Get a Tax Break on Your Children’s Summer Break

  • Child Care Expenses and Tax Credits

While the kids are having fun and making new friends, you can look forward to some tax relief.   Summer camps can be considered Child Care Expenses so you might qualify to claim what you spent on eligible child care in 2016.

Child Care Expenses are costs you, your spouse or common-law partner incur to have someone look after your child so that you are able to:

  1. earn income from your employment or self-employment;
  2. obtain certain occupational training;
  3. carry on grant-funded research; or
  4. attend school under conditions outlined under the Education Program.

Each child you claim expenses for must meet the CRA’s eligibility requirements. They must:

  1. be younger than 16 years of age;
  2. be your, your spouse’s or your common-law partner’s child;
  3. be dependent on you, your spouse or your common-law partner’s; and
  4. not have income that exceeds $11,327.

In the case of disabled dependent children, they can be of any age as long as they are dependent on you, your spouse or your common-law partner.

Eligible expenses include:  babysitters, nannies, daycare, nursery schools, fees to schools (the portion that relates only to child care services), day camps, day sports schools and attendance at boarding schools, overnight sports schools, or camps where lodging is provided.

Child Care Expenses and Tax Credits

Get Tax Break on your Children’s Summer Break

Child care provided by the child’s father or mother, your spouse or common-law partner or a relative under 18 years old cannot be claimed.  Should your employer reimburse any portion of your child care expenses, that portion is ineligible. Fees for Girl/Boy scouts, swim lessons or other recreational programs do not qualify; however, they may be eligible for the Fitness Tax Credit or the Arts Tax Credit.  In the case of boarding schools, or overnight sports schools, you can only claim the lodging portion, but not the cost of the tuition itself.

In most cases the Child Care Expense Deduction must be claimed by the parent or guardian with the lower net income.  However, like most things, there are exceptions to the rules.  The higher income individual can claim the expenses if the lower income person:

  1. was a part time/full time student as outlined under the Education Program;
  2. was unable to care for the child due to medical reasons;
  3. was in a correctional institution for at least 2 weeks; or
  4. was living apart from the child for at least 90 days due to a breakdown in the marital relationship.

The amount that can be claimed is capped based on the age of the child. For each child under 7 years of age, you can claim up to $8,000 and for each child between 7 and 16 years old, up to $5,000.  For dependent disabled children there is no cap on age.  If they also qualify for the disability tax credit, the maximum that can be claimed for them is $11,000.  In the case of disabled children over 16 who do not qualify for the disability tax credit, but remain dependent on you for care, you can claim up to $5,000.

However, you can not claim more than two-thirds of your earned income for the year.

Make sure to save all your receipts for the Child Care Expenses you incurred during the year.  Be sure to ask for all the necessary receipts from your childcare providers, day camps etc., and do not forget to file Form T778 with your tax return to deduct your Child Care Expenses.

To learn more about the Child Care Expense Deductions, or other programs that can help you and your family, contact GB Pilley & Associates Ltd., Chartered Professional Accountants at 604 926 3522.

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