Summer Childcare – What’s tax deductible?

Are daycares and other professional providers eligible expenses?

In general, the fees paid to a childcare provider are considered eligible expenses when you file your taxes—whether the provider is a licensed daycare facility, nursery school, or in-home daycare.

In the case of an organization, such as a daycare center, your receipt should contain information about the services provided as well as the name and address of the organization.

For individual providers—like babysitters in your home or theirs—the receipt must also contain the Social Insurance Number (SIN) of the individual, along with the address and services rendered. The receipts can be in either your name or your spouse/common-law partner’s name, regardless of who claims the expense when you file your taxes.

The deal with summer camps

Summer camps are a terrific opportunity for your children to enjoy the outdoors, learn new things, or sharpen their skills in a sport or hobby. Not only that, you could get a tax break. As long as the primary goal of the camp is childcare, the expense is an allowable deduction.

Wondering if your child’s summer camp is eligible? Age usually determines whether a day sports school or camp qualifies. For example, a 5-year-old child who attends a hockey day camp would need constant supervision. However, if your 15-year-old attends a hockey day camp that is goal-oriented and uses sophisticated training methods, chances are the expense would not qualify. (The term “day sports school” means those day camps that provide a sufficient degree of childcare services.)

If a younger child attends an overnight camp, you could claim some—but probably not all—of the expenses. And this is due to expense caps, which can range between $125 and $275 per week for childcare. So the camp you paid $500 a week for might only translate to a small portion of allowable expenses.

Is friends-and-family childcare deductible?

Many parents opt to have a family member assume childcare duties for the summer. Although this option may work better for your situation, money paid to certain relatives won’t deliver a tax deduction. The CRA excludes a number of relatives as eligible childcare providers for tax purposes, depending on the age of the provider and if you claimed certain credits for the provider.

Using siblings and other relatives

Many parents like to reserve childcare duties for grandparents or siblings. However, just keep in mind that money paid to certain relatives is not tax deductible.

For example, expenses in the following situations are not allowable:

• If your elderly mom lives with you and you claim the caregiver or eligible dependent credit for her, she is not considered to be an allowable childcare provider for tax purposes.
• If you employ your 17-year-old to look after your 7-year-old, that expense is also excluded.

Understanding your deduction limits

Usually, the amount of childcare expenses you can claim is capped by the age of the child. Here are the limits:

• A child less than 6 years of age at the end of the tax year (that cannot claim the disability amount)—$8,000 per year
• A child between the ages of 7 and 16 at the end of the tax year (that cannot claim the disability amount)—$5,000 per year
• A child for whom the disability amount may be claimed—$11,000 per year

In most cases, the lower income earner must claim childcare expenses. Also keep in mind, eligible childcare expenses are capped at two-thirds of net income or $8,000, which is the maximum claimable credit.

For example, if you have a 4-year-old child and you earned $21,000 net income in 2023, the maximum you can claim for childcare expenses is $8,000.

$21,000 x .67 = $14,070 (net income)

$8,000 (actual amount paid)

The deduction lowers your net income on your tax return by the amount claimed.

How can you figure out your permitted amount of child care expenses? Use this form to calculate.

Unexpected extras that could be deductible expenses

There are a few expenses that taxpayers may overlook that do qualify as childcare expenses. Consider these possible expenses:

• If you placed an ad to find a provider, the cost of the advertisement is an eligible childcare expense.
• Fees paid to placement agencies or other mandatory registration fees qualify as childcare expenses.
• Generally, childcare expenses are only valid if you’re working or attending school. But there are exceptions. For example, if you have a temporary leave of absence from work (such as maternity leave), the fees you pay for your other kids’ childcare during this time may be eligible.

The takeaway? Be sure to know in advance what the tax implications are of sending your child(ren) to camp or other summer programs, so you can take full advantage of the credits available at tax time.