations on their child care expense claims.

Full time students are limited in their claims to:

  • $100 for each child age seven to 16 for which the Disability Amount cannot be claimed, plus
  • $175 per child under seven for which the Disability Amount cannot be claimed, plus
  • $250 per disabled child

times the number of weeks of full-time attendance. Part-time students are limited to the above amounts times the number of months of part-time attendance.

Who Claims? Generally, child care expenses may only be claimed by the supporting person with the lower income. However, in the case of students, the higher income person may claim child care expenses during periods in which the other supporting person was a full- or part-time student. When the lower-income taxpayer is a part-time student, the limits to part-time students apply to the claim made by the higher-income taxpayer, and when the lower-income taxpayer is a full-time student, the limits to full-time students apply to claims made by the higher-income taxpayer.

Ineligible Expenditures. For your information include medical or hospital care, clothing, transportation, tuition fees, board and lodging expenses except when they are included in the total charges for a boarding school, day camp or overnight sports school and do not exceed the weekly limits, expenses which were not actually paid or which were or will be reimbursed.

And there is more good news: some of your expenses may be eligible for both the Children's Fitness Amount and the deduction for child care expenses. In that case, the expenses must first be claimed as child care expenses. Only the unused amount after claiming child care expenses may be claimed for the fitness credit amount. We will tell you more about that, next time.

 

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