Hmmm ~ legally we are required to provide a tax receipt according to CRA but it does not indicate it has to be done weekly, bi weekly or monthly ~ I only give receipts annually unless they are paying by cash and than they get a temporary receipt that says right on it 'temporary receipt ~ not to be used for tax purposes'
IMO you are not saying you are not 'willing' to provide it just that you cannot issue a final year end receipt until their balance is paid up ~ to me that seems like a FAIR demand because otherwise the receipt would not be 'accurate'.
I am not sure if it is 'legal' practice cause I have never had this issue in home childcare so not had the need to properly research it first hand ~ however I do know that several of the centres I worked at over the years had a similar policy in place ~ end of year tax receipts could only be issued for accounts in 'good standing' .... however the reality being for most clients if their account was not in good standing they had already 'bolted' from the program never to be seen again so were not around to 'collect' the receipt anyway