Childcare Expense Deduction in Canada

The childcare expense deduction allows Canadian parents to deduct costs for childcare services that enabled them to earn income, attend school, or conduct research. It is one of the most valuable deductions available to families with young children.

Who Claims the Deduction

In most cases, the lower-income spouse must claim the childcare deduction. This is a firm CRA rule, not a suggestion. However, the higher-income spouse may claim in specific situations, such as when the lower-income spouse is:

• Enrolled in a qualifying educational program
• Incapable of caring for children due to a mental or physical infirmity
• Confined to a prison or similar institution for at least two weeks
• Living separate and apart due to a breakdown of the relationship

Maximum Deduction Amounts (2025)

The deduction is limited per child based on age:

• $8,000 per child under 7 years old at the end of the year
• $5,000 per child aged 7 to 16
• $11,000 per child who qualifies for the disability tax credit

The total deduction is also capped at two-thirds of the claiming parent’s earned income.

Eligible Childcare Expenses

Qualifying expenses include:

• Daycare centres and nursery schools
• Before- and after-school care programs
• Day camps and day sports schools
• Babysitters and nannies (including related CPP and EI premiums you pay)
• Boarding schools, overnight camps, and overnight sports schools (subject to weekly limits)

What Does Not Qualify

The following are not eligible:

• Medical or hospital care expenses
• Clothing or transportation costs
• Board and lodging (except at boarding schools or overnight camps)
• Payments to the child’s parent or to a person under 18 who is related to you
• Tutoring or education fees that are not part of a childcare arrangement

Overnight Camps and Boarding Schools

For overnight camps and boarding schools, there is a weekly limit rather than an annual one:

• $200/week per child under 7
• $125/week per child aged 7 to 16
• $275/week per child eligible for the disability tax credit

Required Documentation

You need receipts showing the total amount paid, the name of the care provider, and their Social Insurance Number (SIN) or business number. If you pay a nanny or babysitter, they must report the income, and you should issue a T4 if applicable.

Filing the Claim

Childcare expenses are claimed on Form T778, Child Care Expenses Deduction. The result flows to line 21400 of your tax return. Keep all receipts in case the CRA asks for verification.

Tips for Families

1. Track all payments during the year, including informal babysitting arrangements
2. Remember the two-thirds income cap — if the lower-income spouse earned $20,000, the maximum claim is $13,333
3. Coordinate with provincial credits — some provinces offer additional childcare benefits
4. Keep SINs on file for all caregivers, as CRA requires this information

Sources

• CRA — Child care expenses
• CRA — Form T778