Ontario Childcare & Family Credits: Your 2025 Guide

Ontario Childcare Access and Relief from Expenses (CARE) Tax Credit

The Ontario CARE Tax Credit is a refundable credit designed to help low- and moderate-income families with eligible childcare expenses. It is available in addition to the federal childcare expense deduction and is claimed annually through your Ontario personal income tax return. The CARE credit can make a substantial difference for families with daycare, camp, or babysitting costs.

• Who qualifies? You must:
  • Be a resident of Ontario on December 31 of the tax year
  • Have a family net income up to ~$150,000 (the credit begins to phase out above $20,000 and is eliminated at $150,000+)
  • Have incurred eligible childcare expenses for a child under 16, or a child with a disability under 18
  • Have claimed the federal childcare expense deduction for those expenses
• How much? The credit amount is calculated as a percentage (maximum 75%, gradually declining as income rises) of your allowable federal childcare expense deduction. The maximum annual Ontario CARE credit is:
  • $6,000 per child under 7
  • $3,750 per child aged 7–16
  • $8,250 per child with a disability
  Calculation Example: If you have $4,000 in eligible childcare expenses for a 4-year-old and a family income of $40,000, you might receive ~62% x $4,000 = $2,480 CARE credit (actual percentage is based on a sliding scale).
• Step-by-step claim process:
  1. Complete the federal childcare expense deduction on your tax return (see next section).
  2. Complete Ontario Schedule ON479; your CARE credit is calculated automatically based on your family net income and federal claim.
  3. The CARE credit is paid as part of your tax refund.
• Documentation requirements: Keep all childcare receipts (with provider name, address, and SIN if required) and proof of payment for at least 6 years. In case of audit, you'll need to show both proof of expense and that the provider is eligible.

Official Ontario CARE Tax Credit Info | Ontario Individual Credits Directory

Federal Childcare Expense Deduction

The federal childcare expense deduction allows you to deduct eligible childcare costs from your income, directly reducing your taxable income. This deduction is claimed on line 21400 of your federal tax return and is a prerequisite for the Ontario CARE credit.

• Who can claim: Only the lower-income spouse/common-law partner, except in special situations (e.g., one parent is a full-time student, disabled, separated, or incarcerated).
• Eligible expenses include: Licensed daycare, nursery school, before/after school care, day camps, overnight camps, and babysitters (must provide their SIN). Private nannies and relatives can qualify if not the parent.
• Annual limits:
  • Up to $8,000/child under 7
  • Up to $5,000/child aged 7–16
  • Up to $11,000/child with a disability
• Step-by-step claim process:
  1. Collect all childcare receipts for the tax year (must contain provider details and amount paid).
  2. Enter the total on line 21400 on your T1 federal return (Schedule 2 may help).
  3. Fill in the name, address, and SIN of each provider if required.
  Calculation Example: You paid $6,000 in daycare for a 3-year-old. You can deduct the full $6,000 (under the $8,000 per-child limit). If you are in the 20% federal tax bracket, that deduction saves $1,200 in tax. You can then use the same $6,000 amount for your Ontario CARE calculation.
• Documentation: Keep all receipts and records, including provider details and proof of payment (e-Transfers, cheques, bank statements).

CRA Childcare Deduction Rules | Detailed Deduction Guide

Adoption Expense Tax Credit

If you adopted a child in Ontario, you may be eligible for the federal adoption expense tax credit. This non-refundable credit covers eligible adoption-related expenses up to a maximum amount per child, claimed on line 31300 of your federal return.

• Eligible expenses: Fees paid to licensed agencies, legal fees, travel costs, mandatory adoption courses, and other required adoption costs for a child under 18
• Maximum claim: $17,131 per child (for 2025; indexed annually)
• Step-by-step claim process:
  1. Gather all receipts and proof of payment
  2. Claim the total eligible expenses on line 31300 of your return for the year the adoption is finalized
  3. Save all documentation in case of CRA review
• Calculation Example: You spent $12,000 in eligible legal and agency fees to adopt a child. You can claim $12,000 x 15% = $1,800 reduction in federal tax.

Official CRA Adoption Expenses

Other Family Benefit Programs in Ontario

• Canada Child Benefit (CCB): Monthly federal payments for families with children under 18. Income-tested and tax-free. File your tax return and register your children to receive automatically. CCB Guide
• Ontario Child Benefit (OCB): Monthly provincial payment for low/moderate-income families. Paid with CCB if eligible; based on net family income and number of children. No separate application needed if you file your taxes.
• Disability Tax Credit (DTC) & Child Disability Benefit: For families with children with disabilities. Requires CRA Form T2201. DTC opens additional benefits and credits, including the federal Child Disability Benefit (CDB). DTC Guide
• Registered Education Savings Plan (RESP) Grants: Parents saving for a child’s education can access government grants and bonds. Not a tax credit, but significant for family financial planning.

Ontario Individual Tax Directory | Canada-Wide Credits

Coordinating CARE, Federal Deduction & Other Family Credits

• The Ontario CARE credit is calculated after the federal childcare expense deduction, using the same eligible expenses. You must claim the federal deduction first.
• Claiming childcare expenses does not reduce your eligibility for the Canada Child Benefit (CCB) or Ontario Child Benefit (OCB).
• For children with disabilities, you can claim the DTC, the higher CARE/childcare deduction maximum, and the Child Disability Benefit (CDB) if eligible. These are all stackable. Disability/Health Credits
• If separated/shared custody, each parent may claim a portion of expenses for their period of custody (with receipts and proof of payment).
• Keep all receipts for at least 6 years. The CRA may request proof, including provider details and payment records.

Tip: Use a spreadsheet to track expenses by child and provider throughout the year. This simplifies tax time and ensures you don’t miss claims.

Practical Scenarios & Calculation Examples

Audit Risk, Common Errors & Best Practices

• Common audit triggers: Large childcare claims, missing provider details/SIN, claims for payments to relatives without proper documentation, or conflicting claims in shared custody situations.
• Common errors: Both spouses claiming the same expense, exceeding per-child annual maximums, missing receipts, or claiming ineligible expenses (e.g., music lessons, sports, virtual camps).
• Best practices:
  • Collect and organize all receipts with full details (name, address, SIN, dates, signature where possible).
  • Pay by methods that leave a clear audit trail (e.g., e-Transfer, cheque, not cash where possible).
  • For shared custody, ensure only your portion of expenses is claimed and keep court/custody agreements if requested.
  • Store all supporting documentation for at least 6 years after filing.
  • Consult a tax professional if you have a blended family, complex custody, or disability claims to avoid errors.

More audit tips & claim details

Frequently Asked Questions: Ontario Childcare & Family Credits

Step-by-Step Claim Checklist

1. Gather all childcare receipts (daycare, camps, babysitting, etc.).
2. Determine who (lower-income spouse) will claim the deduction.
3. Complete the federal childcare expense deduction (line 21400).
4. Complete Ontario's CARE Tax Credit (Schedule ON479) using the same expenses.
5. If you adopted, complete the adoption expense credit (line 31300).
6. Register children for CCB/OCB if not already done (via CRA My Account or birth registration).
7. Review other relevant credits (e.g., DTC, RESP grants, property tax credits for families, Ontario Trillium Benefit). Ontario Property Credits