In Canada, the tax rules for claiming childcare expenses deduction are as follows:

Eligibility: You or another person may claim childcare expenses if the child is under 16 years old, or 18 years old if they have a physical or mental impairment. The expenses must be incurred so that you or the other person can earn income, carry on a business, conduct research, or attend school.

In terms of Who can claim the deduction is based on your situation, If you are the person with the lower net income (including zero income), you must claim the child care expenses. However, with the zero income situation, the deduction is a waste as no income can be used to absorb.

If the person you lived with has the higher net income, they can only claim the child care expenses if you were:

  • You are enrolled in an educational program that is offered by a secondary school, college, university, or other designated educational institution.

  • You were not capable of caring for children because of an impairment in physical or mental function.

  • You were not capable of caring for children because of an impairment in physical or mental function, and this situation is likely to continue for an indefinite period.

  • You were confined to a prison or similar institution for a period of at least two weeks.

What if your net incomes are the same?

If both of you have equal net incomes, you have to agree on which one of you will claim the child care expenses.

In terms of the child, the child must either be:

  • under 16 years of age at some time in the year; or

  • dependent on the taxpayer or on the taxpayer’s spouse or common-law partner and have a mental or physical infirmity.

Allowable Expenses: You can claim payments made to caregivers, day nursery schools, day camps, boarding schools, and other similar institutions. However, you cannot claim expenses for medical care, clothing, transportation, tuition fees, or recreational activities.

Claim Limits: The claimable amount is the lesser of:

  • Two-thirds of the taxpayer’s earned income

  • The actual amount spent on childcare

The annual limit per child, which is $8,000 for each child under 7 years of age, $5,000 for each child aged 7 to 16, and $11,000 for children with disabilities

Supporting Documentation: Keep receipts from the individual or organization providing the childcare services. The receipt should indicate the services provided and include the provider’s social insurance number.

For more detailed information, you can visit the Canada Revenue Agency’s website.

Tax tips: plan to earn some income to absorb the expected childcare expenses deduction during the year.

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