Childcare in Toronto can be outrageously expensive — but not for tax-savvy parents
There’s a reason why complaining about the cost of childcare is practically a full-time job for any prospective parent: it can be positively outrageous—especially in Toronto, the most expensive Canadian city for licensed childcare, where it can set single-child parents back tens of thousands per year.
But for tax-savvy couples who know what they’re doing, there are a few ways to actually get a decent portion of that cash back (you know, for your kid’s college fund). Here are a handful of tips for getting the most out of your preferred daycare strategy.
1. Claim your childcare expenses
If you require childcare so you can work or attend school, you can probably claim some of those expenses on your tax return. The CRA lets you claim up to $7,000 a year for children six and under, and $4,000 a year for kids between the ages of seven and 15. (The only catch is that the parent with the lower income has to claim the expenses.) For non-accountant couples, tax-prep software like TurboTax can help you identify the correct deductions and ensure you claim the highest amount possible on your tax return – for as little as $20 per return. Its suite of products helps you prep, print and file your return to the CRA, offers unlimited phone support, automatically searches for over 400 deductions and counsels you on RRSPs, family benefits, tuition and more.
2. Consider a live-in caregiver
While paying for a full-time nanny is out of the price range of most couples, if you have the extra space (a basement bedroom, for instance), a live-in caregiver is a seriously effective way to cut down costs as you can deduct $85 per week from their pay for room and board. Like daycare fees, the costs are tax deductible for the same amounts as above—and you can also deduct amounts paid for your caregiver’s airfare, interim medical premiums and agency fees.
3. Get to know all the family tax breaks
Parents who pay for a wide range of childcare—including daycare, day camps, nursery schools or private schools—are probably eligible for a combination of family tax breaks. These can be deductions (that’s when the amount is taken off your gross income, like above), tax credits (amounts that are subtracted from your tax owing) or tax benefits (where an amount is paid directly to you). Parents may not know that they can also get tax credits for their kids’ physical activity classes, public transportation passes and textbook costs.
4. Stay up-to-date on new regulations
In July of last year, the Canada Child Benefit (CCB) replaced both the Canada Child Tax Benefit (CCTB) and the Universal Child Care Benefit (UCCB). The new regulation is income-based, meaning that lower-income parents receive a larger amount than higher-income parents. Families who make more than $190,000 per year don’t get any benefits. But best of all, the new benefit is tax-free, meaning you don’t have to include the amounts on your tax return as income.
5. Be aware of the child disability benefit
The Child Disability Benefit still exists, and any child who qualifies—kids with ADD, autism, diabetes or anxiety disorders can all be eligible—will receive an additional benefit of up to $2,730. To apply, simply get a medical professional to fill out this form.