Principal Issues: 1) Can an employer of a nanny claim the employer’s share of the Canada pension plan contributions and the employment insurance premiums as child care expenses for the purposes of the child care expense deduction under section 63 of the Income Tax Act (“Act”)?
2) Is an employer in such a situation required to reduce the amount of child care expenses for any amount received as a small business job credit?
Position: 1) Yes, providing all conditions of section 63 are otherwise met.
2) Yes the small business job credit reduces the employer's share of the employment insurance premiums paid in respect of the nanny.
Reasons: 1) The definition of child care expense.
2) Under paragraph 63(1)(d), no deduction may be claimed for child care expenses for which any taxpayer is or was entitled to a reimbursement or any other form of assistance unless the reimbursement or assistance is included in a taxpayer's income and is not deductible in computing that taxpayer's taxable income.
