Many working parents need daycare, but the cost can often be prohibitive. You may be wondering if daycare is tax deductible in Ontario. Here’s what you need to know.
There are a few ways that you can offset the cost of child care. Families who qualify for this program can receive reimbursement for up tp 75 percent of their eligible childcare expenses, which include those paid by childcare facilities, campgrounds, and daycare centers, among others.
Claim child care expenses
Child care is becoming a reality as more and more Canadian families return to the workforce. Since claiming child care costs lowers your net income, you may be able to claim them as an expense on your taxes. It can be tricky to determine who can claim expenses and tax-deductible payments.
What does the Canadian child care system look like?
There are different types of child care. Some parents go to work and their children go to a special place called a daycare.
- Daycares help take care of children during the day. The government gives money back to parents who have to use daycare, up to 75% of the cost. Parents can also claim the costs of child care on their taxes.
- Other parents use what is called informal child care. This is when another person, like a grandparent or family friend, takes care of the children while the parents are at work. Because informal child care does not cost as much as a daycare, parents can only claim a tax deduction for this type of care if they keep receipts.
In Ontario, Canada, there are child care subsidies available. To qualify for the subsidy, you must be working full time or going to school full time. The benefit is valid for children aged 0 to 4 years old and can be used for licensed daycare, home care, or family daycare. To qualify for the subsidy, you must complete an application form and provide documentation of your income. The amount of the subsidy is determined by your family’s income and the type of childcare you use. If you’re not eligible for the grant, you may still be able to deduct some of your childcare expenses from taxes.
How do I know if I’m eligible to claim child care?
You can not deduct the following types of child care costs:
- You must be going to school, working, or running a business.
- The child must reside in your household.
- If you have a nanny, she cannot be a relative under 18.
What expenses qualify for reimbursement?
You can’t deduct the following types of child care expenses:
- Daycare facilities and child care centers
- Educational facilities
- Day camps where the main purpose of the center is childcare
Boarding schools or day/night camps where lodging is provided (however, the deduction is less, and the child cannot earn more than $13,229 per year)
High-quality early childhood education
Child care in Canada comes in different forms. There are some types of childcare that are free or very cheap, but others cost a lot of money.
ELCC, or simply early learning and child care, is a high-quality early education system that protects children’s physical and psychological well-being. It also enhances health and their emotional, social, cognitive, ethical, and creative growth. Early childhood educators work in a variety of settings, including:
-licensed child care
-licensed home-based childcare
-unlicensed day nurseries
-family resource centers
-schools and school boards
The federal government, the provincial government of Ontario, and municipalities all different fund aspects of early learning and child care. Many employers also offer child care subsidies to help their employees with the cost of child care.
High-quality early learning and child care can make a big difference in a child’s life. It can help them do better in school and have better mental and physical health. A good childcare system can help parents go to work and support their families.
Canada-wide early learning
There are different types of child care in Canada, depending on the province you live in. Some types of child care are free or very cheap. Some types of child care you have to pay for.
Is daycare tax deductible in Canada? What about early childhood education? Here’s what you need to know. In Canada, the age for starting early childhood education (ECE) is usually 4 or 5 years old. The average cost of ECE is around $2000 per year, but it can vary depending on the program and location.
What are child care expenses I cannot claim?
You cannot claim benefits for any of the following items:
- Medical or hospital care, clothing, or transportation costs
- Fees related to educational expenses at an educational institution, such as tuition for a regular curriculum or athletic training program
- Fees for non-essential recreational or leisure activities, such as swimming, tennis, etc. lessons or yearly scouting
- Child care expenses paid for by an employer are not considered expenses.
How do I submit a claim for child care expenses?
The most popular approach is to use the Child Care Expense Deduction Form to determine the maximum amount of child care expenditures that may be deducted. You must have a paper record from the individual or organization that includes information about the service provided to you. If you’re paying child care services to, for example, an individual providers, you’ll require a Social Insurance Number (SIN).
Remember that unclaimed expenses cannot be carried over to the following year.
Can the higher income parent claim child care expenses?
No. The individual with a lower net income (including zero income) is more likely to make a claim. However, if any of the following situations apply, the individual with a higher net income can receive child care costs:
The spouse with the lower income:
- Enrolled in a high school, college, university, or another institutionally certified program.
- A parent’s inability or unwillingness to care for their children at least two weeks because of physical or mental illness.
- If you’re separated due to a breakdown in the relationship and have made up by March 31 of the following year, you may be eligible for spousal support.
On the CRA website, there is more information on this subject.
How is this different from the Canadian child benefits?
The Canadian child benefits are different from the daycare tax deduction in Ontario. The benefits are paid to parents whether or not they are working. The daycare tax deduction is only for people who are working and paying for daycare.
Visit the CRA website to learn more.
Looking for child care services in Newmarket? We can help!
Montessori-based child care for children is a great option for parents looking for quality care for their children. Our daycare is based on the Montessori teaching method, which helps children learn and grow at their own pace. We provide a safe, nurturing environment for our students to learn and grow.
If you’re looking for a daycare in Newmarket, we invite you to come and tour our facility. Contact us today to schedule a tour.