Child Care Expenses Deduction

Notice to the reader

This measure has received Royal Assent.

 

What is the child care expenses deduction?

You or your spouse or common-law partner may be able to claim a deduction for expenses that were incurred for someone to look after your child so that one of you could earn income, go to school, or conduct research. The expenses are deductible only if, at some time in the year, the child was under 16 years of age or had an impairment in physical or mental functions. Generally, only the spouse or common-law partner with the lower net income (even if it is zero) can claim these expenses.

How are the current deduction dollar limits associated with the child care expenses deduction affected by the proposed changes?

The following dollar limits currently apply when determining the amount of expenses that can be deducted:

  • For each child who is eligible for the Disability Tax Credit, the deduction limit is $10,000;
  • For each child who is under seven years of age at the end of the year, the deduction limit is $7,000; and
  • For each child who is under 16 years of age or had an impairment in physical or mental functions, the deduction limit is $4,000.

The October 30, 2014 announcement includes a proposal to increase each of the deduction dollar limits by $1,000 for 2015 and subsequent tax years.

If I expect to benefit from the increased deduction limits in 2015, can I reduce the tax being withheld from my employment income or other income during the year?

You can ask to have less tax deducted if, on your income tax return, you are eligible for the child care expenses deduction. To make this request, complete a Form T1213, Request to Reduce Tax Deductions at Source for Year(s) ____, in order to get a letter of authority from your tax services office. Give the letter of authority to your employer or payer.

Where can I get more information about the proposed increase to the deduction limits?

The CRA is committed to providing taxpayers with up-to-date information. The CRA encourages taxpayers to check its Web pages often. All new forms, policies, and guidelines will be posted as they become available.
In the meantime, please consult the Department of Finance Canada's announcement for further details.

Consult our website for further information on the existing rules concerning the child care expenses deduction.
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