Here at The Montana Group, we do the bookkeeping for 2 large Child Care facilities located in York Region. Whenever I get an opportunity to discuss challenges of the industry with the Executive Directors, I’m surprised and impressed by the regulations in place to help protect the children. During tax season I regularly inform clients of the rules pertaining to claiming child care expenses and the receipts that are required. The following is a summary of my discussions regarding the 3 Rs of Child Care:
a) If you are the only person supporting the child, you can claim child care expenses you incurred while the eligible child was living with you
b) If you are in a relationship (marriage or common-law), the person with the lower net income is to claim the child care expenses
c) Employment Insurance is not considered earned income
d) The person with the higher net income can only claim the child care expenses if:
- The other person attended school and was enrolled in a part-time educational program
- The other person was confined to a prison or similar institution for a period of at least two weeks
For more exceptions and detailed information, please click here.
2) Receipts that Qualify
a) For caregivers providing child care services – your receipt will need to have the full name of the caregiver, address and social insurance number plus dates of care-giving services and name of child
b) Day nursery schools and daycare centres
c) Educational institutions, for the part of the fees that relate to child care services
d) Day camps and day sports schools where the primary goal of the camp is to care for children
e) Boarding schools, overnight sports schools, or camps where lodging is involved
Accredited child care is governed in Ontario by the Ministry of Education. This link can help you determine which facility might be the best fit for your child. It not only tells you when the facility was first licensed but also indicates the total capacity, age groups of children it accepts, when it was last inspected and level of compliance, plus much more.
Child care receipts are some of the most commonly requested documents the Canada Revenue Agency (CRA) wants to see after personal tax returns are processed. You’ll need to respond within 30 days from the date of the letter requesting the receipts. In most cases they can be faxed to the auditor. And, they have a significant impact on determining your taxable income. Like all documentation pertaining to your personal tax returns, make sure everything is kept in a secure, dry location for 7 years.
As always, I welcome your feedback. You can connect with me via telephone or email, leave a comment here on the site or click the contact tab at the bottom of the screen if you are reading this post on the website.
Until next time,