No sooner does the final bell for the school year ring than thousands of young people start wondering how they’ll spend their summer.
For older students at CEGEP or university, summer is generally the time for a job and the chance to make a bit of money.
For the younger ones, summer usually means having fun. Many will go to summer camp (day, sports, science, arts and crafts or music camps) with a full day of supervised activities. Wherever they go, the costs could mount up, especially if the child is away from home for one or more weeks.
From a tax perspective, summer camp costs are similar to child care costs. They entitle the parents to a tax benefit, either as a deduction for federal purposes or a refundable tax credit for Quebec purposes. Let’s take a closer look at these rules.
The federal benefit is a deduction that generally reduces the income of the lower-income parent. To give entitlement to the deduction, the eligible child care costs cannot be greater than either of the three following amounts. You should remember though that the deduction cannot be greater than two-thirds of the income earned by the parent claiming it:
- $8,000 per child aged six and under at the end of 2018 (born in 2012 or after);
- $11,000 per child with a severe and prolonged impairment;
- $5,000 per child between the ages of 7 and 16 (over the age of 16 for a child with a disability).
Since summer camp costs are added to annual child care expenses, eligible expenses are limited to these three amounts.
Quebec has opted for a refundable tax credit at a rate that is based on the parents’ family income. The credit rate varies between 36% and 75% and can be claimed by either parent, regardless of who actually paid the costs. Eligible costs are similar to those that qualify for federal purposes, subject to the following two exceptions: there is no limit on earned income and the eligible annual amount for a child aged six and under is $9,000.
Overnight summer camp
What may not be as well understood are the rules regarding the applicable limit when a child goes to an overnight camp. When the child stays overnight, the eligible weekly costs are significantly reduced. The previous age-based limits do not apply. The following amounts apply and give entitlement to the federal deduction and the Quebec refundable tax credit:
- $200 per week per child aged six and under;
- $275 per week per child with a severe and prolonged impairment;
- $125 per week per child between the ages of 7 and 16 (over the age of 16 for a child with a disability).
For federal purposes, child care expenses may sometimes be deducted by the higher-income parent, for example when the spouse is a full-time student or is hospitalized.
Even if you have no tax payable, in Quebec, you can obtain a refund for your credit entitlement, whereas for federal purposes, the deduction can only be used to reduce taxable income and not for a refund.