Child Care Policies. Joanne Abbawi Shabnam Dastyar Noushin Eskandari Jasmine Malachias Lev Osipian . Child Care Expense Deduction. Objective- helps parents reduce their income tax associated with child care costs incurred while at work or in school. What defines child care expense?
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Child Care Policies Joanne Abbawi Shabnam Dastyar Noushin Eskandari Jasmine Malachias Lev Osipian
Child Care Expense Deduction • Objective-helps parents reduce their income tax associated with child care costs incurred while at work or in school. • What defines child care expense? • caregivers providing child care services • a day nursery school or day-care centre • a day camp or day sports school • a boarding school or camp • an educational institution for the purpose of providing child care services.
Eligibility • Eligible child: • your or your spouse/common law partner’s child or • a child who was dependent on you • the child must have been under 16 years of age at some time in the year. • Eligible to claim CCED for the following reasons: • To earn income from employment • Carry on a business • Carry on research or similar work for which you received a grant • Go to school full-time or part-time
Benefits • For single and two-parent families, the deduction for child care expenses is limited to: • $7,000 for each child under 7 at the end of the year • $4,000 for each child over 7 and under 16 years old. • If entitled to claim a disability credit, deduction is $10,000 for a child under the age of 17.
Child Care Subsidies • Objective - objective is to support the participation of parents in employment or training by providing monthly payments paid to the child care provider that assist in meeting the costs of child care. • Payments are used to help pay for the following eligible types of care: • Licensed • Group day care • Family child care • Preschool • Out of School • License Not Required • Family child care • Registered family care • In child's home • Out of School
Eligibility • May be eligible for a subsidy if you have low/moderate income and you: • working • going to school or participating in a training or rehabilitative program • actively looking for work • undergoing medical treatment • would like your child to attend a licensed preschool program, or • have a child who requires extra support
Eligibility • Parents must be: • Canadian Citizen, Permanent Resident of Canada or a Convention Refugee • Live in and have a child care provided in British Columbia • have a reason for child care which meets a social need • provide proof of income to show financial eligibility • select an eligible child care arrangement. • The net income level at which a 1-parent, 1-child family can get subsidy in BC is: • $30,984 for full subsidy • $48,984 for partial subsidy • The net income level at which a 2-parent, 2-children family can get subsidy in BC is: • $35,016 for full subsidy • $71,016 for partial subsidy
Decision Making • Canadian Child Expense Deduction • decision to enter labour force • Decision on the number of hours worked • Child Care Subsidies - Choosing type of child care service • Cost and Quality of child care • Amount of subsidy received from government
Criticisms of Policies: CCED • CCED doesn’t really reduce the cost of child care, it only compensates a taxpayer for the cost of earning income. • CCED provides higher tax savings for those with higher income. $37,000 (tax rate 24%) tax savings = $1,708 $80,000 (tax rate 40%) tax savings = $2,800 • A limit of $7000/child under seven is not sufficient to cover • the cost of licensed child care for infants in some parts of • Canada.
Criticisms of Policies: Child Care Subsidies • Some jurisdictions impose a maximum amount on the fee subsidy determined by the age of the child regardless of the actual fee for the service. • A single parent family needs the subsidy more • than a two parent family
Conclusion • Both of the policies discussed are effective in assisting parents with child care costs, but run into some problems regarding income inequality and child care choices • Going forward, policies should attempt to address these issues to better serve the public