Child care expenses (line 21400)

Child care expenses are amounts you or another person paid to have someone else look after an eligible child so you could earn income, go to school, or carry on research under a grant. If you qualify, they come off your income on line 21400.

The deduction is calculated on Form T778, Child Care Expenses Deduction, and the receipt your provider gives you is what supports it.

What you can claim

You may include payments made to any of the following individuals or institutions:

caregivers providing child care services
day nursery schools and daycare centres
educational institutions, for the part of the fees that relate to child care services
day camps and day sports schools where the primary goal of the camp is to care for children (an institution offering a sports study program is not a sports school)
boarding schools, overnight sports schools, or camps where lodging is involved

That list is not a complete list of the expenses you can claim.

If you paid an individual to provide child care in your home and Canada Pension Plan contributions and employment insurance premiums have been paid for that individual, the share that you have paid is also considered a child care expense. Paying someone to work in your home may also give you some responsibilities as an employer; if you are not sure of your situation, contact the CRA.

If you were a resident of Quebec, you can also claim the basic contribution you paid directly to the subsidized childcare service provider.

What does not qualify

You cannot claim payments for any of the following:

medical or hospital care cost
clothing cost
transportation cost
fees relating to education costs at an educational institution, such as tuition fees of a regular program or a sports study program
fees for leisure or recreational activities, such as tennis lessons or the annual registration for Scouts

None of these move to another line — they are simply not child care expenses.

You also cannot claim expenses that you or another person were reimbursed for, or are entitled to be reimbursed for, or received financial assistance for. If your employer paid the child care expenses on your behalf, you can claim the part of the expenses included in your income for the year.

Who the provider cannot be

If the child care services are being provided by an individual, that individual cannot be:

the eligible child's parent
your spouse or common-law partner, if you are the father or the mother of the eligible child
a person for whom you or another person claimed an amount on line 30400, 30425, 30450, or 30500
a person under 18 years of age who is related to you

A person is related to you if they are connected to you by a blood relationship, marriage or common-law partnership, or adoption. A brother, sister, brother-in-law, sister-in-law, and your or your spouse's or common-law partner's child are related to you. A niece, nephew, aunt, and uncle are not.

This is the rule that catches families out most often. Paying your teenaged daughter to watch her little brother over the summer produces a real cost and no deduction, because she is related to you and under 18.

What your receipt must show

This is the part Dossier cares about most, because the CRA is specific here.

The individual or organization who provided the child care services must give you a receipt indicating the services provided. The receipt has to be:

issued by the individual or organization who provided the child care services
an indication of the services provided
made out to the person who paid — it can be in your name or your spouse's or common-law partner's name
for the amount paid

If an individual provided the services, make sure the receipt shows the individual's social insurance number (SIN). A receipt from a caregiver without a SIN on it is the single most common gap, and it is easier to ask for while the arrangement is still running than a year later.

Timing, and who claims

You can only claim child care expenses that were incurred for services provided in the tax year. You cannot carry forward unclaimed expenses to another year.

If you lived with another person, generally the person with the lower net income (including zero income) must claim the child care expenses. The person with the higher net income can claim only in the situations set out in Part C of Form T778.

One of those situations carries a document requirement of its own. If the lower-income person was not capable of caring for children because of a mental or physical infirmity, a statement from the attending physician certifying this is needed. It must be attached to the higher-income spouse's or common-law partner's claim.

What to keep

Keep every child care receipt for the year, and check each one for the provider's name, what the service was, whose name it is made out to, the amount, and — where an individual provided the care — the social insurance number.

If you are filing online, keep all your documents in case the CRA asks to see them later. If you are filing by mail, attach your completed Form T778 to your paper return, but do not send your other documents; keep them in case the CRA asks to see them later.

Dossier tags a child care receipt as it comes in and flags one that appears to be missing the provider's social insurance number, so the gap shows up while it can still be fixed.

Official CRA sources

Source: Canada Revenue Agency (canada.ca). Not tax advice.