Income Tax Act s. 63
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
Québec), but a reduction
of income would save tax at the taxpayer's marginal tax
rate.
In the Canadian
Tax Calculator, child care costs can be entered on the "Other
deductions" line, under the "RRSP deduction" line.
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, each
parent may usually 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
partner,
or a child who was dependent on you or your spouse or common-law
partner, and
whose net income in 2009 was $10,320 or less (basic personal amount). 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
camps. These 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.
See also CRA bulletin IT-495
Child Care Expenses.
