One of our specialties is the preparation of income tax returns of daycare
providers locally, Canada-wide and worldwide. CRA allows the deduction of many expenses needed to run a daycare.
However, they are very strict in checking that you keep all the receipts.
A proportion (usually 30-40%) of the property taxes, mortgage interest, utilities,cable,
repairs, automobile expenses (usually 20-50
%), and meals for the children (usually six (6) dollars per child per day),
can be deducted from the gross income. These deductions allow a considerable
minimization of tax payable. For small daycare providers in their own homes,
these deductions often mean that no tax is payable, given the fact that each
Canadian taxpayer is entitled to a personal deduction of $ 9600. A complete
list of allowable deductions and the information that CRA requires you to keep
can be seen here.
Since CRA allows many deductions it is advantageous for daycare providers to provide receipts to all parents. In this way daycare providers can charge market rates to parents who will also be able to deduct this expense in their own tax return. Everybody gains by declaring daycare income, both the providers and the parents.
In 2012 the basic limit for children born after 1997 or for whom the disability amount can be claimed is $ 7000. For children born between 1987 and 1996 or for whom the disability amount can not be claimed is $ 4000. Usually, only the spouse with the lower net income is permitted to claim child care expenses. However, a few exceptions to this rule exist.
For details call us at 905-634-5605