Parenting & Family

Claiming Child Care Expenses While on Maternity Leave

  • Last Updated:
  • Feb 7th, 2017 2:57 pm
[OP]
Deal Fanatic
User avatar
Apr 1, 2001
5565 posts
619 upvotes

Claiming Child Care Expenses While on Maternity Leave

Scenario:

- Child care provided in 2016 by a relative.
- Wife is on maternity leave for Jan-Oct 2016. Wife goes back to work for Nov-Dec 2016.
- Husband works full-time and was employed for all of 2016.

Question:
- Can child care expenses (maximum of $8000/year) be claimed only for Nov & Dec 2016 (in other words, the months where wife was working)?
- Or can child care expenses be claimed for the entire year of 2016, since the husband was working throughout all of 2016? (even though the wife was on maternity leave for most of 2016)

--------------------------------------------------------------
CRA states:

Expenses to enable the undertaking of specific activities

1.9 The definition of child care expense in subsection 63(3) requires that the expense be incurred to enable the taxpayer or a supporting person who resided with the eligible child at the time the expense was incurred, to:

perform the duties of an office or employment;
carry on a business either alone or as a partner actively engaged in the business;
carry on research or any similar work for which the taxpayer or supporting person received a grant; or
attend a secondary school or designated educational institution (see Income Tax Folio S1-F2-C1 for the definition of designated educational institution) where the taxpayer is enrolled in a full-time or part-time educational program.
1.10 A supporting person of an eligible child of a taxpayer for a tax year is defined in subsection 63(3) to mean an individual who resided with the taxpayer at any time during the year and at any time within 60 days after the end of the year and who is:

the child's parent (paragraph 252(2)(a) provides an extended meaning of parent for the purposes of the Act);
the taxpayer's spouse or common-law partner; or
any other individual who was able to claim a tax credit under section 118 for the child for the year.

http://www.cra-arc.gc.ca/tx/tchncl/ncmt ... tml#N102CF
10 replies
Member
Jun 10, 2008
468 posts
334 upvotes
Halton Hills
Did you actually pay for child care? Do you have receipts? Claim whatever you paid.
Deal Expert
User avatar
Jun 9, 2003
24800 posts
1913 upvotes
Markham, ON
claim for nov and dec....but relative needs to report income on taxes...
Deal Expert
Aug 22, 2011
35631 posts
21691 upvotes
Center of Universe
Claim the entire year.
[OP]
Deal Fanatic
User avatar
Apr 1, 2001
5565 posts
619 upvotes
thisischris wrote: Did you actually pay for child care? Do you have receipts? Claim whatever you paid.
Child care was indeed paid in order to give the wife some time off from child minding duties while husband was at work. Based on my interpretation, can claim for the time wife was on maternity leave since the husband is defined as a "supporting person" and employed all year round for 2016.

Only want to claim what's permitted, as at the end of the day, we were okay with paying despite not being able to claim a tax deduction. However, we wish to maximize our allowable claim.
Member
Jun 26, 2007
463 posts
96 upvotes
GTA
You should be able to claim for the entire year. Just make sure the child care provider declares the same amount in their income. Also, make sure you have receipts. The first year you claim it, there is a high chance of CRA auditing you.
Banned
User avatar
Jun 8, 2008
3977 posts
1415 upvotes
Toronto
I suspect it just means that since your wife was not at work, the child care deduction would come off of her income (assuming she's the lower paid spouse) for those months. I'd claim the year as a family, assume you wouldn't be getting the full deduction and let the CRA sort things out!
Deal Expert
User avatar
Jun 9, 2003
24800 posts
1913 upvotes
Markham, ON
I would not recommend claiming the whole year unless you hate this one relative.

My recommendation is to claim for the Nov and Dec "officially with receipt"....since your wife has very little income...it's not your family will benefit much from the child care. But this relative will get a potential tax bill and can impact other govt reimbursements...

(this assumes the wife is not under section 63(2))
Last edited by thelefteyeguy on Feb 7th, 2017 2:05 pm, edited 1 time in total.
Sr. Member
May 12, 2014
908 posts
557 upvotes
Markham, ON
thelefteyeguy wrote: My recommendation is to claim for the Nov and Dec "officially with receipt"....since your wife has very little income...it's not your family will benefit much from the child care. But this relative will get a potential tax bill and can impact other govt reimbursements...
Which gov't reimbursements are you referring to?
Just wondering if this is factual or a guess.
Deal Expert
User avatar
Jun 9, 2003
24800 posts
1913 upvotes
Markham, ON
Bobberts wrote: Which gov't reimbursements are you referring to?
Just wondering if this is factual or a guess.
there are many for low income ...however, since the relative has time to care for the child...i am assuming there will be not other employment income and only potential investment income. The 8k will likely not trigger anything...but combine that with pension payments, and or investment income...it could trigger some thresholds like guarantee income supplement.

also Trillium Benefit eligibility in Ontario, also not sure about the Trillium drug plan.

At the end of the day...your relative may have to fork out taxes by claiming $8k in child care (if there is other income). But it's unlikely that the husband or wife will benefit much from claiming the full tax credit.

Should claim for 2017 in full.
Deal Addict
Aug 19, 2013
2397 posts
1080 upvotes
You can try claiming it but if it gets reviewed it's very possible to be denied. It's all in how you must read the legislation. The day care costs must be incurred in order to "enable" your wife or you (the supporting person) to work. The day care fees you are paying to a relative aren't really enabling you to work. If you didn't have the child care you would still be able to work as your wife is home.

So it's not that either you or your wife must be working etc. It's that it's necessary for either you or your wife to work. And your wife needing a break is not a reason. The fact that you are paying a relative to watch a child at a time when your wife is not working is more suspect and could cause this to be looked at in more detail by CRA.

Also if they feel that you did pay your relative for babysitting services BUT those services don't qualify for a child care deduction, you won't get a deduction AND your relative will still have to pay tax on it.

Top