Can a daycare claim input tax credits?

Generally not on what it buys to provide exempt child care. A centre that only provides exempt services generally can't register for GST/HST at all.

How do I record subsidies and parent fees?

As income, in separate lines, so each can be matched to the funding agreement or the family it came from.

Bookkeeping for childcare centres in Canada

Child care for children 14 and under is exempt from GST/HST. You don't charge it to parents, and you can't claim back what you pay on food, toys and rent. Wages are usually the biggest cost by far, so payroll is the other half of the books.

Where the money goes in your books

What a childcare business usually spends on, and the account in a Canadian chart of accounts it belongs in. The numbers are the account codes in Spark’s starting chart.

Typical costs and the account each goes to
What you pay for	Account
Food and snacks for the children	5000 Purchases and materials
Toys, crafts and classroom supplies	5000 Purchases and materials
Educators' wages	6800 Wages and benefitsThrough a payroll service.
Centre rent	6700 Rent
Utilities	6950 Utilities
Liability insurance	6200 Insurance
Licensing fees	6400 Licences, dues and memberships
Playground and furniture	1500 Equipment and furnitureAssets, not expenses.

How a chart of accounts works · The whole chart, as a template

The tax rules that are different for you

Each one is from the CRA, checked in October 2026. The link goes to the page it came from.

Child care is exempt

Child care services are exempt from GST/HST when the main purpose is care and supervision of children 14 and under for less than 24 hours a day.

CRA: type of supply

No input tax credits on exempt work

You generally can't claim back the GST/HST you pay on what you buy to provide exempt services, and if child care is all you do, you generally can't register. Book purchases with the tax included in their cost.

CRA: when to register

Records to keep

Parent fees billed and received, by family.
Government subsidy and funding agreements, and each payment received.
Payroll records from your payroll service.
Licensing and inspection documents.

Common mistakes

Claiming GST/HST input tax credits on purchases for an exempt centre.
Mixing subsidy payments into parent fees, so neither can be reconciled.
Recording grocery runs for home on the centre's card.

How Spark Books handles it

Fits, with a payroll service

Does the books for an exempt centre. Payroll needs a payroll service.

What it does

If you tell Spark you aren't registered for GST/HST, it books purchases at their full price and claims nothing back, which is right for an exempt centre.
Sorts food, supplies, rent and the payments your payroll service makes.
A 13-week cash forecast, so subsidy timing and payroll weeks are in view.

What it doesn’t

No payroll.
It doesn't track fees by family. Your enrolment software does that.
No live bank feed: you upload statements. Not available in Quebec yet.

Free, with no card. If you’d rather not do it yourself, a Spark bookkeeper keeps your books for $350 a month. How Spark Books works

Questions

Is daycare subject to GST/HST in Canada?: No. Child care is exempt when its main purpose is care and supervision of children 14 and under for less than 24 hours a day.
Can a daycare claim input tax credits?: Generally not on what it buys to provide exempt child care. A centre that only provides exempt services generally can't register for GST/HST at all.
How do I record subsidies and parent fees?: As income, in separate lines, so each can be matched to the funding agreement or the family it came from.

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