Child Care Expenses vs Child Tax Credit in Canada
Child care expenses and the child tax credit work in different ways. Child care expenses are a tax deduction claimed on line 21400 with Form T778. They lower your taxable income by up to $8,000 per child under 7 and $5,000 per child aged 7 to 16. The old federal child tax credit ended in 2015. Today, what most Canadians call the child tax credit is the Canada Child Benefit (CCB), a tax free monthly payment worth up to $8,157 per child under 6 for July 2026 to June 2027.
You can claim both. Your child care deduction lowers your family net income, which can also raise your CCB payments. This guide explains how each one works.
Child Care Expenses vs Child Tax Credit: The Key Difference
The main difference is that one reduces the tax you owe, while the other pays you money directly each month. The child care expense deduction is something you claim on your tax return. It covers money you actually spent so you could work, go to school, or run a business. It lowers your taxable income, so it saves you tax at your marginal rate. A parent in Calgary who claims $8,000 of daycare costs at a 22 percent combined tax rate saves about $1,760. The higher your tax rate, the more each dollar of child care you claim saves you.
The child tax credit, in today’s terms, is the Canada Child Benefit. You don’t claim it on your return. The CRA pays it automatically around the 20th of each month, based on your family’s adjusted net income from the previous year. It doesn’t depend on what you spent on child care, only on your income, your children’s ages, and how many children you have. Families with no child care costs at all still receive the full CCB they qualify for.
Many parents confuse the two because both relate to children and both show up around tax time. The old federal Child Tax Credit, the Children’s Fitness Tax Credit, and the Children’s Arts Tax Credit have all been eliminated. That leaves the child care deduction and the CCB as the two biggest tax supports for most families with young children. Knowing how each one works helps you claim everything your family is owed.
What Is the Child Care Expense Deduction?
The child care expense deduction lets you subtract eligible child care costs from your income, as long as the care allowed you to earn income.
1. Eligible Child Care Expenses
Eligible expenses include licensed daycare, home daycare, nursery school, before and after school programs, and day camps. Overnight camps and boarding schools count too, up to $200 a week for a child under 7 and $125 a week for a child aged 7 to 16. A nanny’s wages also count, as long as you have receipts and the caregiver’s social insurance number. Sports day camps and summer camps in Calgary often qualify, as long as their main purpose is care.
Some costs don’t qualify. Medical and hospital care, tuition for regular school, transportation, and clothing are excluded. Payments to the child’s other parent, or to a relative under 18, also don’t count. Our guide on child care expenses in Calgary walks through the most common local costs, from licensed centres to summer camps. It also explains how lower daycare fees in Alberta change the amount you can claim.
2. Claim Limits and Who Can Claim
You can claim up to $8,000 for each child under 7, and up to $5,000 for each child aged 7 to 16. For a child who qualifies for the Disability Tax Credit, the limit is $11,000. Your total claim also can’t exceed two thirds of your earned income, such as wages or net self employment income. These limits are per child, but you can pool them across all your children.
In a two parent home, the parent with the lower net income usually has to make the claim. The higher income parent can claim only in specific cases, such as when the other parent was in school full time, in hospital, or living apart for 90 days or more. Our guide on who claims child care expenses in Canada explains each of these rules in detail. Getting the right parent to claim is the most common way families avoid a CRA reassessment.
What Is the Child Tax Credit in Canada Today?
In today’s tax system, the child tax credit most people mean is the Canada Child Benefit, along with a few provincial and federal credits for children.
1. Canada Child Benefit Amounts for 2026 to 2027
For July 2026 to June 2027, the CCB pays up to $8,157 a year for each child under 6. It pays up to $6,883 a year for each child aged 6 to 17. The benefit starts to go down once your adjusted family net income passes $38,237, and it drops further above $82,847. Payments for this period are based on your 2025 tax return. The amounts are indexed to inflation every July, so they usually rise a little each year.
Families with a child who qualifies for the Disability Tax Credit can also get the Child Disability Benefit, worth up to $3,480 a year. New parents apply for the CCB through the birth registration form or Form RC66. Both parents have to file a tax return every year, even with no income, or the payments stop. Newcomers to Canada can also apply with Form RC66 once they arrive.
2. Alberta Child and Family Benefit and Other Credits
Calgary families may also get the Alberta Child and Family Benefit (ACFB), which the CRA pays four times a year in February, May, August, and November. Like the CCB, it’s based on family net income, and it has an extra working component for parents with employment income. You don’t need to apply, as long as you file your tax return. The CRA pays it together with your other benefits, so you don’t need a separate account.
A few credits on the tax return also help parents. Single parents can claim the amount for an eligible dependant on line 30400 for one child. The Canada caregiver amount helps parents of a child under 18 with an impairment. Low income working parents may also qualify for the Canada Workers Benefit, and our guide on Canada Workers Benefit eligibility shows the family income limits. Together, these credits can add hundreds of dollars to a family’s refund.
Child Care Expenses vs Child Tax Credit Compared
This table puts the child care deduction and the Canada Child Benefit side by side. Use it to see how each one works and what you need to do to get it.
| Feature | Child Care Expense Deduction | Canada Child Benefit (CCB) |
|---|---|---|
| Type | Tax deduction | Tax free monthly payment |
| Where it appears | Line 21400, Form T778 | Paid by the CRA, not claimed on your return |
| Maximum amount | $8,000 per child under 7, $5,000 per child aged 7 to 16 | $8,157 per child under 6, $6,883 per child aged 6 to 17 |
| Based on | What you spent on eligible care | Family net income and children’s ages |
| Receipts needed | Yes | No |
| Who receives it | Usually the lower income parent | Usually the primary caregiver |
The two work together. Your child care deduction lowers your net income on line 23600, and the CCB is based on that net income. A lower net income means a bigger CCB the following year. Our guide on what line 15000 on your tax return means explains how total income and net income differ. Understanding that link helps you see the full value of every child care receipt.
Calgary Tax Consulting provides Personal Income Tax services in Calgary that claim every eligible child care cost on Form T778 and decide which parent should claim it. Our Calgary Year End Tax Planning service helps families time camp payments and RRSP contributions to raise their CCB. If the CRA asks for child care receipts, our Audit Representation in Calgary handles the review for you, and Tax Review checks past returns for missed claims. Parents in Mahogany, Evanston, and Seton use these services every tax season.
Tips to Get the Most From Both Benefits
A few simple habits help Calgary families claim the full child care deduction and the highest possible Canada Child Benefit. Keep every child care receipt, and make sure each one shows the provider’s name, address, the amount paid, and the dates of care. For a nanny or home daycare, write down the caregiver’s social insurance number. The CRA often reviews child care claims, and missing receipts are the most common reason a claim gets denied. Store your receipts for at least six years, in case the CRA asks for them later.
File both parents’ tax returns on time every year, even if one parent had no income. The CRA can’t calculate your CCB without both returns, and late filing can stop your payments in July. If you’re on parental leave, read our guide on the types of Employment Insurance benefits in Canada, since EI income affects your net income and your benefits. A missed return can delay months of payments, even when you qualify.
Lower your family net income where you can, because both the CCB and the GST credit depend on it. RRSP contributions, union dues, and child care expenses all reduce net income. Families who qualify can check when their next GST credit arrives on the GST credit payment dates. Small deductions add up, especially for families just above a benefit threshold.
FAQs
Q. Is the child tax credit the same as the Canada Child Benefit?
Yes. The old federal Child Tax Credit ended in 2015, and most Canadians now use “child tax credit” to mean the Canada Child Benefit.
Q. Can I claim child care expenses and get the Canada Child Benefit?
Yes. You can get both, and claiming child care expenses lowers your net income, which can raise your CCB.
Q. How much can I claim for child care expenses in Canada?
Up to $8,000 per child under 7, $5,000 per child aged 7 to 16, and $11,000 for a child eligible for the Disability Tax Credit.
Q. How much is the Canada Child Benefit for 2026 to 2027?
Up to $8,157 a year per child under 6 and $6,883 per child aged 6 to 17. Payments shrink as family net income rises.
Q. Which parent claims child care expenses?
Usually the parent with the lower net income. The higher income parent can claim only in specific situations, such as when the other parent was a full time student.