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Ontario Refundable CARE Childcare Credit

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Ontario  ->  Personal tax credits -> Ontario Refundable Care Credit

Ontario Childcare Access and Relief from Expenses (CARE) Credit - Refundable

Ontario Taxation Act, 2007 s. 103.0.2 (proposed)

The Ontario 2019 Budget proposed a new Ontario Childcare Access and Relief from Expenses (CARE) refundable tax credit, which would provide about 300,000 families with up to 75% of their eligible child care expenses.  This tax credit will start with the 2019 tax year, and will be claimed on the tax return.  The tax credit will be based on family income and eligible child care expenses.  Lower income families would get a higher percentage tax credit.  Starting with the 2021 tax year, families can choose to receive advance payments throughout the year or receive a single payment when filing their tax returns after the year ends.

The CARE credit is based on family "adjusted" income and eligible child care expenses.

The CARE credit is included in the Detailed Canadian Tax and RRSP Savings Calculator.

To calculate adjusted income, the following are added back to line 236 net income from the tax return:

    - child care expenses deducted (could be less than expenses incurred)

    - deduction for split income (won't be applicable to many people)

    - EI benefit repayment deduction, and

    - OAS clawback

The tax credit rate is dependent on the adjusted family income, as follows:

Adjusted family income

Tax Credit
Rate

Reduced by
$20,000 or less 75% n/a
over $20,000 up to $40,000 75% 2% for each $2,500 or portion above $20,000
over $40,000 up to $60,000 59% 2% for each $5,000 or portion above $40,000
over $60,000 up to $150,000 51% 2% for each $3,600 or portion above $60,000
over $150,000 0%  

Example:

Adjusted family income of $51,000:  The tax credit rate is 59% - 2% x ($51,000 - $40,000) / $5,000.

Since ($51,000 - $40,000) / $5,000 = 2.2, this is rounded up to 3.  This makes the equation:

59% - 2% x 3 = 59% - 6% = 53% tax credit rate.

The tax credit rate is multiplied by the allowable child care expense deduction.  If actual expenses incurred totalled $9,600 but the maximum allowable deduction is $8,000, the refundable tax credit would be 53% x $8,000 = $4,240.

If the adjusted family income was $50,000, the tax credit rate would be 55%, with a tax credit of $4,400.

Too complicated?  To make things easier, we've created a table showing all levels of the tax credit rate.

Adjusted Family Income CARE
Tax Credit Rate
Greater than and up to
$0 $20,000 75%
20,000 22,500 73%
22,500 25,000 71%
25,000 27,500 69%
27,500 30,000 67%
30,000 32,500 65%
32,500 35,000 63%
35,000 37,500 61%
37,500 40,000 59%
40,000 45,000 57%
45,000 50,000 55%
50,000 55,000 53%
55,000 60,000 51%
60,000 63,600 49%
63,600 67,200 47%
67,200 70,800 45%
70,800 74,400 43%
74,400 78,000 41%
78,000 81,600 39%
81,600 85,200 37%
85,200 88,800 35%
88,800 92,400 33%
92,400 96,000 31%
96,000 99,600 29%
99,600 103,200 27%
103,200 106,800 25%
106,800 110,400 23%
110,400 114,000 21%
114,000 117,600 19%
117,600 121,200 17%
121,200 124,800 15%
124,800 128,400 13%
128,400 132,000 11%
132,000 135,600 9%
135,600 139,200 7%
139,200 142,800 5%
142,800 146,400 3%
146,400 150,000 1%
150,000   0%

 

More information can be found at Ontario Childcare Access and Relief from Expenses (CARE).

The legislation for the tax credit is in Bill 100, Protecting What Matters Most Act (Budget Measures), 2019.



Revised: May 12, 2019

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