What Parents Need to Know for Tax Season

If you’re a working parent in Canada, child care can be one of your biggest monthly expenses. The good news? The government allows you to deduct eligible child care costs on your personal tax return.

At Toro Accounting, we help families structure and claim child care expenses correctly to reduce taxes and avoid CRA reassessments.

Here’s what you need to know.

🔹 What Are Child Care Expenses?

Child care expenses are amounts paid to have someone look after your child so you can:

✔ Work
✔ Run a business
✔ Attend school
✔ Conduct research
✔ Look for work

The rules are set by the Canada Revenue Agency (CRA).

Official CRA reference:
👉  Line 21400 – Child care expenses - Canada.ca 

🔹 Who Can Claim Child Care Expenses?

Typically:

• The lower-income spouse must claim the deduction.
• In shared custody or separation situations, special rules apply.
• Single parents claim their own expenses.

This is a deduction, not a tax credit — meaning it reduces your taxable income.

🔹 Eligible Children

You can claim expenses for:

• Children under age 16 at any time during the year
• Children with a disability (no age limit if eligible for the Disability Tax Credit)

🔹 What Expenses Qualify?

✔ Daycare centres
✔ Licensed home daycare
✔ Babysitters
✔ Nannies
✔ Day camps
✔ Boarding schools (partial amount)

You must have receipts showing:

• Caregiver’s name
• Address
• Social Insurance Number (if individual)
• Amount paid

🔹 What Does NOT Qualify?

❌ Private school tuition (education portion)
❌ Sports programs
❌ Music lessons
❌ Overnight camps (education component)
❌ Payments to your spouse
❌ Payments to a child under 18

🔹 How Much Can You Claim?

The maximum annual deduction per child:

• $8,000 for children under 7
• $5,000 for children aged 7–16
• $11,000 for children eligible for the Disability Tax Credit

However, the deduction is limited to:

• The lower-income spouse’s earned income
• 2/3 of the lower-income spouse’s earned income
• The annual maximum per child

You must use the lowest of these amounts.

🔹 Important Planning Tips

✔ Keep detailed receipts
✔ Ensure the caregiver reports the income
✔ Plan income splitting strategically
✔ Consider how child care affects Canada Child Benefit (CCB)

Because it reduces net income, claiming child care expenses may increase income-tested benefits.

🔹 Common Mistakes We See

❌ Higher-income spouse claiming the deduction incorrectly
❌ Missing caregiver SIN
❌ Claiming non-eligible programs
❌ Not filing Form T778 properly

Accuracy matters — CRA reviews child care claims closely.

💼 How Toro Accounting Can Help

At Toro Accounting, we:

✔ Determine which spouse should claim
✔ Calculate the maximum allowable deduction
✔ Review receipts for compliance
✔ Optimize your return to increase overall tax savings

Every family’s situation is different — and proper planning can mean thousands in savings.

📞 Book Your Family Tax Appointment

If you paid child care expenses this year and want to make sure you're claiming them correctly:

👉 Book your personal tax consultation here