The credit is calculated by adding together all eligible tuition fees, then multiplying the amount by the lowest federal tax rate percentage. Schools outside Canada also qualify if the time abroad is a full-time study program lasting at least three weeks. They apply to any student over 16 years old who is enrolled in post-secondary level courses at an accredited institution in Canada. Parents with children enrolled in post-secondary education can take advantage of transferred Tuition Tax Credits. What other tax breaks are left for parents? “There is probably something that the stay-at-home spouse is able to do that could warrant and justify a reasonable salary, that would allow them to have access to the child care deduction,” he said. Lorn Kutner, a tax consultant with Northwood Family Office in Toronto, said he advises his clients to be proactive about taking advantage of the child care expense deduction by adjusting their lifestyle.įor example, a self-employed working parent could pay one who primarily stays at home a salary in order to meet the minimum earned income requirement. She said the list of eligible expenses will be expanded after the 2017 tax year to include a variety of costs relating to service animals for a patient with a severe mental impairment. It has to make sense for the situation,” she said.ĭe Lisser advises that grandparents examine the potential tax impact that babysitting income could have on their own income-tested benefits, such as Old Age Security.Ī parent of a child with a disability that pays related fees to a school can claim another little-known deduction, De Lisser added.įees for special equipment, facilities and personnel qualify. “You have to make sure that the amount is reasonable. Maureen De Lisser, an associate partner with EY Tax Services, said many parents may not know that the Canada Revenue Agency has confirmed that paying grandparents for child care also qualifies under the Child Care Expenses Deduction. “There are camps including summer sports camps for young kids that have a sufficient degree of child care that the cost qualifies for the child-care deduction.” “One thing that is often missed is summer camp,” Golombek said. It’s when you start looking at what qualifies as a child-care expense that parents can miss valuable opportunities to make claims. The total Child Care Expenses Deduction is generally limited to two-thirds of the lower-income spouse or partner’s earned income. The exception is children eligible for the Disability Tax Credit, their deduction limit jumps to $11,000 regardless of the child’s age. Still, Golombek insists the Child Care Expenses Deduction is the best remaining option for working parents, now that the income-splitting Family Tax Cut is gone, and arts, fitness and textbook tax breaks are off the table.Įach child’s age-based deduction limit is pretty straight-forward, $8,000 for children six and under, and $5,000 for children between seven and 16 years old. “The government has eliminated most of the tax deductions and credits that are available on the return, and have replaced a lot of the benefits with this non-taxable Canada Child Benefit, which you receive tax free on a monthly basis.” Really, the only thing that’s left for most people is the Child Care Expenses Deduction,” he told CTVNews.ca in an interview. “Most of the tax benefits that are accruing to parents in 2017-2018 are coming from outside the tax-return system. In a two-parent household, only the lower-earning parent qualifies, and only if they have an earned income of $11,635 or more in the 2017 tax year. To qualify for the Child Care Expenses Deduction, parents must have children under 16 years old. Just seven per cent of respondents to a survey by TurboTax conducted before Canadians filled out their 2016 tax returns last spring said they planned to claim the deduction for $8,000 in child-care expenses for children six and under, and $5,000 for children between seven and 16 years old.įor Jamie Golombek, CIBC’s managing director of tax and estate planning, the figure is evidence of the small pool of Canadians eligible to claim child-care costs on their federal income tax return. But experts say parents may not be taking full advantage of the Child Care Expenses Deduction, which could be the most valuable option. With the income-splitting Family Tax Cut, arts, fitness and textbook tax breaks now off the table, Canadian working parents are nearly out of opportunities to deduct child-care costs on their tax returns.
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