2015-0580291E5 Child Care Expenses - pre-employment costs

Principal Issues: 1.Do child care expenses include pre-employment expenses such as payments for processing fees to Service Canada and immigration fees paid to a lawyer?

Position: 1. Yes.

Reasons: 1. Published position in income tax folio S1-F3-C1, Child Care Expenses.

Author: Dubis, Robert
Section: 63; 63(1); 63(3)

XXXXXXXXXX                                      2015-058029
                                                              Robert Dubis

August 14, 2015

Dear XXXXXXXXXX:

Re:  Child care expenses

We are replying to your correspondence of April 7, 2015, in which you asked if certain costs incurred to hire a live-in caregiver qualify as a child care expense for the purposes of section 63 of the Income Tax Act (the “Act”). Specifically, you asked if a fee paid to an immigration lawyer and a fee paid to Service Canada for a labour market opinion are child care expenses as defined in subsection 63(3) of the Act when these expenses are incurred specifically for the purpose of hiring a live-in caregiver.

Our Comments

This technical interpretation provides general comments about the provisions of the Act and related legislation. It does not confirm the income tax treatment of a particular situation involving a specific taxpayer but is intended to assist you in making that determination. The income tax treatment of particular transactions proposed by a specific taxpayer will only be confirmed by this Directorate in the context of an advance income tax ruling request submitted in the manner set out in Information Circular IC 70-6R6, Advance Income Tax Rulings and Technical Interpretations.

Section 63 of the Act provides a deduction for amounts paid for “child care expenses” incurred in respect of an “eligible child” of the taxpayer. There are a number of other requirements that have to be met in order for a taxpayer to be entitled to deduct child care expenses. The Canada Revenue Agency’s (CRA) general views regarding child care expenses can be found in Income Tax Folio S1-F3-C1: Child Care Expense Deduction available on the CRA website at www.cra-arc.gc.ca.

With regard to the type of expenses identified in your email, pre-employment expenses which are incurred for the purpose of hiring a child care provider are discussed generally in paragraph 1.14 of the folio:

“1.14 The above is not an exhaustive list of deductible child care expenses. For example, advertising expenses and placement agency fees incurred to locate a child care provider and mandatory registration fees may also qualify as child care expenses. In each case, the requirements in the definition of child care expense in subsection 63(3), as explained in ¶ 1.1 and ¶ 1.2 must also be met.”

Provided all the requirements are otherwise met, it is our view that, generally, a fee paid to an immigration lawyer and to Service Canada for a mandatory labour market opinion for the purpose of hiring a child care provider could be child care expenses within the meaning of section 63 of the Act.

We trust our comments will be of assistance.

Yours truly,

Pamela Burnley, CPA, CA
Manager, Tax Credits and Ministerial Issues
Business and Employment Division
Income Tax Rulings Directorate

All rights reserved. Permission is granted to electronically copy and to print in hard copy for internal use only. No part of this information may be reproduced, modified, transmitted or redistributed in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, or stored in a retrieval system for any purpose other than noted above (including sales), without the prior written permission of Canada Revenue Agency, Ottawa, Ontario K1A 0L5.

© Her Majesty the Queen in Right of Canada, 2015

Tous droits réservés. Il est permis de copier sous forme électronique ou d'imprimer pour un usage interne seulement. Toutefois, il est interdit de reproduire, de modifier, de transmettre ou de redistribuer de l'information, sous quelque forme ou par quelque moyen que ce soit, de façon électronique, mécanique, photocopies ou autre, ou par stockage dans des systèmes d'extraction ou pour tout usage autre que ceux susmentionnés (incluant pour fin commerciale), sans l'autorisation écrite préalable de l'Agence du revenu du Canada, Ottawa, Ontario K1A 0L5.

© Sa Majesté la Reine du Chef du Canada, 2015