Principal Issues: Whether the fees paid for a virtual camp would qualify as child care expenses under section 63 of the ITA?
Position: No.
Reasons: Fees paid for a virtual camp would not likely qualify as child care expenses under section 63 because a virtual camp does not provide a sufficient degree of basic protection and safety..
XXXXXXXXXX 2022-092888
C. Underhill
November 16, 2022
Dear XXXXXXXXXX:
Re: Child care expenses - virtual camp
We are writing in response to your correspondence received on February 26, 2022, asking if you can claim the fees paid for a virtual camp as child care expenses under section 63 of the Income Tax Act (Act).
You have described a situation where your child who usually enrolls in an in-person day camp was required to temporarily attend an online camp as a result of the COVID-19 pandemic. Your child attended the virtual summer camp from your home so that you and your spouse could continue to work from home.
Our comments:
This technical interpretation provides general comments about the provisions of the Act and related legislation (where referenced). 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 70-6R12, Advance Income Tax Rulings and Technical Interpretations.
The expression “child care expense” is defined in subsection 63(3) of the Act. In general terms, the definition provides that a child care expense is an expense incurred for the purpose of providing child care services for an eligible child of a taxpayer, to enable the taxpayer or a supporting person to undertake specific activities as described in that subsection. The taxpayer or supporting person must have resided with the eligible child at the time the expense was incurred in order for the expense to qualify as a child care expense.
The Canada Revenue Agency’s general position on the deductibility of child care expenses under section 63 of the Act is set out in Income Tax Folio, S1-F3-C1, Child Care Expense Deduction (the Folio).
As noted in paragraph 1.9 of the Folio, child care expenses refers to amounts paid in a calendar year by a taxpayer or a supporting person to have someone look after the eligible child so that the taxpayer or the other supporting person could do certain activities, which includes, among other things, earn income from employment.
Paragraph 1.13 of the Folio provides examples of what might be considered eligible child care expenses and refers to payments to, among other things, an eligible child care provider and a day camp or day sports school.
Paragraph 1.17 of the Folio explains what the Canada Revenue Agency considers to be child care services, which states:
“The term day sports school is intended to cover those day camps providing a sufficient degree of child care services . . . it is a question of fact as to whether child care services can be regarded as having been provided or whether a program of training and/or education is essentially involved. With respect to any particular program, a degree of basic protection and safety (child care services) is normally involved although the program may also provide activities and instruction which enrich the program. In determining whether a particular sports program involves a sufficient degree of child care, some factors that would be considered are the age of the participating children, the instructors’ qualifications, the extent that progress is measured and goal-orientation is involved, the time devoted to the program, the duration of the program and the training and educational facilities used.”
Furthermore, the reference to the degree of basic protection and safety is supported by the jurisprudence more specifically at paragraphs 8 and 9 of the case Bailey v The Queen, 2005 TCC 305, 2005 DTC 673 which read in part as follows:
“8 To determine what is meant by a child care expense it is helpful to consider the definition of the word “care”. The Canadian Oxford English Dictionary defines care as “the process of looking after or providing for someone or something; the provision of what is needed for health or protection”.
9 The French version confirms the importance of protecting the child as the phrase for child care expenses is “frais de garde d’enfants” which literally means costs of minding the children.”
Considering the above, it is our view that a virtual camp would not likely provide a sufficient degree of basic protection and safety; therefore the fees paid for a virtual camp would not qualify as child care expenses under section 63 of the Act.
You can find a Folio online by going to Canada.ca and typing the name of the Folio into the search toolbar.
While we regret that we could not give you a more favourable response, we hope that the foregoing comments will be of assistance in clarifying our position.
Yours truly,
Lita Krantz, CPA, CA
Manager, Tax Credits and Ministerial Issues
Business and Employment Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch
