Last week's column on tax deductible babysitting expenses drew a barrage of emails from readers, questioning the deductibility of child-care expenses for "date night."
The column discussed a recent tax case dealing with child-care expenses in which a couple successfully deducted babysitting paid to two teenagers, notwithstanding the fact they lacked a receipt from one of them.
While the intent of the column was to highlight the fact that the failure to obtain a receipt for child care is not fatal to your claim, I introduced that column by incorrectly suggesting that babysitting might always be tax deductible, even when the sitter is hired for personal purposes.
As many astute readers correctly pointed out, for babysitting costs to qualify as tax-deductible child care, the expense must be incurred to enable you to earn income from employment, carry on a business, attend school or carry on research for which you received a grant.
As it turns out, the couple in this case study hired a babysitter during the summer months while they were indeed working.
As CRA spokesman Philipe Brideau clarified, "Amounts paid to have someone look after an eligible child for the reasons described in your article are considered leisure and would not qualify as...child-care expenses."
In reviewing the case law on this topic, however, I came across an interesting 2007 case involving a couple who claimed child-care expenses for their autistic son for services rendered on Saturdays. The CRA denied the deduction because the child's parents were not working on Saturdays.
The judge allowed the claim, saying "the definition does not specifically require that there be a connection between the time when the child-care services are given and the time when employment duties are performed."
The judge noted the Tax Act allows camp fees to be deductible as a child-care expense up to a maximum weekly limit based on the number of weeks the child went to camp. No reference is made to the number of days during which the parent claiming the child-care expenses was actually working.
The 2007 case was, however, fact-specific since the judge noted the couple was unable to perform the usual domestic tasks such as groceries or cleaning without care for their autistic son on Saturdays. As he wrote, their son "has to be taken into care on Saturdays to allow [mom] to hold full-time employment from Monday to Friday."
This was a unique situation where the sympathetic judge broadly interpreted the term "enable" to allow the child-care deduction.
Ultimately, however, it is unlikely that such an interpretation can be extended to babysitting on date night.