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Child care costs are not claimed as a non-refundable tax credit, but as a deduction from income on line 214 of the personal tax return.  A non-refundable tax credit is always at the lowest tax rate (except in Québec), but a reduction of income would save tax at the taxpayer's marginal tax rate.

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In the Canadian Tax Calculator, child care costs can be entered on the "Other deductions" line, under the "RRSP deduction" line.

In most cases, child care expenses for an eligible child must be claimed by the parent with the lower net income for tax purposes.  If the parents are separated and share custody, each parent may usually claim a portion of the child care costs.  Where a medical doctor certifies in writing that the lower-income spouse is incapable of caring for the child due to a physical or mental infirmity, then the costs may be claimed by the higher income spouse.

An eligible child is a child of you or your spouse or common-law partner, or a child who was dependent on you or your spouse or common-law partner, and whose net income in 2011 was $10,382 or less (basic personal amount).  The child must have been under 16 years of age at the beginning of the year, unless the child was mentally or physically infirm.

Allowable child care expenses are those paid for the care of an eligible child, to enable the parent to earn employment income, carry on a business, attend an eligible program at a designated educational institution for at least 3 consecutive weeks, or carry on research or similar work for which a grant has been received.  Some examples of eligible child care expenses include day-care centres and day nursery schools, some individuals providing child care services, day camps and day sports schools, educational institutions such as private schools (the portion of tuition costs relating to child care services), boarding schools, and overnight sports schools and camps.

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There are limits on the total amount of child care expenses that can be claimed for each child.  There are also limits on the amounts that can be claimed for expenses related to boarding schools or overnight camps.  These limits can be found in the Canada Revenue Agency (CRA) form T778 Child Care Expenses, which is filed with the tax return to make a claim for child care costs.


Source: taxtips.ca