Child care expenses are amounts paid by a person or their spouse to have someone care for an eligible child, so that the person could:
earn employment income,
carry on a business, or
attend school (full-time or part-time, in a program at least 3 consecutive weeks long).
For detailed guidance see Form T778 – the first few pages provide excellent explanations.
Who Can Claim the Deduction?
Single parent: May claim expenses for an eligible child.
Couple: Normally, the spouse with the lower net income must claim the expenses (regardless of who paid).
Exception: If the lower-income spouse attended an educational program for at least 12 weeks, the higher-income spouse may claim expenses for that period.
Net income is based on line 23600 of each spouse’s return, before child care deductions and excluding social benefits repayment (line 23500).
Who is an Eligible Child?
A child qualifies if:
They were under 16 at some time in the year, and are the child of the taxpayer or their spouse, or
They were dependent on the taxpayer or spouse, and their net income in 2024 was $15,705 or less.
A child of any age qualifies if, at the beginning of the tax year, they were mentally or physically infirm and dependent.
Eligible Child Care Providers:
Expenses can be claimed if paid to:
Child care providers (e.g., babysitters – SIN required),
Day camps or day sports schools (primary purpose: child care),
Boarding schools or overnight camps (including sports camps, where lodging is provided).
Not eligible: Payments to the child’s parent, the taxpayer’s spouse, or a relative under age 18.
Payments to grandparents are allowed, but the grandparent must report the income (usually on Form T2125).
Claim Limits:
Maximum annual claim per child:
$8,000 – child aged 6 or younger at year-end,
$5,000 – child aged 7 to 16 at year-end,
$11,000 – any age if eligible for the Disability Tax Credit.
Overall cap: The total deduction for all children cannot exceed two-thirds of the taxpayer’s earned income.
UFile Instructions:
Go to the dependent’s tab (not the parent’s).
Select Child care → click the + sign to add the relevant category.
UFile will:
Apply the deduction to the lower-income parent,
Generate Form T778,
Claim the deduction on line 21400,
Calculate the refundable Ontario CARE credit (ON 479-A).
Notes:
UFile does not transmit Form T778 to CRA when e-filing, but CRA may request it. Provide clients with a copy.
If the higher-income spouse is allowed to claim, check the box under Parents-and-Children → Child care (special cases).
UFile may show a warning: “UFile cannot claim a deduction for the child care expenses you entered…”. Despite the warning, UFile still generates Form T778 and correctly applies the deduction. The return can be e-filed.
Babysitters – SIN Requirement
If the caregiver is an individual, CRA requires their SIN on Form T778.[1]
Omitting the SIN does not block e-filing, but CRA may request it later, and if not provided the deduction could be denied.