5.4 Child care deductions
Section 7(1), 7(2), 7(3) and 16(1) of the Act.
Section 49(1) 53, and 55(1) of Regulation 134/98.
Random file reviews are completed to ensure that:
- child care expenses, such as receipts, income tax returns or a Child Care Receipt form (#2843), have been visually verified
- all visually verified documents have been documented in the Social Assistance Management System (SAMS) or other file system used by a First Nations delivery agent
Application of policy
Child care expenses are payments made by an applicant or recipient in respect of a dependent child or a child on whose behalf Temporary Care Assistance is provided to a child care provider that enables the applicant or recipient to accept or maintain employment or participate in an employment assistance activity.
Child care expenses are deducted from an applicant or recipient’s net income from employment, a business, or a training program when determining eligibility for financial assistance. Where a recipient is also eligible for earnings exemptions, the child care deduction is applied after the earnings exemptions have been applied.
The recipient determines the type of child care provider (i.e., licensed, the Extended Day program [before and after school program], or unlicensed) that best meets his/her child care needs. The amount that may be deducted depends on the type of child care provider.
Child care expenses are not deductible when they are paid to a member of the same benefit unit, such as an older sibling, or to a person with a legal obligation to support the child, such as a parent.
In two parent families, where only one parent has earnings or training income, child care expenses are only allowed if the other parent is unable to provide child care due to participation in employment assistance activities. Where the Administrator is satisfied that circumstances prevent the parent from providing child care, expenses may be allowed.
The allowable child care deduction for licensed child care is the actual amount paid by the recipient for each child in licensed care.
Licensed child care is provided by a child care provider licensed under the Child Care and Early Years Act to provide care for children under the age of 10 and/or children with special needs under the age of 18, and includes:
- child care centres including integrated centres for children with special needs
- nursery schools
- private home day-care agencies
- in-home services
The Extended Day Program (the before and after school program)
The allowable child care deduction for the Extended Day Program (the before and after school program) is the actual amount paid by the recipient for each child in care.
The Extended Day Program (the before and after school program) is provided by school boards under the Education Act as part of the Full-Day Early Learning Kindergarten Program.
Unlicensed (informal) child care
The allowable child care deduction for informal child care is the actual amount paid by the recipient for each dependent child under the age of 18 up to a maximum amount of $600 per month per child.
Informal care providers do not need to be licensed under the Child Care and Early Years Act as long as care is provided to no more than five children under 10 years of age who are not of common parentage. Informal child care may be provided by a relative, friend, neighbour or other person providing child care services, but not a person legally obligated to support the child.
Informal child care may also include alternative care arrangements, such as after-school programs, parks and recreation programs, or camps.
Other funding sources
Child care expenses that are reimbursed by another funding source are not deductible from earnings or a training allowance unless they are exempt as income. If the funding received for child care exceeds the actual cost of licensed care, the actual cost of the Extended Day program (the before and after school program), or the maximum allowable deduction for informal care, the excess amount is considered income.
Where child care expenses are only partially reimbursed, the non-reimbursed portion is deducted up to the maximum amount provided for care, the Extended Day program (the before and after school program), or informal care.
Ontario Child Care Supplement for Working Families
The Ontario Child Care Supplement for Working Families (OCCS) is a tax-free monthly payment to help with the costs of raising children under the age of 7. A recipient may be eligible for the OCCS provided they have earnings or qualifying child care expenses.
Effective July 2008, the OCCS has been consolidated into the Ontario Child Benefit (OCB). OCCS benefits are reduced by the amount of OCB a family receives for each child under age seven. Families whose OCCS entitlement exceeds their OCB payment will continue to receive a supplementary OCCS payment until their dependent child turns seven or until the family is no longer entitled to receive the benefit.
The OCCS is exempt as income and allowable child care deductions are not reduced by the amount of the benefit.
Under section 49 of the Ontario Disability Support Program Act, 1997, parental relief can be provided and is designed to give the parent(s) some time away from the strains of caring for a child with a severe disability. For parents with a child with a severe disability, parental relief is not considered to be a child care expense.
Advance (up front) child care payment
The advance (up front) child care payment is a mandatory benefit that may be issued when an applicant or recipient is required to pay in advance for child care expenses that the administrator considers to be reasonably necessary to permit employment or participation in an employment assistance activity.
Recipients remain eligible for child care deductions if they have received an advance child care payment. However, advance child care payments are not deductible as child care expenses.
The advance child care payment (upfront childcare) may be issued in an amount determined by the Administrator, up to the maximum amount of child care deductions for licensed or informal care that the person would be entitled to in any 12-month period. The benefit can be issued more than once in a twelve-month period up to the maximum amount.
Example of child care deduction calculation
Mary is a single parent with a 6 year-old child. Her gross monthly income from employment is $1,275. Her total monthly payroll deductions are $125. Mary’s monthly informal child care expenses are $600 per month. Her monthly budgetary requirements are $940.
|Mandatory payroll deductions:||-$125|
|Less $200 flat rate earnings exemption:||-$200|
|50% partial earnings exemption:||×50%|
|Total Earnings Exemption:||$200 + $475 = $675|
|Child care expenses:||$600|
|Allowable child care deduction:||$600|
|Total earnings exemption:||$675|
|Child care deduction:||+$600|
|Total allowable deductions:||$1,275|
|Total allowable deductions:||-$1,275|
|Chargeable earnings (cannot be less than zero):||$0|
|Amount of social assistance:|
(subject to other income exemptions):