# Child Care deduction for someone with divdends or rental income?



## plaza (Sep 16, 2010)

Hi,

We have a large family and we have been considering getting a nanny to help out. I am only earning rental income and dividends (not a huge amount but enough to pay the bills). My wife is currently a stay at home mom and thinking of starting a small business or some real estate investment (but also would only earn rental income). We have been holding off on a nanny for years because of cost, but has become a necessity for sanity with so many kids. 

We have friends with 1-2 kids with stay at home moms that can send their kids to daycare and still get the $7-10/day program here in Quebec, but from what I am seeing, we can not get a nanny at home and declare the expenses, because we have no employment income. 

Is there anyway we would be able to take advantage of the child care deductions?

We are currently setting up a family trust for other reason, but would this help us qualify if we were to restrusture our rental income to go into a holding company/trust instead?


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## stardancer (Apr 26, 2009)

http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/ddctns/lns206-236/214/wht-eng.html

Dividends are not eligible as earned income for the child care expenses deduction
Unless the rental is considered a full-time business, then it would not be eligible. I would check with an accountant re the conditions around rental income to be sure.


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## plaza (Sep 16, 2010)

Yes I read that form before posting and understand that rental income and dividends don't qualify, but was wondering if there was a loophole or a way around it where I can restructure my personal/business model and qualify for childcare costs.


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## Plugging Along (Jan 3, 2011)

You could deduct a nanny if she was an employee of the corporation, assuming it's incorporate and there is revenue to the corporation. The deduction can go against your income. The nanny could not be under the live in care giver or temporary foreign worker program. The deduction is at a corporate tax rate. 

The nannies position would also have to be proven to be helping your business like assistant. 

This is very generic in how of have explained it, it has to be set up with a more card and thought than I just explained.


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## plaza (Sep 16, 2010)

Plugging Along said:


> You could deduct a nanny if she was an employee of the corporation, assuming it's incorporate and there is revenue to the corporation. The deduction can go against your income. The nanny could not be under the live in care giver or temporary foreign worker program. The deduction is at a corporate tax rate.
> 
> The nannies position would also have to be proven to be helping your business like assistant.
> 
> This is very generic in how of have explained it, it has to be set up with a more card and thought than I just explained.


Yea I thought about that also, but we tried to do a good deed and sponsor someone from another country, so she is on the Live in Caregiver program.. We started the paperwork 2.5 years ago when my situation was different. It took all this time to get her approved and a visa. Now that she got it and all excited to come to a better country, I would hate to put her down


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## tenoclock (Jan 23, 2015)

Childcare is only deductible by a lower income spouse. If your spouse is not working and has no income, then childcare expenses are not deductible anyway


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## Plugging Along (Jan 3, 2011)

tenoclock said:


> Childcare is only deductible by a lower income spouse. If your spouse is not working and has no income, then childcare expenses are not deductible anyway


You live in caregiver definitely cannot work for your corporation.


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## plaza (Sep 16, 2010)

tenoclock said:


> Childcare is only deductible by a lower income spouse. If your spouse is not working and has no income, then childcare expenses are not deductible anyway


She will be making income. Lower than mine, but since mine is rental income then we would not qualify to take the deduction, right? If I transferred the income property to my business and then both took salaries it would work but would we get double taxed?


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