Daycare Meals - Canada Revenue

Dear Daycare Owners,

CRA has started to audit the cost of daycare meals. My client has been audited and it is CRA's view that the cost of meals (breakfast, lunch and 2 snacks) should be no more than $3.08 all age groups. They got their information from "Consumer Trends Report, Chapter 9: Consumer Spending , Office of Consumer Affairs -9.5 Consumer Spending on Food, the average weekly cost of the Nutritious Food Basket for a family of 4 in Edmonton. It is reported that the average spending was $132.10 in 2002.Due to inflation the $132.10 would be equal to $161.13 in 2013. CRA estimates that adults eat twice as much as children so that 2 children would be equal to 1 adult.
Family of 4 equals $161.13 weekly; divide weekly amount by 3 to determine amount for 2 children equals $53.94 and for 1 child weekly equals $26.97. Daily cost per child would be $3.85. Since all kids don't eat everything CRA concluded a reasonable amount would be $3.08 per day (4/5*3.85). The number I used for my daycare clients in 2013 was $5.22.What do you allocate per child per day for meals?

Yikes! For tax purposes I claim $5/child per day. Some days I spend less, some days much more! I do a lot of home raised meat (I keep all related receipts) and organic produce that are pricy, but I bake from scratch which saves money. Heck, one organic apple is $1+ these days! Not to mention organic milk at 70 cents per cup. I definitely spend more than $3.08 per child...

I do $8/day/child.
$2/snack x 2 snacks a day
$4/lunch

There is no way I would provide food if all I can claim is $3.08/child/day.

So what if the kids don't eat it all, I still had to but it. And there are kids who eat more then I do.

Quote:

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Originally Posted by jfbird@shaw.ca

Dear Daycare Owners,

CRA has started to audit the cost of daycare meals. My client has been audited and it is CRA's view that the cost of meals (breakfast, lunch and 2 snacks) should be no more than $3.08 all age groups. They got their information from "Consumer Trends Report, Chapter 9: Consumer Spending , Office of Consumer Affairs -9.5 Consumer Spending on Food, the average weekly cost of the Nutritious Food Basket for a family of 4 in Edmonton. It is reported that the average spending was $132.10 in 2002.Due to inflation the $132.10 would be equal to $161.13 in 2013. CRA estimates that adults eat twice as much as children so that 2 children would be equal to 1 adult.
Family of 4 equals $161.13 weekly; divide weekly amount by 3 to determine amount for 2 children equals $53.94 and for 1 child weekly equals $26.97. Daily cost per child would be $3.85. Since all kids don't eat everything CRA concluded a reasonable amount would be $3.08 per day (4/5*3.85). The number I used for my daycare clients in 2013 was $5.22.What do you allocate per child per day for meals?

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I have to be honest, I'm not buying this. You said your client is being audited? Who are you to them then? Are you an agency then?

First of all, the cost of food is never constant so the average is way off. That cauliflower can cost $2 or as much as $5 in ontario. Cost of living is also significantly different in certain provinces making it impossible to base the cost off of one city's average "consumer report".

Also it just doesn't make sense to me. Some folks live off processed foods whereas others eat clean. Additionally a families diet may be very different than that which is being provided to children at this kind of business. Two daycares could pretty much serve the same meal plan but have very different costs based on source of food, season, convenience packaging e.g chopped bagged broccoli vs whole, organic and none organic, frozen or fresh. Same foods but potentially significantly different expenses.

If this is an expense, it should be actual cost, not an average. I have children who eat like birds and others who eat as much as me! Why should I expense based on a dreamed up average vs actual cost of food purchased. I just don't buy this claim at all.

People get audited on a regular basis and I think that isn't cause for concern. I'd like a link to the source of this claim, otherwise aim going to continue to claim what it costs. I don't claim an average I have a meal plan, purchase all of my ingredients and then the cost is what it is.

I assumed this was a very weird spam post. It's 2017 and she is only talking about 2012 and 2013. Which is 3-4 years behind the current tax filing of 2016.

The post just doesn't make any sense to me. She is speaking as an accountant not a child care provider.

It just seemed like they were trying to stir up debate and get us worried about what we spend on food.

That's not the case at all. I am as worried as you are. I do not run a daycare. I do income tax for clients such as you. Yes this is 2017 but CRA just audited my clients 2013 & 2014 tax returns. I am not making this stuff up. I am trying to stir up conversation so that we can find out what other daycares are doing so that we can be united in our responses to CRA. I have heard a lot of good comments already that proves statistical information (from CRA) is for losers when it comes to daycare meals. I am on your side and once I have enough data I will post the results on the Forum. I hope more people respond to my question so that we can have enough data to stand up to Revenue Canada.

Thanks in advance for your thoughts on this topic.

Does your client now owe back taxes since CRA use a lower cost calculation?

Thank you so much for the inf. But, obviously the auditors I guess they aren't parents or neither have experience working with children. We offer quality services and that includes quality butricional meals. I can absolutely prove that a child's meal can cost more than $3. Some of them really eat a lot more than others. Are they expecting us to provide kind of McDonald happy meals? And I do not think those also cost $3 or so.

Quote:

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Originally Posted by jfbird@shaw.ca

Dear Daycare Owners,

CRA has started to audit the cost of daycare meals. My client has been audited and it is CRA's view that the cost of meals (breakfast, lunch and 2 snacks) should be no more than $3.08 all age groups. They got their information from "Consumer Trends Report, Chapter 9: Consumer Spending , Office of Consumer Affairs -9.5 Consumer Spending on Food, the average weekly cost of the Nutritious Food Basket for a family of 4 in Edmonton. It is reported that the average spending was $132.10 in 2002.Due to inflation the $132.10 would be equal to $161.13 in 2013. CRA estimates that adults eat twice as much as children so that 2 children would be equal to 1 adult.
Family of 4 equals $161.13 weekly; divide weekly amount by 3 to determine amount for 2 children equals $53.94 and for 1 child weekly equals $26.97. Daily cost per child would be $3.85. Since all kids don't eat everything CRA concluded a reasonable amount would be $3.08 per day (4/5*3.85). The number I used for my daycare clients in 2013 was $5.22.What do you allocate per child per day for meals?

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I'm not buying this information either.

First, it's a strange post for a new poster.
Second, the cost of food is drastically different across the provinces. Some have milk subsidized, others do not.
Third, who care if we are audited. We have receipts for our expenses and can prove them. The meal costs aren't capped - they are based on actual expense with the evidence of a receipt, like all business costs are.
$161.13 doesn't even pay for a few basic items here.
Fourth, if CRA are focusing on the meal claims of dayhomes, then most provider's will be okay. I know some here use a daily amount to claim but my accountant and the CRA website has always explained that receipts are required and there's no ability to take a daily amount x # of children. As long as a provider has followed the CRA rules for what can be claimed, all this is doing is unnecessarily worrying some people.

Quote:

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Originally Posted by jfbird@shaw.ca

That's not the case at all. I am as worried as you are. I do not run a daycare. I do income tax for clients such as you. Yes this is 2017 but CRA just audited my clients 2013 & 2014 tax returns. I am not making this stuff up. I am trying to stir up conversation so that we can find out what other daycares are doing so that we can be united in our responses to CRA. I have heard a lot of good comments already that proves statistical information (from CRA) is for losers when it comes to daycare meals. I am on your side and once I have enough data I will post the results on the Forum. I hope more people respond to my question so that we can have enough data to stand up to Revenue Canada.

Thanks in advance for your thoughts on this topic.

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And there it is. You don't run a day care. You have no idea on what the costs really are.

I can accept you are trying to stir up a conversation but not out of concern for us. I suspect you have done a client's tax return, they are being audited and you are trying to make sure you haven't messed up. The easiest way is to find out what other's have claimed. So YOU can stand up to CRA with some data.

Did you average the costs and submit a daily rate that your client doesn't have receipts for and now you are trying to find some supporting evidence that 1) you are worth the fee that client paid and 2) so you can hopefully challenge the CRA's findings.

I'm betting there's no receipts.

People would respect you more had you been entirely honest and not made up some cover story to get the information you need. Trouble with trying to trick people who deal with people, is that we can spot a dodgy thread or a poster whose story not quite adding up - (like tax return, eh?)

Keep a daily record of what you served (menu).

I do not think those also cost $3 or so.