Child care expenses

Child care is not taxable only if all of the following conditions are met:

• The services are provided at your place of business.
• The services are managed directly by you.
• The services are provided to all of the employees at minimal or no cost.
• The services are not available to the general public, only to employees.

If not all of the conditions are met, the taxable benefit is the fair market value (FMV) minus any amount that the employee pays for the service.

When you subsidize a facility operated by a third party in exchange for subsidized rates for your employees, the amount of the subsidy is considered a taxable benefit to the employee.

Include any GST/HST that applies in the value of this benefit.

Payroll deductions

If the benefit is taxable, it is also pensionable. Deduct income tax and CPP contributions. If the taxable benefit is paid in cash, it is insurable. Deduct EI premiums. If it is a non-cash benefit, it is not insurable. Do not deduct EI premiums.

Reporting the benefit

Report the taxable child care expenses in box 14 "Employment income" and in the "Other information" area under code 40 at the bottom of the T4 slip. For more information, see T4 – Information for employers.

Date modified:

2016-12-08