Can you claim payroll service expenses as childcare expense?

We had twins born last year so this is my first year claiming Childcare expenses. 

We have hired a live-out part time Nanny and we pay for a payroll service that manages her pay for us. As such she's been issued a T4, and I have received a copy of her T4 as well as a T4 summary.

I understand that I can claim her gross pay plus all of the employer paid top ups  we've paid to the source deductions (not sure if I'm saying that right). I understand that her T4 and the T4 summary I've received are my backup for this portion of the claim.

I am wondering if I can also claim the fees paid to the payroll service to manage our nanny's payroll? I have a monthly invoice for this service.

I don't think there's any other expenses I haven't thought of that would apply to me.

As we started childcare later in the year we have not hit the claim limit with her gross salary + employer contributions so looking to make sure I can maximize our returns.

Thanks in advance for any assistance

Answer

You can claim the amount paid as child care, provided you paid your nanny so that you could work and/or go to school.  You are able to claim the amount paid to the nanny plus the employer expenses (employer paid CPP, EI).  You can also claim the amount paid to prepare the payroll. However, there is a limit to how much you claim, based on number and ages of the children, whichever is less.

The annual child care expense amount maximum is determined by the child’s age and physical and mental condition.

For tax year 2015 and later, the annual maximum for a child who does not qualify for the disability tax credit is:

  • Children born in 2012 or later: $8,000 per eligible child
  • Children born in 2002 to 2011: $5,000 per eligible child
  • Children born in 2001 or earlier and with a physical or mental infirmity but who do not qualify for the disability tax credit: $5,000 per eligible child

For a child who qualifies for the disability tax credit, the annual maximum is:

  • $11,000 for a child of any age

Additional credits for Quebec

Québec offers an additional tax credit for child care expenses if you meet the eligibility requirements. This is a refundable tax credit that is calculated by multiplying the value of your eligible expenses by the tax credit rate that corresponds to your family income.

The maximum amounts you can claim are:

  • For children with a severe and prolonged impairment in mental or physical functions: $13,000 per child
  • For other children, who were born after December 31, 2011: $9,500 per child
  • For other children, who were born after December 31, 2001, or who have a disability: $5,000

Note: You can only claim one amount for each child, even if that child falls into more than one category.

For more information on qualifying expenses, please visit the Revenu Québec website. You can also find a list of non-qualifying expenses on their site.

 

Related Information

 


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