Parents and tax
If you have children, there are various tax credits and deductions you can claim on your tax return.
3 main tax credits
1. Children’s fitness amount
You can claim this tax credit if your children are registered in ongoing physical activities or classes. Beginning in the 2015 tax year, this tax credit is refundable. You can claim up to a maximum of $1,000 of eligible fees per child, which at 15%, creates a refund of $150 per child. Learn more about the children’s fitness amount.
2. Children’s Arts Tax Credit
You can claim this non-refundable tax credit if your children are registered in art, music or cultural activities or classes. You can claim up to $500 per child each year. The maximum credit for the Children's Arts Tax Credit is $75 for each child.
3. Family Tax Cut
In 2014, a new non-refundable tax credit, the Family Tax Cut, was introduced. The Family Tax Cut is based on the net reduction of federal tax that would result if up to $50,000 of one person’s taxable income was transferred to their spouse or common-law partner, to take advantage of the spouse’s lower tax bracket. (Note that no income is actually being transferred from one taxpayer to another and it won’t impact your provincial income taxes. This “income splitting” is notional only.)
This non-refundable tax credit of up to $2,000 is for eligible couples who live with children under 18 (at the end of the year). In order to be eligible for 2015, you must:
- not be separated for more than 90 days including December 31, 2015,
- both be residents of Canada on December 31, 2015, and
- both file a tax return for the year this credit is claimed.
You will not be eligible if during the year, you:
- were in prison for at least 90 days
- became bankrupt, or
- elected to split eligible pension income.
To claim it for 2015, complete Schedule 1-A, Family Tax Cut. Learn more about the Family Tax Cut from the Canada Revenue Agency (CRA).
Canada Child Benefit
In 2016, the federal government introduced the Canada Child Benefit (CCB), replacing two existing child benefits: the Canada Child Tax Benefit (CCTB) and the Universal Child Care Benefit (UCCB).
The first CCB payment will be made in July 2016, with monthly payments following. The tax-free payment amount is based on the previous year’s total family income, and you (and, if applicable, your spouse or common-law partner) must file a tax return to receive the CCB. The payment amount is recalculated each year based on the previous year’s income.
Learn more about the Canada Child Benefit from the CRA, and estimate your payment amount with the Canada Child Benefit Calculator.
To apply for the CCB, complete Form RC66 Canada Child Benefits Application.
You don't pay tax on money you receive from the Canada Child Benefit.
Deductions for child care expenses
You can deduct the costs of having someone look after your children (under age 16) while you work or go to school. You must have “earned income" to claim deductions for child care expenses.
What you can claim
- Amounts paid to a daycare centre
- Amounts paid to a caregiver – must be a Canadian resident and have a social insurance number, but cannot be the child's father or mother, or a person under age 18 who is related to you
- The portion of school fees that relate to child care services
- The cost of day camps and boarding schools.
How much you can claim
You can claim the lower of:
- 2/3 of your earned income, and
- the actual amount you paid for child care.
The maximum you can claim per child each year is:
- $8,000 for children under age 7
- $5,000 for other eligible children
- $11,000 for children who qualify for the disability tax credit.
How to claim
The spouse or common-law partner with the lower income must claim the deduction. File Form T778, Child Care Expenses Deduction. You don't need to include your receipts but keep them as proof of your claim.
Adoption Expense Tax Credit
You can claim an amount for adoption expenses related to adopting a child under the age of 18. The maximum claim for each child is $15,255 in 2015, for a maximum tax savings of $2,288. The amount will be indexed to inflation after 2014.
For adoptions that are finalized in 2013 or later, the adoption tax credit has been enhanced to help offset costs incurred before parents are matched with a child.
Learn more about claiming adoption expenses.
Saving for your child's education in an RESP
Contributions to your child's RESP
are not tax deductible, but you won't be taxed on any income earned while the funds remain in the plan. If you save for a child age 17 and under, the federal government and some provincial governments will also put money into the RESP as a grant or bond. Accumulated earnings and government grants are taxable income to the student in the year they are paid out. Contributions can be withdrawn tax free.