Just like kids, certain tax deductions keep growing like weeds. . .expanding their benefits exponentially for those in the know.

For example, did you know that the claim for Child Care Expense deduction reduces Net Income on the tax return (Line 236 for you tax software enthusiasts!) and therefore, like your Registered Retirement Savings Plan contributions, child care claims will affect the following refundable and non-refundable tax credits elsewhere on the return:

• the Age Amount
• the Spousal Amount
• the Amount for Infirm Dependent Adults
• the Caregiver Amount
• Amounts Transferred from Spouse or Common-Law Partner
• Medical Expenses
• Charitable Donations
• Child Tax Benefits
• Goods and Services Tax Credits
• Provincial Refundable Tax Credits
• Employment Insurance Benefits Clawbacks

Restrictions to Child Tax Benefit, Disability Amounts: In addition to having a positive affect on tax credits, amounts claimed for Child Care Expenses have the following negative effects:

• the Child Tax Benefit includes a supplement of for each child under seven. This supplement is reduced by 25% of the Child Care Expenses claimed by yourself, your spouse, or your common-law partner
• if you are claiming the Disability Amount for a dependant who is under 18, your claim includes a supplement also. This supplement must also be reduced by Child Care Expenses claimed for the child by anyone

Eligible expenditures: Remember that the following expenses may be claimed, providing they were actually paid by you for child care provided to Canadian Residents in Canada (deemed or factual residents living outside of Canada may also qualify): baby-sitting costs, day care costs, costs of a live-in nanny, lodging paid at boarding schools, day camps, day sports camps and overnight camps to a maximum of

• $100 per week for each child age seven to 16 for which the Disability Amount cannot be claimed, plus
• $175 per week per child under seven for which the disability amount cannot be claimed, plus
• $250 per week for each disabled child

Ineligible expenditures: The following expenses may not be claimed: medical or hospital care, clothing, transportation, tuition fees or payments made for “sports study programs”, leisure activities or sports lessons or registration fees. You many not claim any expenses which you did not actually pay or for which you will receive reimbursement.

This concludes our series of essential tax facts for parents claiming child care expenses.

For more information and to obtain a copy of Essential Tax Facts by Evelyn Jacks, call toll free 1-866-953-4769 or visit Evelyn’s website: www.knowledgebureau.com.