Maternity Leave T4E Earned Income for Childcare

Tax Topics
1

I am reading a lot of conflicting information on this one so have decided to ask my community.
I have a client with both a T4E and a T4. I have asked for more information regarding dates but essentially I am trying to figure out if she can claim childcare expenses while on maternity leave. It appears (by some posts) that maternity leave benefits are considered different than parental leave benefits although they are entered to the same box on the T4E.
I assume that I can only claim childcare expense while she was earning income (T4 dates) unless she was attending school - is that correct? I am confused and would appreciate help.

I believe it comes down to the definition of earned income

Earned income

1.41 As indicated in ¶1.40 under the general rule, a taxpayer’s claim for child care expenses for a year cannot exceed two-thirds of the taxpayer’s earned income for that year. Earned income of a taxpayer for the purposes of the child care expense deduction is defined in subsection 63(3). Earned income consists of:

  1. a disability pension received under the Canada Pension Plan or the Quebec Pension Plan;
  2. all salaries, wages, tips, and other remuneration from an office or employment;
  3. all amounts included in computing employment income by virtue of sections 6 and 7 (employment benefits and employee stock option benefits);
  4. all scholarships, fellowships, bursaries, prizes and research grants to the extent they are included in income under paragraph 56(1)(n) or (o);
  5. all amounts received in the year under the Apprenticeship Grant programs administered by Employment and Social Development Canada and included in income under paragraph 56(1)(n.1);
  6. any governmental financial assistance as defined under paragraph 56(1)(r);
2

T4E is not earned income. It’s a type of insurance, although taxed. Also, maternity leave and parental leave mean the same thing, just one is gender neutral, because now it can be split between the spouses.

3

You don’t have to figure that out. It’s based on the year as a whole - how much income was earned, and how much childcare expense was incurred DURING the year. It doesn’t really matter if the client paid for childcare WHILE she was on maternity leave, as long as she doesn’t claim more than two-thirds of her earned income for that year.