24 February 1995 External T.I. 9430235 - CHILD CARE EXPENSE FOR LATE FEE

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:

whether receipts must be issued for late fees paid directly to staff member of a daycare centre

Position TAKEN:

While there is no requirement which compels a caregiver to issue a receipt, the amount paid as a late fee will qualify as child care where the amount otherwise paid to the daycare qualifies as such. The amount is remuneration to the staff member who receives it.

Reasons FOR POSITION TAKEN:

question of fact

		943023
XXXXXXXXXX	A. Humenuk

Attention: XXXXXXXXXX

February 24, 1995

Dear Sirs:

Re: Child Care Expenses

We are replying to your letter of November 9, 1994 concerning the issuance of tax receipts for child care. We apologize for the delay in our response.

XXXXXXXXXX

In the event that a parent does not pick up his or her child by the official closing time, your policy manual states that the parent is required to pay a late fee directly to the staff member who is required to wait for the parent with the child. You have asked whether your staff members are required to issue receipts for these late fee payments or whether you can establish a policy that receipts will not be issued for such amounts.

While there is no requirement in the Income Tax Act which would compel a caregiver to provide a receipt for services provided, an individual cannot claim a deduction for income tax purposes for the amount so paid without a receipt. Where the amount paid to the daycare centre otherwise qualifies as a child care expense as defined in subsection 63(3) of the Act, it is our view that the late fee paid directly to a staff member for the same type of services will also qualify as a child care expense. Thus it would seem appropriate that your staff members issue receipts which include their social insurance number for the additional child care provided after hours.

Furthermore, the amount paid by a parent to a staff member would be additional remuneration to that staff member whether or not a receipt is issued or the parent actually claims a deduction for child care expenses. Accordingly, such amounts would have to be included in computing the staff member's employment income for income tax purposes.

We trust our comments will be of assistance to you.

Yours truly,

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