FOR IMMEDIATE RELEASE:
[La version française suit le texte anglais.]
FAO RELEASES REPORT ASSESSING ONTARIO’S NEW CHILD CARE TAX CREDIT
TORONTO, September 24, 2019 – Today, the Financial Accountability Office of Ontario (FAO) released a new report: Child Care in Ontario: A Review of Ontario’s New Child Care Tax Credit and Implications for Ontario’s Labour Force.
The report assesses the financial and economic implications of the government’s new child care tax credit -- the ‘Childcare Access and Relief from Expenses’ or ‘CARE’ tax credit.
The CARE tax credit was introduced by the Ontario government in the 2019 budget to offset a portion of child care costs for working families, and help parents return to work sooner after a parental leave. According to the FAO’s report, the CARE tax credit will cost the Province an average of $460 million per year over the next five years, somewhat higher than the government’s projection of $390 million per year.
Based on the FAO’s analysis, approximately 310,000 families will be eligible to receive the CARE tax credit, with an annual average benefit of $1,300 per family. Another 240,000 families with child care expenses will not receive any benefit from the CARE credit, largely because their family incomes will exceed the threshold for the credit.
The CARE tax credit was designed to provide a maximum benefit of $6,000 per child under seven. However, based on the FAO’s analysis, fewer than 300 families (or just 0.1 per cent of all recipients) will receive the maximum entitlement. Additionally, while the CARE tax credit was intended for low- and moderate-income families, about two-thirds of the total benefit will go to families with above-median incomes. Just 3 per cent of the benefit will be distributed to lower income families.
By offsetting a portion of child care costs, the FAO estimates the CARE tax credit could result in about 6,000 to 15,000 more people (mostly women) entering the Ontario workforce, modestly boosting labour force participation for Ontario women.
To read the full FAO report click here.
About the FAO
Under the Financial Accountability Officer Act, 2013, the Officer provides independent analysis on the state of the Province's finances, trends in the provincial economy and related matters important to the Legislative Assembly of Ontario. Visit our website at http://www.fao-on.org/en/ and follow us on Twitter at https://twitter.com/InfoFAO.