How the Tories’ new budget will affect parents and their kids

One of the marquee items in the 2019 budget is a child-care tax credit. TVO.org explains how it works — and what else parents should know
By Chantal Braganza - Published on April 11, 2019
a day care classroom
The Progressive Conservatives are proposing a new tax credit, called Childcare Access and Relief From Expenses, or CARE. (iStock.com/DGLimages)

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Shortly before the Progressive Conservative government on Thursday released its 2019 budget, media outlets began reporting on a hotly anticipated policy: a tax credit intended to reduce a number of child-care expenses for Ontario families.

This is a departure from the policies that the previous Liberal government, under Kathleen Wynne, proposed in its 2018 budget, its last before the June provincial election. That budget, too, featured child-care accessibility as a marquee item; it proposed such benefits as fully funded daycare for preschool-aged children and increased child-care subsidies for middle- and lower-income families with infants.

The proposed Childcare Access and Relief From Expenses tax credit (CARE), would work differently: eligible families would receive credits on child-care expenses when they file their tax returns. The program would be implemented in time for the 2020 tax season.

Here’s a breakdown of how the CARE tax credit would work and what else families need to know about the Progressive Conservatives’ child-care plans.

CARE tax credit

Describing it as “one of the most flexible child care initiatives ever introduced in Ontario,” the budget states that the CARE income-tax credit would be available to parents no matter what type of child care they use (in-school, independent, after-school, summer camps). The credit would apply to any child-care expenses incurred on or after January 1, 2019; the rate would differ depending on a few factors.

The first of these is household income. Families earning $20,000 or less per year would qualify for the highest rate, 75 per cent. That rate would decrease by two percentage points for every $2,500 a household earns over $20,000, every $5,000 a household earns over $40,000, and every $3,600 a household earns over $60,000. Families with incomes of $150,000 or more would not be eligible for CARE.

The second factor is age. Tax credits would max out at $6,000 per child under the age of seven and at $3,750 per child between the ages of seven and 16. For families of children with severe disabilities, the maximum credit would be $8,250 per year, per child.

However, as the Centre for Canadian Policy Alternatives reported last year, daycare fees in major cities across Ontario can be prohibitively expensive, and the $6,000 maximum CARE credit likely won’t go nearly as far as many families need it to. Annual full-time daycare costs for toddlers in GTA cities such as Brampton, Mississauga, and Vaughan, for example, can run upwards of $14,000 a year; in Toronto, the cost is closer to $16,000 a year — and fees for infants are even higher.

Policy experts who commented on the plan prior to the presentation of the budget also expressed concern over the government’s decision to opt for a tax credit over upfront funding. Gordon Cleveland, a professor of economics at the University of Toronto, told the Toronto Star on Monday that such a policy would likely incentivize the use of lower-cost, unregulated child-care services.

The 2019 budget does note that, as of 2021, eligible families would be able to apply for regular advance payments throughout the year to help offset the upfront costs of child care.

Lifting restrictions

In a bid to create more child-care spaces, the government is proposing to lift some of the regulations on independent daycare operators and after-school kindergarten programs. Independent daycare operators, for example, would be allowed to admit three children under the age of two instead of two; the minimum age for children to access licensed after-school recreation programs would be lowered to four from six. The budget estimates that these and other, similar measures would give 4,000 more children under the age of two access to child care.

Creating new child-care spaces

In 2016, the Liberal government committed to creating 100,000 new daycare spots in schools across the province. This year’s budget includes an initiative aimed at adding 30,000 new school-based daycare spots over the next five years; 10,000 of those spaces would be created at newly built schools.

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