Child Care & Caregivers Deductions
The source for all items presented below are CRA’s website at www.canada.ca.
Definition: amounts paid have someone look after an eligible child, so that you can do one of the following: 1) work/job , 2) carry on business, 3) attend school/education & 4) research for which received grant.
Child must have lived with you
Either your child, or, a child dependent on you and has a net income of less than $13,229
Who can claim?
The person with lower income (who is employed or doing one of the four items we discussed above)
Can you pay the grandparents to take care of the kids?
Yes. It has to be properly recorded and the grandparents should report the income on their tax returns.
You should consider whether you have employer-employee relationship with grandparents, in which case, you need to issue T4. Read here for employing caregiver, babysitter, or domestic worker. You can also request to get a ruling on your situation. If you are an employer, you need to deduct from the payments, and make remittances to the CRA. Criteria for considering someone an employee: a) hire a person; b) establish regular working hours (e.g. 9 AM to 5 PM); and c) assign and supervise tasks performed.
What payments you can claim?
Caregivers, daycare centres, educational institutions, day camp & sport schools, and boarding schools. The caregiver can NOT be one of the following: child’s father or mother, a person under 18 that is related to you (niece, nephew, aunt and uncles are NOT related, but brother-in-law, sister-in-law, brother and sister are related).
CRA also defines “another person” as a category that cannot claim child support.
What costs cannot be claimed? Medical / hospital, clothing, transportation, fees that relate to education (tuition fees of a regular program / sports study program); fees for leisure or recreational activities (tennis).
Links to sources:
Child Care, Eligible Child, Payments you can claim, and Payment can NOT claim