December 2016

5.12 Private Child Care Income

Legislative Authority

Section 7(3) of the Act.
Section 48 of Regulation 134/98.

Audit Requirements

Random file reviews are completed to ensure that:

  • monthly verification of the private home child care revenues and expenses have been visually verified; and
  • all visually verified documents have been documented in the Social Assistance Management System (SAMS) or any other file system used by a First Nations delivery agent.

Application of Policy

An applicant or recipient who operates a private home day care is considered to be self-employed. Private home day care is defined in the Day Nurseries Act as: "temporary care for reward or compensation of five children or less who are under ten years of age in a private residence, other than the home of a parent or guardian or any such child, for a continuous period not exceeding twenty-four hours." The day care provider may be associated with a licensed agency or work independently.

An applicant or recipient may also earn income from occasional babysitting or regular babysitting. Occasional babysitting occurs a few days or evenings per week or month and is provided on an intermittent basis. Regular babysitting involves a steady and continuous pattern of employment (e.g., five days or evenings per week).

Income from occasional babysitting is treated as income from employment, while private home day care and regular babysitting income is treated in the same manner as self-employed income.

Applicants or recipients with income from either type of babysitting may be eligible for earnings exemptions (see Directive 5.3 Earnings Exemptions, and Directive 5.13: Self-Employment Income for more information).

When determining eligibility and budgetary requirements, net business income from private home day care and regular babysitting is determined by deducting an amount for expenses (calculated using a choice of two formulas) from gross business income. Earnings exemptions may then be applied to the net business income.

Applicants and participants should be encouraged to use the Self-Employment Record Keeping Kit as a means of recording expenses and monthly revenues. Receipts for expenses and revenue are submitted on a monthly basis (see Directive 5.13: Self-Employment Income for more information).

Net Business Income

Net business income is the gross business income less expenses. Expenses for private home day care and regular baby-sitting, are calculated using either Formula One or Formula Two. The formula that is most beneficial to the benefit unit should be applied.

Formula One

Expenses are determined at 40% of the gross monthly income generated from the provision of private home day care or regular babysitting.

This formula is used if receipts are not available.

Formula Two

Expenses are determined by calculating an amount for food, cleaning and laundry, as per the table below, plus any incidental expenses, capital expenditures, transportation costs, mandatory income tax deductions, and contributions to CPP and EI special benefits.

Expenses for: Infants to School Age Children
Food $70.00
Cleaning Supplies $4.00
Laundry $5.00

Incidental Expenses

If receipts are provided, reasonable incidental expenses such as toiletries, postage, and first aid supplies may be included in the determination of expenses using Formula Two.

Capital Expenditures

Capital expenditures that may be included in the determination of expenses using Formula Two include:

  • equipment costs (e.g., cribs, linen, play materials, gates, fences, etc.); and
  • breakage and replacement costs incurred as a direct result of the operation of the business.

A recipient must obtain approval prior to making any capital expenditures. If the expenditure is required for an immediate health or safety concern, approval may be obtained when the purchase is reported.

Any capital expenditures in excess of $1000 may be approved at the discretion of the Administrator.

Transportation Costs

Transportation costs that may be included in the determination of expenses using Formula Two include costs incurred when travelling to and from:

  • the initial medical and TB test;
  • ongoing training required by a licensed agency a recipient is associated with; and
  • meetings held by the licensed agency a recipient is associated with.

Example

A sole-support parent operates a private home day care for four children aged 4. She earns $390 per month per child which generates a gross monthly income of $1560.

Forumla 1

Gross business income $1560.00

Less expenses
(40% of gross income)

$624.00

Ne Business Income

$936.00

Forumla 2

Gross business income $1560.00
Food ($70.00 x 4) $280.00
Cleaning (4.00 x 4) $16.00
Laundry ($5.00 x 4) $20.00
Incidental expenses (toiletries) $60.00
Capital expenditures (approved) $100.00
Transportation costs $50.00
Income tax $232.00
CPP contributions $63.00
EI special benefit contributions $29.00
Less total expenses -$850.00
Net Business Income $710.00