Investment Tax Credit for Child Care Spaces (ITC)

1. What is the investment tax credit (ITC) for child care spaces?
2. Who will be eligible for the credit?
3. How will the credit be calculated?
4. What expenditures will be eligible for the ITC?
5. Where can I get more information about this new tax credit/benefit?

Q.1 What is the investment tax credit (ITC) for child care spaces?

A.1 The budget proposes to introduce a non-refundable investment tax credit for employers who create licensed child care spaces for the children of their employees and, potentially, for other children.

The proposed credit will be equal to 25% of eligible expenditures incurred after March 18, 2007 to a maximum of $10,000 per childcare space created in a licensed facility.

Q.2 Who will be eligible for the credit?

A.2 Eligible employers must carry on a business in Canada and the provision of child care spaces must be associated with one or more businesses of the employer that do not include the provision of such spaces.

Q.3 How will the credit be calculated?

A.3 The proposed non-refundable ITC will be equal to 25% of eligible expenditures incurred after March 18, 2007 to a maximum of $10,000 per child-care space created in a licensed child care facility.

The amount of the credit will be added to the employer's ITC pool and be available to reduce federal taxes payable for the taxation year. Unused amounts may be carried back 3 years and forward 20 years.

Q.4 What expenditures will be eligible for the ITC?

A.4 Eligible expenditures will include the cost of eligible depreciable property, and the amount of specified child care start-up costs acquired or incurred solely for the purpose of the creation of the new child care spaces at a licensed child care facility.

Q.5 Where can I get more information about this new tax credit/benefit?

A.5 All new forms, policies and guidelines will be posted on the CRA's Web site as they become available. In the meantime, please consult the Department of Finance's Budget 2007 documents for details.