Who Claims Child Care Expenses in Canada?
In Canada, child care expenses are usually claimed by the parent or supporting person with the lower net income, even if the other parent paid the bills. The claim goes on line 21400 using Form T778. The higher income parent can claim only in specific situations, for example when the lower income parent was in school, in hospital, in prison, or separated for 90 days or more. Single parents claim on their own. Separated parents each claim only what they paid while the child lived with them. The limit is $8,000 per child under 7 and $5,000 per child aged 7 to 16, capped at two thirds of earned income.
The Basic CRA Rule on Who Claims Child Care Expenses
The CRA’s main rule is simple: the supporting person with the lower net income has to claim the child care expenses. A supporting person is the child’s parent, the parent’s spouse or common law partner, or someone who claimed the child as an eligible dependant. If two supporting persons lived with the child during the year, the CRA compares their net incomes on line 23600. The one with the lower net income makes the claim on line 21400, no matter whose bank account paid the daycare.
This rule surprises many families. A Calgary couple where one parent earns $90,000 and the other earns $40,000 might assume the higher earner should claim, since the deduction saves more tax at a higher rate. The CRA doesn’t allow that. The $40,000 earner has to make the claim, unless one of the specific exceptions applies.
The rule exists because child care expenses are meant to help the parent whose work depends most on having child care. It also stops families from moving the deduction to whoever gets the biggest tax saving. Knowing who claims child care expenses in Canada before you file helps you avoid a CRA reassessment later.
When Can the Higher Income Parent Claim Child Care Expenses?
The higher income parent can claim only when the lower income parent couldn’t care for the children for a specific reason during the year.
1. School, Illness, or Prison
The higher income parent can claim if the lower income parent was enrolled in school full time or part time. They can also claim if the lower income parent couldn’t care for the children because of a physical or mental illness. That includes time confined to a bed, a wheelchair, or a hospital for at least two weeks. Time in prison for at least two weeks also counts.
The claim is limited to the weeks or months the situation lasted. The higher income parent can claim up to $200 a week for each child under 7, $125 a week for each child aged 7 to 16, and $275 a week for a child who qualifies for the Disability Tax Credit. For part time school, the same amounts apply per month, not per week.
2. Separation for 90 Days or More
If the parents separated because of a breakdown in their relationship for at least 90 days starting in the year, the higher income parent can claim. This applies even if they got back together within 60 days after the end of the year. The weekly limits still apply for the period of separation.
If the parents stayed separated, they’re treated as single supporting persons for that period. Each parent then claims only the child care costs they paid while the child lived with them. Clear records of who paid what, and when, are the key to getting this right.
Who Claims Child Care Expenses in Other Family Situations?
Different family setups lead to different answers, so here is how the rules apply in the most common cases.
1. Single Parents
If you were the only supporting person for the whole year, you claim all the eligible child care expenses yourself. There’s no income comparison, because no other supporting person lived with the child. You still need receipts, and the claim can’t exceed two thirds of your earned income.
Single parents can also claim the amount for an eligible dependant on line 30400 for one child. That’s a separate credit from child care expenses, and claiming both is allowed. Our guide on child care expenses in Calgary shows which local daycare, camp, and nanny costs qualify for the deduction.
2. Separated and Divorced Parents
After separation or divorce, each parent claims only the child care costs they actually paid while the child lived with them. If the child lived with one parent for part of the year and with both parents together for the rest, the income rules apply only to the time together. Shared custody often means both parents make a claim for their own costs.
A new spouse or common law partner changes the picture. If you live with a new partner who is also a supporting person, the CRA compares your net income with your partner’s. If your new partner earns less than you, your new partner may have to make the claim, even though the child isn’t biologically theirs.
3. Parents With Equal Incomes
If both supporting persons have exactly the same net income, the CRA doesn’t decide for you. You and the other parent have to agree on which one of you will claim the child care expenses. Only one of you can claim, and you can’t split the amount between you.
This rarely happens, because net incomes are almost never identical to the dollar. Still, it can come up when both parents earn the same salary and have no other income or deductions. Make the choice before you file, so you don’t both claim the same expense and trigger a CRA review.
Who Claims Child Care Expenses at a Glance
This table sums up who claims child care expenses in each common situation and what limits apply. Use it to check your family’s setup before you file.
| Family Situation | Who Claims | Limit |
|---|---|---|
| Two parents living together | Lower net income parent | $8,000, $5,000, or $11,000 per child |
| Lower income parent in school | Higher income parent can claim | $200, $125, or $275 per week |
| Lower income parent ill or in hospital (2 weeks or more) | Higher income parent can claim | $200, $125, or $275 per week |
| Lower income parent in prison (2 weeks or more) | Higher income parent can claim | $200, $125, or $275 per week |
| Separated 90 days or more | Higher income parent can claim | Weekly limits for the period |
| Single parent | The single parent | Full annual limits |
| Separated or divorced | Each parent for their own costs | Full annual limits |
| Equal net incomes | Parents choose one | Full annual limits |
Every claim is also limited to two thirds of the claiming parent’s earned income, which includes wages and net self employment income. A parent on parental leave may have less earned income, which can limit the claim. Our guide on the types of Employment Insurance benefits in Canada explains that EI doesn’t count as earned income for this rule.
Here’s an example of how the rules can work against a family. One parent earns $80,000, and the other stayed home all year with no income and no school. The lower income parent can’t claim, because two thirds of zero earned income is zero. The higher income parent can’t claim either, since none of the exceptions apply. In that case, nobody can claim the child care costs.
Calgary Tax Consulting provides Personal Income Tax services in Calgary that work out which parent should claim and complete Form T778 correctly. Tax Review in Calgary checks past returns where the wrong parent claimed, and Calgary Audit Representation handles CRA requests for child care receipts. Year End Tax Planning helps families in Mahogany, Evanston, and Seton plan child care payments around school, leave, and separation.
Common Mistakes When Claiming Child Care Expenses
These errors are the most common reasons the CRA reassesses a child care claim. The most common mistake is the higher income parent claiming without a valid exception. Tax software sometimes lets this through if the other parent’s income isn’t entered correctly. When the CRA matches both returns, it denies the claim and sends a reassessment with interest. Always enter both parents’ net incomes before you file.
Another frequent mistake is both parents claiming the same expense, often after a separation. The CRA compares both returns and the receipts, so double claims are easy to spot. Agree in writing on who paid which costs, and keep copies of every receipt and e-transfer. Clear records also help if custody arrangements change during the year.
Missing receipts is the third big problem. Each receipt should show the provider’s name, address, the amount paid, and the dates of care. If you paid a nanny or babysitter, you also need their social insurance number. Our guide on child care expenses vs the child tax credit in Canada explains how a correct claim also raises your Canada Child Benefit.
FAQs
Q. Who claims child care expenses, the higher or lower income parent?
In most two parent homes, the parent with the lower net income has to claim child care expenses on line 21400. The higher income parent can claim only in specific cases, such as when the other parent was in school, in hospital, in prison, or separated for 90 days or more.
Q. Can the parent who paid for daycare claim the expense?
Not always. The CRA decides who claims based on net income, not on whose bank account paid the daycare. If both parents lived with the child, the lower income parent claims, even if the other parent paid every bill. The exception is separated parents, who each claim only the costs they paid while the child lived with them.
Q. Can separated parents both claim child care expenses?
Yes. After a separation, each parent can claim the child care costs they actually paid during the time the child lived with them. Both parents can’t claim the same expense, so keep clear records of who paid which bills.
Q. What if one parent has no income?
If the lower income parent has no earned income, the claim limit is two thirds of zero, so that parent can’t claim anything. The higher income parent can claim only if the other parent was in school, ill, in prison, or separated. If none of those apply, no one in the family can claim the child care expenses for that year.
Q. Which form do I use to claim child care expenses?
You claim child care expenses with Form T778, Child Care Expenses Deduction, and enter the result on line 21400 of your tax return. The form asks for each provider’s name, address, and the amount you paid.