In this article, information will be provided to give insight on the following topics:

What are child care expenses
Who is eligible to claim child care expenses
Which expenses can be claimed
How to claim the deduction

Table of Contents

What are child care expenses?

Child care expenses are amounts Canadian taxpayers pay to have someone look after their children when they are working, studying, or conducting research for a university, not-for-profit, or other institution. Children must live with the Canadian taxpayer at the time for which they want to deduct this expense. The children can be adopted or naturally born and must be directly related to the taxpayer. Eligible expenses can only be claimed from Canadian residents or businesses that solely live or operate in Canada.

What are the Eligibility Criteria?

The Canada Revenue Agency has provided a checklist to determine eligibility for claiming child care expenses:

The Child:

The child was under 16 years of age at any time in 2023

Had a physical or mental function impairment and a Disability Tax Certificate (DTC), and was wholly dependent on the taxpayer (A DTC makes the child an “eligible dependent” and the taxpayer qualifies for additional tax credits)
Has a net income in 2023 of $15,000 or less

Other requirements

The taxpayer had to pay someone to look after the child because the taxpayer had to:

Earn income from employment
Carry on a business either as a sole proprietorship or partnership
Conduct research after receiving a grant to conduct such research or similar work
Attend school under the conditions of an education program
- Has to be offered by a secondary school, university, college, or other designated education institution (Ensure the education is from a designated educational institution!)
The child was under the care of the parent(s)/guardian(s) when the expenses were incurred, and;
Services were provided in Canada by a Canadian resident
An exception can be made if a taxpayer lived outside Canada or all or part of 2023 and CRA considers them to be resident

All of the above are needed to be able to claim child care expenses.

Eligible Dependents

An eligible dependent has to have a disability tax certificate or relies on one parent for all their care (If a single parent has multiple children, only one child can be claimed as an eligible dependent).

Which expenses can be claimed?

If you are Eligible, these are the expenses you can claim:

Caregivers providing child care services
Day Nursery Schools and Daycare Centres
Educational Institutions, for the part of the fees that relate to childcare services
Day camps and day sports schools where the primary goal of the camp is to care for children
Boarding schools, overnight sports schools, or camps where lodging is involved (read the note in Part A of Form T778)

Child care services cannot be from any of the following:

The child’s parent or guardian or their spouse
A person for whom you or another person claimed the Canadian Caregiver Amount or as an Eligible Dependent
A person under the age of 18 who is related to you

Expenses that cannot be claimed:

Medical or Hospital care cost (Medical Expenses are claimed in a separate area)
Clothing costs
Transportation costs
Fees that relate to education costs at an educational institution, such as tuition fees of a regular program or a sports study program
Fees for leisure or recreational activities, such as tennis lessons or the annual registration for Scouts
Childcare expenses that have been reimbursed

How do you claim the deduction?

Important Notes:

Expenses can only be claimed for the year in which they incurred
Carryforwards of unclaimed expenses from previous years are not allowed

Step 1: Calculate your allowable deduction

Fill out Parts A & B of Form T778, Child Care Expenses Deduction
- Part A is for determining total childcare expenses
- Part B is for calculating the basic limit for childcare expenses
Fill out Part C, only if you are the person with the higher net income and any of the situations described in this part applied in the tax year
- In most circumstances, the lower income earner deducts child care expenses, however there specific situations in Part C that may allow the higher income earner to claim the deduction
Fill out Part D if you were enrolled in an educational program in the tax year

Step 2: Claim the deduction on your income tax return

Enter the allowable deductible amount on line 21400 of your return

Step 3: Keep all supporting documentation

The individual or organization who provided the child care services must provide a receipt indicating the services performed.
If an individual provided these services, make sure the receipt shows their social insurance number.

Want to understand more about your tax situation?

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