Child Care Expense Deduction Calculator

Eligible expenses must allow a parent to work, run a business, attend school or conduct qualifying research. Keep receipts with the provider’s identifying information.

Three ceilings, and the one that actually binds

Section 63 of the Income Tax Act runs your claim through three tests and lets you keep the smallest: what you actually paid, the sum of the per-child annual amounts, and two-thirds of earned income. The result tile names which of the three stopped you, and that label is the useful part — the fix is different in each case. If expenses bind, you are already claiming everything you spent. If the per-child total binds, extra spending buys nothing. If earned income binds, the constraint is the size of the claiming spouse’s paycheque, not the daycare invoice.

The per-child amounts, and their awkward age boundaries

CRA defines an annual child care expense amount per child, and the age tests are measured at different moments, which is where most arithmetic errors start:

• $8,000 for each child under seven at the end of the year. A child who turns seven in December drops to the lower tier for the whole year.
• $5,000 for each child over six at the end of the year and under 16 at any time during the year. A child who turns 16 in January still counts for that year.
• $5,000 for a child over 15 throughout the year who has a physical or mental infirmity and depends on you or your spouse — an amount the calculator’s three inputs do not separate, so enter that child in the 7-to-16 field.
• $11,000 for a child for whom the disability tax credit may be claimed, at any age. Note that it is the eligibility that matters, not whether the credit is claimed.

Earned income is narrower than income

The two-thirds ceiling is measured against earned income as subsection 63(3) defines it: employment income and taxable employment benefits, self-employment or active partnership income, scholarships and research grants included in income, apprenticeship grants, certain government financial assistance, and a CPP or QPP disability pension. The list is exhaustive. Investment income, rent, regular pension income and EI maternity or parental benefits are not on it, so a parent on parental leave for most of the year can have a healthy household income and almost no earned income — which is exactly when the two-thirds test bites hardest.

Which spouse has to claim

Where two people supported the child, the one with the lower net income — including a net income of zero — must make the claim. The higher-income spouse can claim only where the lower-income spouse was enrolled in a qualifying educational program, was confined for at least two weeks to a bed, a wheelchair or a hospital, had an infirmity likely to continue indefinitely, was in prison for at least two weeks, or was living separate and apart at year end for a period of at least 90 days but reconciled within the first 60 days of the following year. In those cases the higher-income spouse calculates first, each of you files a separate T778, and the remainder can go to the lower-income spouse. If your net incomes are identical, you agree between yourselves who claims.

What counts as a child care expense

Payments to caregivers, day nursery schools and daycare centres, the child-care portion of fees charged by an educational institution, day camps and day sports schools whose primary goal is care, and lodging-based camps and boarding schools up to the weekly cap all qualify. Where you employ someone in your home, your share of the CPP contributions and EI premiums paid for them is itself a child care expense. Quebec residents can also claim the basic contribution paid directly to a subsidised provider.

Excluded outright: medical and hospital care, clothing, transportation, education costs such as tuition for a regular or sports-study program, and leisure or recreational fees such as tennis lessons or a Scouts registration. Anything you were reimbursed for, or are entitled to be reimbursed for, comes out too — although if an employer paid the cost and included it in your income, the part included in income is claimable.