Canada Customs and Revenue Agency

A - Class Nannies and Caregivers Inc. has dedicated this page to provide additional information on related tax benefits that you and your family can avail by employing a nanny or a caregiver. Please be advised that the information provided on this site is solely for informational purposes and cannot be construed as a legal advice. Please contact an accountant or Canada Customs and Revenue Agency, formerly Revenue Canada, at 1-800-959-8281 for further details.

Child Care Expenses Deductions

Who can claim child-care expenses?

Usually, you can claim child-care expenses if you or your spouse or common-law partner pays to have someone look after your children or your spouse or common-law partner's children, so that you or your spouse or common-law partner can:

• earn income from employment or self-employment;

• carry on research or similar work for which you received a grant;

• go to school full-time (you spend at least 10 hours per week for at least three consecutive weeks on courses or work in an educational program at a secondary school, college, university, or other designated educational institution); or

• go to school part-time (you spend at least 12 hours in a calendar month for at least three consecutive weeks on courses in an educational program at a secondary school, college, university, or other designated educational institution).

The expenses have to be for your child or your spouse or common-law partner's child, or for a child who was dependent on you or your spouse or common-law partner and whose net income in 2005 was $8,648 or less. The child has to be under 16 years old at some time in 2005. However, if the child is mentally or physically disabled and is dependent on you or your spouse or common-law partner, there is no age limit.

Usually, the spouse or common-law partner with the lower net income (even if it is zero) has to claim the child- care expenses. However, in some cases, the spouse or common-law partner with the higher net income can claim the expenses.

How to claim child-care expenses?

Use Form T778, Child Care Expenses Deduction for 2005, to calculate the amount you can claim. You should attach one copy of the completed Form T778 to your income tax and benefit return and claim the deduction on line 214. You should not send receipts with your return. However, you should keep them in case the Canada Revenue Agency (CRA) asks to see them. To get forms or publications, visit our Web site at www.cra.gc.ca/forms or call 1-800-959-2221.

For each eligible child under seven years of age, there is a supplement to the basic Canada Child Tax Benefit. This supplement is reduced by 25% of the child-care expenses you or your spouse or common-law partner claimed. If you or your spouse or common-law partner does not need the full child care expenses to reduce federal tax to zero, claim only what you need, since this may increase your supplement. However, keep in mind that you cannot carry forward unclaimed expenses to another year.

Form T778, which is available on our Web site at www.cra.gc.ca/forms or by calling 1-800-959-2221, contains more information on child care expenses. If you claimed child care expenses on your 2004 return, you will find a copy of Form T778 included with the 2005 tax package you receive in the mail. For more details, visit our Web site at www.cra.gc.ca or call 1-800-959-8281.

Additional information: Child Care Expenses Deductions for 2005

Source: Canada Customs and Revenue Agency

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Disability amount

The disability amount is a non-refundable tax credit that reduces the amount of income tax you have to pay.

You can claim a supplement if you were under 18 at the end of the year and you qualify for the disability amount. However, child care expenses and attendant care expenses anyone claimed for you for 2005 may reduce the claim.

To find out if you can claim the disability amount, see Form T2201, Disability Tax Credit Certificate, which is included in this guide. If you have previously qualified but your period of approval has ended or your condition has improved, see Form T2201.

Tax Tip
Your return may be processed faster if you are preapproved for the disability amount. You can send a completed Form T2201 at any time during the year to one of the tax offices listed. After we review your T2201, we will tell you in writing whether or not you can claim the disability amount on your return. If you are filing your return and have not received a letter in response to your application, claim the disability amount as though you qualify.

If you were 18 or older at the end of 2005, claim the federal disability amount of $6,596 on line 316 of Schedule 1. If you live in Saskatchewan, your provincial disability credit is also $6,596. If you live anywhere else in Canada, see line 5844 in the provincial or territorial pages of your forms book to find out how much you can claim.

If you were under 18 at the end of 2005, calculate the federal disability supplement by completing the chart for line 316 on the Federal Worksheet in your forms book. If you live in Saskatchewan, Northwest Territories, or Nunavut, your provincial or territorial supplement is the same as your federal supplement. If you live in any other province, complete the chart for line 5844 on the Provincial Worksheet in your forms book.

Additional information: Information Concerning People with Disabilities

Source: Canada Customs and Revenue Agency

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Caregiver Amount

Can you claim a caregiver amount?

If, at any time of the year, you (either alone or with another person) maintained a dwelling where you and a dependant lived together, you may be able to claim a maximum amount of $3,848. The dependant must have been one of the following individuals:

• your or your spouse or common-law partner's child or grandchild; or

• your or your spouse or common-law partner's brother, sister, niece, nephew, aunt, uncle, parent, or grandparent who was resident in Canada.

You cannot claim this amount for a person who was only visiting you.

As well, your dependant must have met all of the following conditions. The person must have:

• been 18 or over at the time he or she lived with you;

• had a net income of less than $16,989 (line 236 of his or her return, or what line 236 would be if he or she filed a return); and

• been dependent on you due to physical or mental infirmity or, if he or she is your or your spouse or common-law partner's parent or grandparent, born in 1940 or earlier.

Additional information: Caregiver Amount

Source: Canada Customs and Revenue Agency

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