Your kid just finished three weeks of day camp in Bowmanville and you paid $1,050 for it. Keep that receipt. It's worth real money on next spring's tax return, and most Durham Region parents don't claim anywhere near what they're allowed.
Key takeaways
- The child care expense deduction is capped at $8,000 per child under 7, $5,000 per child aged 7 to 16 and $11,000 per child eligible for the disability tax credit, per Form T778 for the 2025 tax year.
- Your total claim is separately capped at two-thirds of your earned income, and you deduct whichever number ends up smallest.
- Overnight camp and boarding school stays are capped by the week: $200, $125 or $275 per week depending on the child's category.
- In a couple, the spouse with the lower net income has to claim the child care expenses, unless one of six specific exceptions on Form T778 applies.
- Ontario families with income of $150,000 or less can add the Ontario child care tax credit, worth up to 75% of the same costs and refundable.
Is the day care expense tax deduction a tax credit or a deduction?
Quick answer: it's a deduction. That distinction matters more than it sounds.
A tax credit comes off the tax you owe. A deduction comes off your income before the tax is calculated. So the child care expense deduction lowers your taxable income, and what you save depends on your marginal rate rather than a fixed percentage.
For an Ontario parent with about $46,000 of income, the combined marginal rate is 19.05% in 2026 (14% federal plus 5.05% Ontario). Every $1,000 of daycare you deduct saves roughly $190 of personal income tax. Ontario then adds a separate refundable tax credit for childcare expenses on top, which we get to below.
How much you could claim per eligible child
| Child's situation (age at 31 December) | Annual limit per child | Weekly limit for overnight camp or boarding school |
|---|---|---|
| Under 7 | $8,000 | $200 |
| Aged 7 to 16 | $5,000 | $125 |
| Any age, eligible for the disability tax credit | $11,000 | $275 |
| 17 or older with a mental or physical infirmity, disability amount not claimable | $5,000 | $125 |
Figures from Form T778, Child Care Expenses Deduction, 2025 tax year. These limits aren't indexed to inflation, so they don't drift upward each year the way most CRA figures do.
Your actual deduction is the lowest of three numbers:
- The basic limit above, added up across all your eligible children
- What you actually paid in childcare expenses during the year
- Two-thirds of your earned income
The two-thirds of earned income rule that surprises people
Earned income has a narrow definition here. It covers employment income, net self-employment income, the taxable portion of scholarships and research grants, CPP or QPP disability benefits and a few smaller items. Investment income, rental income, EI benefits and most pension income are all outside it.
That catches one group of Ajax and Pickering parents in particular: the one who stepped back from work. If you earned $12,000, two-thirds is $8,000, and $8,000 is your ceiling no matter how much daycare you paid or how many children you have.
Child care expenses you can claim, and the ones you can't
Eligible expenses include:
- licensed daycare centres and day nursery schools
- nannies and caregivers providing child care services
- before and after school programs
- day camps and day sports schools, where the primary goal is to care for children
- boarding schools, overnight camps and overnight sports schools, subject to the weekly limits above
- the child care portion of fees paid to an educational institution
You can't claim:
- medical or hospital care
- clothing
- transportation costs
- education costs at an educational institution, including tuition and a sports study program
- leisure or recreational activities, such as tennis lessons or annual Scouts registration
Note the line between a day sports school and a sports study program. A summer hockey camp that exists to look after your child qualifies. An institution offering a sports study program does not.
There's also a rule about who does the caring. Child care services provided by an individual can't come from the eligible child's parent, from your spouse or common-law partner if you're the child's parent, or from a person under 18 who is related to you. Paying your 15-year-old to watch her little brother over the summer doesn't qualify, however fair the wage.
Who has to claim the child care expenses in a couple
The default rule is blunt: the spouse or common-law partner with the lower net income has to make the claim, even if the higher earner paid every invoice. If both net incomes are identical, you agree between you who claims.
The higher earner can claim only if the lower earner was in one of six situations set out in Part C of Form T778:
- enrolled part-time in an eligible educational program
- enrolled full-time in an eligible educational program
- not capable of caring for children because of a mental or physical infirmity, and confined for at least two weeks to a bed or wheelchair, or as a patient in a hospital or similar institution
- not capable of caring for children because of an infirmity likely to continue for an indefinite period
- confined to a prison or similar institution for at least two weeks
- living separate and apart from you at the end of the year and for at least 90 days beginning in that year because of a relationship breakdown, then reconciled within the first 60 days of the following year
Situations 3 and 4 need a signed statement from a medical doctor or nurse practitioner attached to the claim.
An eligible educational program has to run at least three consecutive weeks. Full-time means at least 10 hours a week on courses or program work. Part-time means at least 12 hours in a calendar month.
When an exception does apply, the higher earner's claim is limited to 2.5% of the basic limit for each week or month the situation lasted. That's a far tighter number than the full annual limit, so work it out before assuming the higher earner should be the one to claim the child care.
What the deduction is actually worth: a Whitby family's numbers
Priya and Dev live in Whitby with two children. Maya turned 4 this year, Arjun turned 9. Over the year they paid:
- Licensed daycare for Maya: $14,200
- Before and after school care for Arjun: $3,900
- Three weeks of day camp for Arjun in Bowmanville: $1,050
- Total paid: $19,150
Priya has the lower net income at $46,000, so the claim is hers. The three tests on Form T778 run like this:
- Basic limit: $8,000 for Maya plus $5,000 for Arjun, so $13,000
- Amount actually paid: $19,150
- Two-thirds of Priya's earned income: $30,667
The lowest of the three is $13,000. That's the deduction, even though the family spent $19,150. At a combined 19.05% marginal rate, taking $13,000 off Priya's taxable income saves about $2,477 in federal and Ontario tax.
Their family income is $118,000, which lands them at a 17% Ontario child care tax credit rate. That adds another $2,210, and because the credit is refundable they receive it whether or not they owe tax.
Total value of the two claims: about $4,685.
The Ontario tax credit for childcare expenses
The Ontario Child Care Tax Credit, officially the Childcare Access and Relief from Expenses (CARE) credit, sits on top of the federal deduction rather than replacing it. It's refundable, which is the part families miss.
It's calculated as a percentage of your child care expense deduction, and the percentage falls as family income rises:
| Family income | Credit rate |
|---|---|
| Up to $20,000 | 75% |
| Over $20,000 up to $40,000 | 75% minus 2 points for each $2,500 above $20,000 |
| Over $40,000 up to $60,000 | 59% minus 2 points for each $5,000 above $40,000 |
| Over $60,000 up to $150,000 | 51% minus 2 points for each $3,600 above $60,000 |
| Over $150,000 | 0% |
The most a family can receive is $6,000 per child under 7, $3,750 per child aged 7 to 16 and $8,250 per child with a severe disability. You have to be an Ontario resident at the end of the tax year and file Schedule ON479-A with your return. Full details are on the Ontario Child Care Tax Credit page.
How to claim child care expenses on your tax return
- Collect the receipts. Each one needs the payer's name, the child's name, the amount received, the period covered and the caregiver's name, address and signature. Where child care services were provided by an individual rather than an organization, the receipt has to show that individual's social insurance number. A separate receipt is required for each child.
- Fill out Form T778. Part A lists the children and amounts paid, Part B works out the basic limit, Part C applies if you're the higher earner, Part D applies if you were the one in school.
- Enter the result on line 21400 of your T1 return.
- Keep the paperwork. You don't file receipts with your return, but the Canada Revenue Agency can ask for them afterwards.
- Add Schedule ON479-A if you're in Ontario, so the provincial credit gets claimed too.
The CRA's own guidance on line 21400, child care expenses lists the eligible expenses in full.
Mistakes we see most often across Durham Region
Missing the summer entirely. Day camps in Oshawa and overnight camps up north both count, and parents routinely leave them off because camp feels like recreation rather than childcare.
Claiming under the wrong spouse. Child care expenses must be claimed by the lower earner unless a Part C exception applies, and filing it the other way round usually earns a reassessment letter.
No social insurance number on the nanny's receipt. A receipt from an individual without a SIN is the easiest thing on the return for the CRA to disallow.
Skipping Schedule ON479-A. The federal deduction and the Ontario credit are two separate claims on the same spending. Doing one and not the other leaves money on the table.
If any of this was missed on a past return, you can still fix it. Use Change my return inside CRA My Account, or file Form T1-ADJ. The CRA generally lets you go back ten calendar years, so a camp receipt from 2019 is still worth digging out. We walk through the process in how to fix a CRA filing mistake.
This article is general information, not tax advice for your specific situation. Rates and limits are current as of 28 July 2026 and reflect Form T778 for the 2025 tax year. Confirm your own numbers with the CRA or with us before filing.
