Do I Qualify?
- You are a Canadian resident
- You have a child under 16 at any point during the year, or a dependent child of any age with a mental or physical impairment
- You paid for eligible child care (daycare, licensed home daycare, nanny, babysitter, day camp, boarding school, or after-school program)
- The child care was necessary so you (or your spouse) could work, carry on a business, or attend school
- You have receipts showing the provider’s name, address, SIN (for individuals), and amounts paid
Overview
Under section 63 of the Income Tax Act, parents can deduct eligible child care expenses directly from taxable income. This is a deduction — not a credit — so it reduces the income you’re taxed on, dollar for dollar. At a combined marginal rate of 40%, a family spending $15,000 on daycare saves $6,000 in taxes.
The deduction is systematically underused because parents either don’t claim it at all, miss eligible expense types, or don’t realize how broad the eligible provider list is.
What Expenses Qualify
Eligible child care expenses include:
- Daycare centres and licensed home daycares
- Nannies and babysitters (including those paid in cash — as long as you have their SIN and can prove payment)
- Day camps (any camp where the child is not sleeping overnight)
- Boarding schools and overnight camps — eligible at a lower per-week limit
- After-school programs run by a daycare, school, or qualifying organization
- Caregivers for disabled children of any age
What does not qualify:
- Medical or hospital care
- Clothing, food, or transportation
- Tutoring (even if it includes supervision)
- Overnight camps where the primary purpose is a specific skill (hockey schools, language camps) — these are contested; get a receipt specifying child care
Per-Child Limits
The annual deduction limit per child is:
| Child | Annual Limit |
|---|---|
| Child under 7 at year-end | $8,000 |
| Child aged 7–15 at year-end | $5,000 |
| Child with a severe disability (any age) | $11,000 |
These are maximum claimable amounts, not reimbursements. You claim actual expenses up to the limit.
Earned income cap: Your deduction cannot exceed 2/3 of the lower-income spouse’s earned income (employment or self-employment income). If the lower-income spouse earned $18,000, the maximum claimable — regardless of limits above — is $12,000.
Who Claims It — The Lower-Income Spouse Rule
The deduction must be claimed by the lower-income spouse or common-law partner. The higher-income spouse can only claim it in limited exceptions:
- The lower-income spouse was a full-time student for at least 2 weeks
- The lower-income spouse was in prison for at least 2 weeks
- The lower-income spouse was confined to a hospital or care facility for at least 2 weeks
- The spouses were separated for at least 90 days during the year
In those exceptions, the higher-income spouse can claim, but the deduction is further limited to $150–$275/week per child depending on age.
Single parents claim the deduction on their own return with no restriction to the lower-income spouse rule.
How to Claim
- Collect receipts showing: provider’s name, address, SIN (for individuals), amount paid, and the child’s name
- Complete Form T778 (Child Care Expenses Deduction)
- Enter the result on line 21400 of your T1 return
- Keep receipts — CRA regularly requests them
You do not attach T778 to your return, but CRA may ask for it and your receipts within 4 years.
What Most People Miss
- Nannies paid in cash qualify as long as you can provide their SIN and have a record of payment. CRA does not require a formal contract.
- Day camps qualify in full — the $5,000/$8,000 limits apply. Only overnight camps use the weekly rate ($200–$275/week).
- The 2/3 income cap is a common trap. If the lower-income spouse only worked part of the year (parental leave, for example), earned income may be low enough to restrict the deduction significantly.
- Claiming more than one child means limits apply per child, not per family. Two kids under 7 means up to $16,000 total.
- Receipts from unlicensed home daycares are eligible. CRA does not require providers to be licensed — just identified.
Frequently Asked Questions
Both my spouse and I work full time. Who claims the deduction?
The lower-income spouse claims it. If your incomes are similar, the difference in tax savings is small, but you cannot split the deduction between returns — it must all go on one return.
My child’s grandparent watched them while I worked. Can I claim that?
Only if you actually paid the grandparent for the child care service. You cannot claim unpaid care. You can pay a relative (including a grandparent) for child care and deduct it, but you cannot pay your own minor child (under 18) or your spouse.
We used a daycare but only have credit card statements, not official receipts. Is that enough?
CRA prefers an official receipt from the provider with their name, address, SIN, and amounts paid. Credit card statements alone are often rejected on audit. Contact the daycare for a year-end receipt — all licensed daycares should issue one.
I was on parental leave for part of the year. Can I still claim?
Yes, for the portion of the year when you were working. You can only claim child care expenses incurred to earn income (or attend school). Expenses paid during parental leave do not qualify unless you were working or in school during that specific period.
Can I claim child care for a child born partway through the year?
Yes. The limit depends on the child’s age at year-end. A child born in February who is under 7 at December 31 qualifies at the $8,000 limit for the full year — though you can only claim expenses actually incurred, which may be only a portion of the year.