Daycare Expenses Tax Deduction in Canada: What Parents Should Know

Start with what you paid for. If your child went to daycare so you could work, for example, that fee may count as an eligible child care expense. Care that allows you to attend an eligible school program can also qualify. What matters is the care the fee covered and the reason it was needed.

If a school bills you for tuition and after-school supervision, those amounts can be treated differently. Regular tuition does not qualify as child care. The part that paid for supervision may qualify if the other conditions are met.

Even when the expense qualifies, the amount you can deduct may be smaller than what you paid. There are limits, including ones based on the child and the claimant’s earned income. The amount of any refund depends on how the rest of the return works out.

Suppose you and your partner live with your child. You pay the daycare bill from your account, and your partner has the lower net income. If the expense is eligible, the general rule puts the deduction on your partner’s return. The receipt can still be in your name because you paid.

For this comparison, what matters is each partner’s net income for tax purposes, not simply their salary.

Some circumstances change who can claim. If the lower-income partner was in an eligible educational program, for instance, the higher-income partner may be able to claim some or all of the eligible expense. If you are the only person supporting your child, eligible expenses paid while the child lived with you may go on your own return.

Some daycares issue one receipt for the year. Others send them as you pay. Keep what the daycare gave you, and if the statement seems to be missing a month or includes several kinds of fees, it is worth flagging that before the returns are prepared.

Receipts establish what was paid. Who lived with the child, the reason care was needed and the income on each return help determine whether and where it can be claimed.

When Anytime Accounting prepares your personal tax returns, we can review the daycare records alongside the relevant family and income details. If the expenses qualify, we can work out which return should include the claim and how much can be deducted.

If you have the receipt but are unsure what else matters, start there. We can explain which other details we need and agree with you on the filing work you’d like us to handle.