September is here which means school has begun and you, as parents, have begun incurring educational costs. The costs associated with sending your child to school will depend on what grade your child is in and the type of education they are receiving.
In some cases, your child may be too young for grade school but it is likely that they attend pre-school or daycare on a part-time or full-time basis while you, yourself, are at work or school.
Koroll & Company has outlined the credits and deductions that are available to you as a parent at each stage of your child’s education.
If you are a parent who works or attends school, you likely send your child to daycare or pre-school. The good news is that you may be able to deduct these costs, subject to certain limits and requirements.
To be eligible for the Child Care Deduction, your child must be 15 years old or younger at some time during the year.
The child care deduction is restricted to a maximum amount, known as the basic limit. As such, the amount deducted from your income is the lesser of the three calculations:
For more information on claiming your child care expenses, visit the Canada Revenue Agency (CRA) website.
If your child is 15 years or younger and attends after school care while you work or attend school, you may also be able to claim their child care expenses.
It is important to remember that expenses can’t be claimed if they are made to the mother or father of the child, someone claiming an amount for the child, or an individual who is related to you (excluding aunts, uncles, nieces and nephews) and under the age of 18.
Similarly, if you send your child to boarding school, you can deduct those expenses from your income, based on the above-mentioned calculations.
Additional credits, known as the Fitness Credit and Arts Credit, are no longer available for children of any age.
For most high school students (those over 15), there are no school-related credits available to offset expenses incurred to send your child to school or for extra-circular activities such as playing sports.
For many years, an education tax credit and textbook tax credit was available to students who attended college or university, however, this was eliminated back in 2016. That being said, carry forward amounts are still available for previous years.
Additionally, any student who pays tuition to a post-secondary institution greater than $100 can claim a non-refundable tax credit of 15% on these costs. In turn, these amounts can be applied to tax owing and/or transferred to spouses, parents, or grandparents within specified limits. If there is no tax to apply this tax credit to, it can be carried forward.
Tax relief for school expenses is also available in the form of a tax credit for interest paid on student loans. This, however, is only available for provincially and federally sponsored student loans, such as OSAP. As such, it is important to be mindful of how you fund your or your child’s post-secondary education.
There are also a number of credits and deductions, such as the moving expense deduction, which are not student-specific but are available for students who meet certain requirements.
For more information on available credits for you or your students, contact us today.