Parents don’t have to wait to file income taxes to apply for the Canada Child Benefit.hobo_018/iStockPhoto / Getty Images
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A bundle of joy doesn’t necessarily lead to bundles of tax breaks for new parents.
But tax opportunities do show up in other ways, says Mohammed Al-Khooly, chartered professional accountant (CPA) and partner at CoPilot Tax LLP in Toronto.
“It surprises a lot of new parents that there’s no specific tax deduction for having a child,” says Mr. Al-Khooly, who became a parent himself last fall.
Here are six things that should be on new parents’ financial checklists.
1. Apply for the Canada Child Benefit
New parents should apply to receive the federal Canada Child Benefit, which provides the lower-earning parent with tax-free money each year to offset the costs of raising a child, says Stefanie Ricchio, CPA at SRBC Inc. in Toronto.
She notes that parents don’t have to wait to file their income taxes to apply for CCB.
“Do it pre-emptively, and that way you can start to receive benefits,” she says.
A parent will receive a CCB annual payment of up to $8,157 for each child under 6, and up to $6,883 for each child aged 6 to 17. If the parent has a child with a disability, the Child Disability Benefit is a supplement that will be added to the CCB, up to an additional $3,480 a year, Mr. Al-Khooly says. These amounts are paid out monthly.
He notes that the CCB is an income-tested benefit, so the actual amount a family receives will vary depending on the parents’ combined net incomes on their tax returns.
Mr. Al-Khooly also says clients should file their income taxes by April 30 each year to ensure there’s no disruption in receiving CCB payments, which are updated every July.
2. Deduct child care expenses
Parents can write off child care expenses on their income taxes, but only if child care allows the parent to attend work or school, says Shannon Tatlock, certified financial planner with Kevin R. Williams Financial Services Inc. at Sun Life Financial Distributors (Canada) Inc. in Moncton.
Any child care expense accrued during parental leave or leisure time doesn’t qualify.
On Form T778, the lower-earning spouse outlines details of specific child care arrangements, including daycare, nanny or babysitting services.
Parents can claim up to $8,000 for a child aged 6 and under and up to $5,000 for a child younger than 17 years of age. (If a child has a disability, allowed deductions increase to $11,000 regardless of age.)
Mr. Al-Khooly notes that child care deductions will reduce the family’s overall net income, which reduces the amount of income taxes they pay. And the lower the net income, the more CCB the parent may receive.
Ms. Tatlock says it’s important to maximize the child care deduction.
“Remember, it’s not just daycare. Summer day camps count as long as it’s a day camp that provides child care while you’re at work,” she says, noting that overnight camps qualify, too.
3. Parents can claim children’s medical expenses
Mr. Al-Khooly’s newborn had a dental procedure soon after birth. He plans to claim those medical expenses on his tax return.
He notes parents can claim not only their own personal medical expenses but those of their spouse and children.
Qualifying medical expenses must exceed $2,834, or 3 per cent of their 2025 net income, whichever is lower, to generate a tax credit, he says.
4. Single parents can claim an amount for eligible dependants
Single parents can claim $2,687 for each child under 18 who lives with them. One stipulation: the kid’s net income must be less than the parent’s basic personal amount.
Parents can also claim $8,601 if the child is 18 or older and has a physical or mental disability.
Ms. Tatlock says parents will need to confirm which parent is eligible to claim the amount in their separation agreement.
“While a child can be claimed as an eligible dependant, only one parent can do this even if the custody is 50/50,” she says.
5. Start a registered education savings plan
Although the days are long, childhood years are short, so the earlier parents start squirrelling funds away toward their child’s post-secondary education, the better, Ms. Ricchio says.
She notes that if parents have a tax refund, that money could be earmarked for an RESP.
While parents can’t deduct an RESP contribution from their income taxes, with every dollar they contribute, the government will provide a 20-per-cent top-up in Canada education savings grant money to a maximum of $500 a year, Ms. Tatlock says.
To open an RESP at a financial institution, she says the parent will need a social insurance number for the child.
6. Don’t forget provincial credits
In some provinces, parents can take advantage of additional tax credits for their children. For example, Newfoundland, Quebec, Manitoba and the Yukon all offer fitness tax credits that allow parents to claim part of an eligible physical activity expense, Mr. Al-Khooly says.
He notes that British Columbia has the B.C. family benefit for low and middle-income families who reside in that province. Like the CCB, it pays out a tax-free monthly payment.