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Before making a major financial decision you
should consult a qualified professional.
Child care costs are not claimed as a non-refundable tax
credit, but as
a deduction from income on line 214 of the personal tax return.
A non-refundable tax credit is always at the lowest tax rate (except in
Quebec), but a reduction
of income would save tax at the taxpayer's marginal tax
In the Canadian
Tax Calculator, child care costs are entered in the deductions area. The
calculator does not check to ensure that the maximum allowable amount is not
exceeded. It will provide a warning if the child care costs are being
claimed by a higher income spouse.
In most cases, child care expenses for an eligible child must be claimed by the parent with the
lower net income
for tax purposes. If the parents are separated and share custody,
parent may claim a portion of the child care costs. Where a
medical doctor certifies in writing that the lower-income spouse is incapable
of caring for the child due to a physical or mental infirmity, then the costs
may be claimed by the higher income spouse.
An eligible child is a child of you or your spouse or common-law
or a child who was dependent on you or your spouse or common-law
whose net income in the year was less than or equal to the federal basic personal
amount ($11,138 in 2014, $11,327 in 2015). The child must have been
under 16 years of age at the beginning of the year, unless the child was
mentally or physically infirm.
Allowable child care expenses are those paid for the care of an eligible
child, to enable the parent to earn employment income, carry on a business,
attend an eligible program at a designated educational institution for at
least 3 consecutive weeks, or carry on research or similar work for which a
grant has been received. Some examples of eligible child care expenses
include day-care centres and day nursery schools, some individuals providing child
care services, day camps and day sports schools, educational institutions such
as private schools (the
portion of tuition costs relating to child care services), boarding schools, and
overnight sports schools and camps.
There are limits on the total amount of child care expenses
that can be claimed for each child. There are also limits on the amounts
that can be claimed for expenses related to boarding schools or overnight
Basic Annual Limit for Each Child for Child
Age 6 or less at the end of the tax year, for whom the disability
amount cannot be claimed
Any age, for whom the disability amount can be claimed
Age 7 to 16 at the end of the tax year, for whom the disability
amount cannot be claimed
Over 16 at the end of the tax year, with a mental or physical
impairment, for whom the disability amount cannot be claimed
Thus, if you have 3 children ages 5, 7 and 15, your
total claim for 2015 or 2016 would be limited to $18,000 ($8,000 + 2 x $5,000). See example
Maximum Weekly Claim for Certain Child Care
The maximum that can be claimed for expenses for a stay in
a boarding school (other than education costs) or an overnight camp (including
an overnight sports school) is:
$175 per week for a child in line 1 above
$250 per week for a child in line 2 above, and
$100 per week for a child in lines 3 or 4 above.
Annual Limit for Child Care Expenses Based on
The claim for child care expenses cannot exceed two-thirds
of your earned income for the year.
The above limits can be found in the Canada Revenue Agency (CRA) form T778
Child Care Expenses, which is filed with the tax return to make a claim for child
care costs. The T778 also includes the definition of earned income.
If your costs exceed the allowable limit, a tax credit may
be available for some of the costs through the child
fitness tax credit. Any eligible fitness costs which qualify as
child care costs must first be claimed as child care costs, with the remainder
of eligible costs then claimed through the fitness credit.
Child Care Costs Deduction Example for 2015
or 2016 Tax Year
3 children ages 5, 7 and 15, so total claim cannot exceed $18,000
($8,000 + $5,000 x 2)
spouse with lower net income has earned income of
$30,000, so claim cannot exceed $20,000 (2/3 x $30,000)
actual child care costs are $8,000 each for the 5 and 7
year olds, and zero for the 15 year old, for a total of $16,000
The allowable deduction is the lesser of $18,000, $20,000 and
$16,000, so is $16,000. When using tax software, make sure that you input
the full amount of the child care costs for each child. Also make sure
that for the 2015 or 2016 taxation year, when there is no longer a child amount tax
credit, you input all dependent children even if there are no child care costs,
so that the maximum allowable can be properly calculated.
Provincial Claims for Child Care Costs
Because the child care costs are claimed as a deduction
from income, this reduces both federal and provincial taxes payable. In
Newfoundland and Labrador, there is a non-refundable child
care tax credit in addition to the deduction from income. The tax
credit is claimed by the individual who claims the child care costs. The
tax credit is calculated by multiplying the child care costs by the lowest
personal tax rate.
Care Services Provided by a Relative
Costs for child care services provided by a person 18
or over who is related to you are eligible as child care
expenses, as long as you or another person did not claim a
tax credit for that person in the following categories of
the personal tax return:
line 305 - amount for an eligible dependent
line 306 - amount for infirm dependents age 18 or