e are often asked whether providing childcare to employees will result in a taxable benefit to the employees. As with many taxation issues the answer is not straightforward.
Employer Provided Childcare
Interestingly enough, there is no taxable benefit in the hands of the employee in cases where:
Most parents are aware that there is some relief from the high cost of childcare through the deduction of childcare expenses from personal taxable income. Given that centre staff are often asked questions on this topic, we thought it would be useful to review what expenses are deductible, when may they be deducted, how much may be deducted and who may claim the deduction?
We have recently commented at length on guidelines for calculation and distribution of pay equity grants. Childcare centres must continue to distribute their direct operating grant and wage enhancement grant subsidies (collectively referred to as wage subsidies) in addition to pay equity grants. Rules for calculation and distribution of wage subsidies were set by the Ministry of Community and Social Services on implementation of the funding program in 1987. These rules are available in a Guidelines and Procedures document and, in theory, have been sent to every centre. They differ from pay equity rules and regulations.
Collecting parent fees is becoming increasingly difficult. Every increase in the Toronto Children’s Services user fee component of subsidy means centres with purchase of service agreements are responsible for collecting larger portions of their fees. Collection efforts are hampered by a slower than expected domestic economy; many families are finding it difficult to make ends meet each month. Fee collection will only get more difficult if the economy continues to stagnate.
Summer presents a financial challenge to many centres as enrolments often decline when families make alternative care arrangements in July and August. Centres with school-age programs are most susceptible to enrolment drops in the summer. In addition, many staff naturally prefer to take their holidays during the summer. This increases the need for casual staff to maintain child-to-staff ratios.
