Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
Principal Issues: Deductibility of child care expenses.
Position: Non Deductible
Reasons: Paragraph (a) of the definition of "child care expense" - the taxpayer does not reside with the children (there is no supporting person)
2004-009269
XXXXXXXXXX Karen Power, CA
(613) 957-8953
November 25, 2004
Dear XXXXXXXXXX:
Re: Child Care Expenses
This is in reply to XXXXXXXXXX letter of August 4, 2004, requesting our views on the deductibility of child care expenses pursuant to subsection 63(1) of the Income Tax Act (the "Act"). XXXXXXXXXX requested that we reply to you directly.
Written confirmation of the tax implications inherent in particular transactions is given by this Directorate only where the transactions are proposed and are the subject matter of an advance income tax ruling request submitted in the manner set out in Information Circular 70-6R5, Advance Income Tax Rulings, dated May 17, 2002. Where the particular transactions are completed, the inquiry should be addressed to the relevant tax services office. However, we are prepared to provide the following general comments which may be of assistance.
The Canada Revenue Agency's general position on the deductibility of child care expenses under section 63 of the Act is set out in Interpretation Bulletin IT-495R2 and in form T778 (copy enclosed).
In a situation where parents are separated and there is no "supporting person", as defined in subsection 63(3) of the Act, a parent could claim the amounts he or she paid in respect of child care expenses incurred in a taxation year for an "eligible child", as defined in subsection 63(3) of the Act, if, among other requirements, the expenses were incurred at the time the parent resided with the child and only to the extent they were paid by that parent to enable the parent to engage in the activities listed in paragraph (a) of the definition of "child care expense" in subsection 63(3) of the Act (IT-495R2 and form T778 provide details on these defined terms). The requirement that the parent reside with the child at the time the expenses are incurred is specifically provided for in the definition of "child care expense". In your situation, as it appears that among other requirements you do not reside with your children, you would not be entitled to claim child care expenses.
We trust that our comments are of assistance to you.
Yours truly,
Phil Jolie
Director
Business and Partnerships Division
Income Tax Rulings Directorate
Policy and Planning Branch
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