14 August 2015 External T.I. 2015-0580291E5 - Child Care Expenses - pre-employment costs

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: 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.

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