Becoming a parent can be an incredible experience, but it can also be expensive. You suddenly have to plan for a new person’s health, well-being, and future. As well as the overall responsibility for their care, feeding, and education.
All joys to be sure. But the financial planning can be overwhelming. To assist with the costs of being a parent, the Canadian Revenue Agency (CRA) provides several ways for families to save money through tax deductions and tax credits. Find out if the following tax benefits could work for you.
Key Takeaways
- The T1 General Tax Form is a comprehensive summary of your financial activities and obligations for a specific tax year in Canada.
- To obtain your copy of the T1 Tax Form, visit the CRA website or log in to your TurboTax account if you filed through our platform.
- To fill out a T1 Form, provide personal details, document all income sources, and calculate net and taxable income.
Child Benefit (CBB)
The CRA offers a non-taxable Canada Child Benefit (CCB) for each eligible family that helps cover the cost of raising children under the age of 18. Families of children with disabilities will receive an additional amount under the Child Disability Benefit (CDB). The benefit is paid when you register your child after birth and will stop automatically when they turn 18.
You have to file your income tax return with your spouse/common-law partner to be able to receive the CCB every year. For a single parent, the parent with custody is the one who receives the benefit. For shared custody, the benefit is either split in half or according to the custody agreement.
Medical expenses
All Canadian taxpayers can claim medical expenses for themselves, their spouse, common-law partner, and their children aged under 18. They can also claim for other dependants such as parents or grandparents.
Medical expenses are a non-refundable tax credit, which means you can get a credit of 15% of the calculated amount against your taxes owed not resulting in a negative amount. You may include birth-related medical expenses that were not covered by your provincial health plan or your health insurance.
Eligible dependant amount
If you’re a single parent, you may be able to claim the amount for an eligible dependant. Regardless of how many children you have, you can claim this amount for one child only. If you have shared custody, only one parent can make a claim. The amount is reduced by the child’s income from all sources, such as CPP.
Canada caregiver amount for children under 18
If you have a child who has an infirmity or disability, you can claim the Canada caregiver amount for your child or your spouse/common-law child. You can claim this amount for as many children as you have. For a single parent with shared custody, only the parent who claims the eligible dependant amount will be able to claim the Canada caregiver amount for the same child.
Child care expense deduction
The child care expenses deduction is a deduction from gross income that you may claim if you use a daycare or babysitter while you work or go to school. Note: If you pay an individual to provide child care in your home, you may have some responsibilities as an employer.
There are annual limits that vary with each child’s age and, if your child has a disability, a higher limit may be available. Any disability must be approved by the CRA with the disability tax credit application to claim benefits.
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You can claim the following child care expenses incurred in the tax year:
- caregivers, such as nannies and babysitters, (you’ll need to provide their Social Insurance Number and receipts as proof of income paid)
- day nursery schools and daycare centres
- educational institutions that provide child care services
- day camps and day sports schools with a primary goal of child care
- boarding schools, overnight sports schools, or camps where lodging is involved
What’s important to note is that if you pay an individual person—such as a nanny or babysitter—for childcare, you must provide their Social Insurance Number as well as all related receipts to claim them as a deduction. A good tip to follow is to ask for these items ahead of time instead of at the end of the year.
As a Canadian taxpayer, the maximum amount you can claim is:
- $8,000 for each child under 7 years of age at the end of the year
- $5,000 for each child between 7 and 16 years of age
- $11,000 for each child who qualifies for the Disability Tax Credit
You can find the amount on the T778 form.
The deduction must be claimed by the spouse/common-law partner with the lower income unless that person is enrolled in an education program, incapable of caring for children due to physical or mental impairment or confined in prison. In that case, then the higher-income person may claim the deduction.
Children’s fitness tax credit and art amount
Only Quebec, Manitoba, and Yukon still have the fitness tax credits and the children’s art amount. All other provinces have eliminated these credits.
- The Yukon Children’s Fitness Tax Credit allows you to claim up to $1,000 for eligible fees paid for children under 16 and also offers a supplement of an additional $500 for children with disabilities. The Yukon offers a claim of $500 fees paid for the children’s art amount for children under 16 who are enrolled in an art program and a supplement for an additional $500 for children with disabilities.
- Manitoba offers the same children’s art amount as the Yukon but a different Manitoba fitness amount that covers $500 in fees paid for any family member.
- Quebec residents can apply for a similar credit called the Tax Credit for Children’s Activities. The credit allows you to apply for $500 in fees paid per child and an additional $500 for children with disabilities.
Registered Education Savings Plan (RESP)
Planning ahead? You can begin saving for your child’s education right from the start. Simply open an account with a bank, insurance, or financial company, where you can designate one or more children as beneficiaries. This account will be registered by the CRA as a Registered Education Savings Plan (RESP), with specific contribution limits and grants provided by the government for each child.
RESP contributions are not deductible from your income since you contribute after you pay taxes. However, when the plan reaches maturity, it is considered the income of the child. The beneficiary (child or children), will be taxed on the increased portion, not the original contribution amount.
If the child decides not to pursue post-secondary education, the subscriber will attribute the money back to the contributor and any government grants will have to be paid back to the government.
If the child has a disability, you can transfer the fund to a Registered Disability Saving Plan (RDSP). This option is available only for children with a certified disability Form T2201 registered with the CRA.
Transferred and pooled credits
Many of these credits can be transferred to another family member, which can be the child’s parent, your spouse or common-law partner (if you are the child’s parent), or the individual who claimed an amount for the eligible child.
Child care expenses usually must be claimed by the person with the lower net income. The only variable is if one of the situations listed in Part C or Part D of Form T778 applies.
The Tuition Tax Credit can be claimed or carried forward by the student or may be transferred to the student’s parent, grandparent, or spouse, or the student’s spouse’s parent or grandparent.
Eligible medical expenses may be declared on family totals. To qualify, expenses must exceed the current level set by the CRA or 3% of net income, whichever amount is lower.
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