I have a taxpayer couple who just had their first baby. father works full time (2 jobs), mother works full time as well and is taking some maternity leave but intends to return to work ASAP. Her mother is planning to come from overseas to provide childcare so she can return to work. She will be coming on a non-work visitation visa. Has anyone tried claiming the travel expenses, medical insurance premiums , etc. for the mother as childcare expenses?
She can pay her mother, as she is over 18, but her mother would declare it as income… May be a problem that mom is not allowed to work in Canada…
No, because those are absolutely not child care expenses.
“Has anyone tried claiming the travel expenses, medical insurance premiums , etc. for the mother as childcare expenses?”
I sincerely hope not, since any payments to, for, or on behalf of, grandma, would be illegal to claim, with very severe consequences.
I appreciate your response but, can you point me to where it says they are not childcare expenses? I am of the belief that unless the tax code says I cannot, I will assume I can.
63(1) of the ITA states that child care expenses are payments for the service of child care. The things mentioned are not payments for the service of child care.
And some free advice from someone who worked in the tax department of a major national firm: the attitude that unless the tax code says you can’t, you can, is dangerous. Especially when it’s not your tax return, but a client’s.
“I appreciate your response but, can you point me to where it says they are not childcare expenses? I am of the belief that unless the tax code says I cannot, I will assume I can.”
Sorry, but I am of the belief that that is upside down, and putting the cart before the horse. The Tax Act agrees.
A tax preparers belief has to instead be: unless the tax act says you can, you definitely cannot.
In this case, the taxpayers need to be told that the tax act provides that if they attempt to claim these items, they could go to jail for 2 years, in addition to large fines and penalties. (That is found in Section 239 of the ITA.)
If you regularly have these and other people coming to you that want to claim illegal things, maybe it would be helpful to print out Section 239 and hang it on your wall, so that you can point it out to them as a reason why you will not help them do so?
Personal opinion commentary below; take it for what it’s worth:
Without commenting on the specific details of the above conversation….here we go again with “illegal”.
To quote The Princess Bride: “You keep using that word. I do not think it means what you think it means,”
Nobody is getting charged with a criminal offence (“illegal”) for claiming Child Care Expenses that are incorrect on a given return. Nobody.
Perhaps if done on, say, many, many returns by a single preparer…then, sure, “illegal” may come into play.
Whether a given claim is allowable or not is a matter of law, fact and interpretation. It is up to us, as preparers to assess those issues and come to a decision for ourselves and our clients. At worst, an incorrect Child Care Claim would draw a Sec 163(2) penalty, but most likely, it would just be denied, and reassessed. Again, nothing “illegal” has occurred in a single instance.
Even a claim contrary to established law is not necessarily “illegal”…it may be contrary to provisions of the ITA (and it may indeed constitute “gross negligence”)…but that still doesn’t make it “illegal” unless it crosses the boundaries established in Sec 239…and the bar for that is relatively high (as it should be).
@SmallBizGuy Thanks, and therefore my comment above. IF it was legal for her to work in Canada, then she could be paid for doing the childcare work, and in that way be reimbursed for her travel expenses…
I agree with @SmallBizGuy and @BertMulderCGA that it may be possible to claim, but remain aware that it is not “YOU” who are claiming it - it’s your client (the taxpayer). I suggest you discuss with your client about the probability of what will happen - how likely CRA will investigate and/or deny it (i.e. unreasonable amounts); how likely the mother will get in trouble for working in Canada if that is not allowed by her visitor visa; etc. Let your client decide whether they want to deal with the possible consequences.
On the checklist for line 21400 it says that the person you are paying childcare fees to must be a Canadian resident and one can not claim transportation costs.
So the question becomes whether it is reasonable to consider expenses related to travel for a person that is not considered a child care provider eligible for the deduction as childcare expenses.
All on this thread (except Rein) have apparently missed the legal issue that grandma is not an eligible person.
Re Bert: I believe that the phrasing was that grandma could be “PAID” (but with the illegal work status caveat). And the phrasing did not say that payments to grandma could be “CLAIMED” - since she is not an eligible person for childcare claim purposes, that would be illegal.
Re Smallbizguy: perhaps review S239 carefully? - which does explicitly make such actions explicitly illegal, with the consequences so stated.
Re Nezzer: I would suggest needs to be reversed and rephrased, because not only are those expenses not childcare expenses as defined, but also that grandma is ineligible as defined.
I continue to strongly suggest that if you cannot find it explicitly in the ITA, it is illegal (see S239).
I think after all this discussion, the short answer to @dbush is that it would be overreach to attempt to claim transportation costs from another country to bring in a person who is not eligible to be paid as a childcare provider. I think his question ACTUALLY was whether anyone has ATTEMPTED to claim these expenses and until now, noone has answered in the affirmative.
Is the mother eligible to work with a non work Visa? Clearly, it already told you, it’s not for work. In order to claim child care expense, you have to pay someone for their workl, whatever expenses the care provider incurred, why would the payers/parent care whether they are childcare expenses or not? It’s none of their business