Child Care Expenses in Canada 2025: Who Claims, Eligible Costs, and the $8,000 Maximum

Every dollar counts when you're raising children and managing a household budget. The good news is that the Canada Revenue Agency allows working parents, business owners, and students to deduct eligible child care expenses from their income — reducing the tax you owe at filing time. Understanding the rules, limits, and eligible costs can make a meaningful difference to your refund or balance owing. Here is a plain-language guide to child care expenses in Canada for the 2025 tax year.

What Are Child Care Expenses?

Child care expenses are amounts you pay to have someone look after your child so that you can earn income from employment or self-employment, carry on a business, attend school full-time or part-time, or conduct grant-funded research. The deduction is claimed on Form T778 and reduces your net income, which in turn lowers the federal and provincial tax you owe.

The deduction is not a tax credit — it directly reduces the income on which your tax is calculated, so the benefit depends on your marginal tax rate. Higher earners who are permitted to claim (more on that below) see a proportionally larger dollar reduction in tax owing.

Who Must Claim Child Care Expenses?

This is one of the most misunderstood rules in Canadian tax law. The lower-income spouse or common-law partner must claim the child care deduction. The CRA does not allow the higher earner to claim simply because it would produce a larger tax saving.

There are three exceptions that allow the higher-income spouse to claim instead:

• The lower-income spouse was enrolled in full-time or part-time education at a designated educational institution during the year.
• The lower-income spouse was confined to a bed or wheelchair, or was a patient in a hospital or similar institution for at least two weeks.
• The lower-income spouse was imprisoned for at least two weeks.

When an exception applies, the higher-income spouse can claim, but only for the weeks during which the exception was in effect. Careful record-keeping of dates is essential.

Single parents claim on their own return without the spousal income comparison, subject to the same deduction limits.

Deduction Limits for 2025

The maximum child care expense deduction per child depends on age and disability status:

• Children under 7 years old at the end of 2025: $8,000 per child
• Children aged 7 to 16 at the end of 2025: $5,000 per child
• Children eligible for the disability tax credit: $11,000 per child (regardless of age, as long as the child is under 18 or dependent due to the disability)

There is an additional hard limit: your total deduction cannot exceed two-thirds of your earned income for the year. Earned income includes employment income, self-employment income, and research grants. If your net earned income was $18,000, the most you can deduct — even if your eligible expenses and the per-child limits would otherwise allow more — is $12,000.

Always calculate both limits and use whichever is lower. The T778 form walks you through this calculation step by step.

Eligible Child Care Expenses

The CRA defines eligible child care expenses broadly. Qualifying costs include:

• Licensed daycare centres and nursery schools — fees paid to a regulated facility
• Babysitters and nannies — amounts paid to an individual you hire to care for your child in your home or theirs
• Day camps and day sports schools — summer and other day programs where the primary purpose is childcare or supervised recreation (not instruction in a specific sport)
• Overnight camps and boarding schools — subject to weekly dollar limits (see below)
• Educational institutions for children with a learning disability or mental or physical impairment

The child must generally be under 16 at some point during the tax year, or have a disability and be dependent on you, for costs to qualify.

Expenses That Do Not Qualify

Equally important is knowing what the CRA will not accept. The following expenses are explicitly ineligible:

• Payments made to the child's parent or to your spouse or common-law partner
• Payments made to a sibling of the child who is under 18 years old
• Amounts paid for medical care or health services
• Clothing, food, or transportation costs (even if a daycare includes these in its billing)
• Tuition for academic instruction at a primary or secondary school (regular school tuition is not child care)
• Costs for a child who is 16 or older and does not have a disability

If a provider bundles eligible and ineligible services — for example, a camp that includes both supervised care and meals — you should ask for a breakdown so you only claim the eligible portion.

Receipts and Documentation Requirements

The CRA requires that you keep receipts for every child care expense you claim. Each receipt should include:

• The caregiver's full name
• The caregiver's Social Insurance Number (SIN) — required for individuals, not corporations
• The amount paid
• The period of care

You do not attach receipts to your return, but you must retain them and produce them if the CRA requests them during review or audit. Ask every provider for a receipt with their SIN before the end of the tax year — getting this information after the fact can be difficult. Daycare centres typically issue annual receipts in February; for individual caregivers, ask at year-end.

Employing a Nanny or In-Home Caregiver

When you hire a nanny or other individual caregiver directly, you become an employer in the eyes of the CRA and Service Canada. This triggers payroll obligations:

• You must withhold Canada Pension Plan (CPP) contributions and Employment Insurance (EI) premiums from each paycheque.
• You must remit both the employee and employer share of CPP, and the employer share of EI, to the CRA.
• You must issue a T4 slip to the caregiver by the last day of February each year.
• You must file a T4 Summary with the CRA.

Many parents underestimate this obligation. Paying a nanny "under the table" and then trying to claim the deduction is risky — the CRA can deny the claim and assess penalties. Keeping everything above board also protects the caregiver's right to EI if they are ever laid off. The team at Swift Accounting Calgary regularly helps families set up simple nanny payroll so that you remain compliant and can claim every dollar you're entitled to.

Overnight Camps and Boarding Schools: Weekly Limits

For overnight camps and boarding schools, the CRA caps the eligible amount on a per-week basis rather than allowing the full cost. The weekly limits for 2025 are:

• Child under 7: $200 per week
• Child aged 7 to 16: $125 per week
• Child eligible for the disability tax credit: $275 per week

Calculate the number of weeks your child attended, multiply by the appropriate weekly cap, and that is the maximum claimable amount for that program — even if the actual cost was higher. Day camps do not have weekly limits and are simply capped by the per-child annual maximum.

Tips for Maximising Your Child Care Deduction

A few practical steps can help you capture the full deduction you are entitled to:

• Collect receipts with SINs throughout the year rather than scrambling in April.
• If both spouses earned income, confirm who the lower earner is before filing — sometimes the answer changes year to year.
• Track overnight camp weeks carefully and request itemised invoices from boarding schools.
• If you employed a nanny, confirm that CPP/EI remittances are up to date and that a T4 has been filed before claiming the deduction.
• Check whether your child qualifies for the disability tax credit, which significantly raises your deduction ceiling.

If your situation is complex — multiple children at different age thresholds, a spouse in school, or an in-home caregiver — Swift Accounting in Calgary can review your T778 calculation before you file to make sure nothing is missed.

Ready to Claim Every Dollar You're Owed?

Child care is one of the largest household expenses for Canadian families, and the tax deduction is one of the most valuable reliefs available to working parents. Getting it right means understanding the spousal income rule, tracking receipts diligently, and respecting the per-child and earned-income caps.

If you have questions about your specific situation — whether you're navigating a nanny payroll setup, sorting out a split custody arrangement, or simply want a second set of eyes on your return — our team is here to help. Contact Swift Accounting today to book a consultation and make sure your 2025 child care expenses are claimed correctly and completely.

Frequently Asked Questions

Can the higher-income spouse ever claim child care expenses in Canada?

Yes, but only in limited circumstances. If the lower-income spouse was enrolled in school at a designated educational institution, was confined to a bed or wheelchair, or was hospitalised or imprisoned for at least two weeks during the year, the higher-income spouse may claim the deduction — but only for the portion of the year the exception applied. In all other cases, the CRA requires the lower-income spouse to be the one who claims.

Do child care expenses cover summer day camps?

Yes. Fees paid for day camps and day sports schools are eligible child care expenses. The cost is subject to the standard annual per-child limit ($8,000 under age 7, $5,000 for ages 7 to 16) rather than the weekly overnight-camp cap. The camp's primary purpose must be childcare or supervised recreation — programs that primarily provide instruction in a single sport or artistic skill may not qualify.

What happens if I pay a babysitter cash and don't get a receipt with their SIN?

You can still claim the expense if you have documentation of the payment and can provide the caregiver's SIN if the CRA asks. However, without a proper receipt bearing the caregiver's name and SIN, the CRA may disallow the claim during a review. It is strongly advisable to ask every caregiver for their SIN and to issue a written receipt or keep a payment log. For regular babysitters, this is straightforward to set up at the beginning of the arrangement.

Can I claim child care expenses if I am self-employed?

Yes. Self-employment income counts as earned income for the purpose of child care expense claims, and self-employed parents are fully eligible to claim. The same rules apply: the lower-income spouse must claim, the deduction cannot exceed the annual per-child limits, and it cannot exceed two-thirds of your earned income. Note that the child care deduction is separate from business expenses — you claim it on Form T778 as a personal deduction, not as a business cost on your T2125.