25 October 1994 External T.I. 9419265 - CHILD CARE EXPENSES - ELIGIBLE CHILD

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.

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.

Principal Issues:

	Clarification of meaning of "eligible child" contained 	in subsection 63(3) of the Act with respect to the net 	income requirement of the child.

Position TAKEN:

	The net income requirement attaches to dependent 	children other than a child of the taxpayer or the 	taxpayer's spouse.

Reasons FOR POSITION TAKEN:

	The accuracy of the description of eligible child found 	on claim form T778 was brought into question.  The 	enquiry involved a finding of fact.

		941926
XXXXXXXXXX	J.A. Szeszycki

Attention: XXXXXXXXXX

October 25, 1994

Dear Sirs:

Re: Child Care Expenses - Meaning of "Eligible Child"

This is in reply to your letter of July 22, 1994 in which you requested confirmation of the meaning of "eligible child" for the purposes of child care expenses under section 63 of the Income Tax Act.

You indicated in your letter that you have received comments concerning the wording used on form T778 "Calculation of Child Care Expenses" suggesting that one of the conditions of being an eligible child is to have a net income for the year of less than $6,457. Your reading of the legislation itself draws the conclusion that the condition regarding a child's income only applies to dependent children other than a child of the taxpayer or the taxpayer's spouse.

We wish to confirm your understanding of the requirements of the legislation concerning an eligible child for child care expense purposes. We have reviewed the 1993 version of the form T778 and have found that the description of an eligible child, found in Part 1 of the form, appears to be separated into three distinct parts and reads as follows:

An eligible child may be:

(i) your child;
(ii) your spouse's child; or
(iii) a child who was dependent on you or your spouse and whose net income in 1993 was less than $6,457.

We would note that the absence of any punctuation after the word "spouse" in category (iii) clearly links the income requirement to the child described in that category and not to the previous two categories.

We hope we have been able to clarify the meaning of "eligible child" for the purposes of the child care expense deduction.

Yours truly,

P.D. Fuoco
for Director
Business and General Division
Rulings Directorate
Policy and Legislation Branch