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  1. #1

    Ei for mat leave

    Hi there. I’m going to be opening up a home daycare after my mat leave ends, and I was curious to get some opinions and information. I’ve been reading forums and Facebook group discussions, and think I may be missing something. Now I hope I don’t offend anyone or come off in the wrong way, I genuinely just want to have a better understanding. I keep seeing people complain about the amount of money they’re making. I know that the going rate in our area is about $35 a day. So if you’re having 5 kids at 35 per day, and 3 before and after schools at about $15 a day, that’s $53,300 per year! Or let’s say you have a child of your own included in there, that would bring you down to about $44,200. I know everyone’s situation ranges, of course. But the common response is “after expenses, it’s next to nothing!” But excuse me if I’m wrong, some expenses are just a luxury of being able to claim...ie; mortgage interest, hydro, water, internet, cable, etc. All things that you’d be paying for regardless if you ran a daycare. And no one forces you to claim those things. You could claim $0 in expenses if you wanted to. You just wouldn’t benefit at tax time.

    My main question is though, for someone running a home daycare that is planning on having another child eventually, is it worth it to pay into EI? Because as I’ve been told, the maternity leave benefit amount is calculated as 55% of your income AFTER expenses. However...could you not just NOT claim any expenses the year prior to planning on becoming pregnant, that way your income on paper is at its highest, and your maternity leave benefit amount would be based off of that? Please help!

  2. #2
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    Quote Originally Posted by avne View Post
    I know that the going rate in our area is about $35 a day. So if you’re having 5 kids at 35 per day, and 3 before and after schools at about $15 a day, that’s $53,300 per year!
    Yes and no.

    Firstly 5 all day children plus 3 before and after school is 8. I don't know of a single province that allows so many children.
    Realistically most of us are allowed between 4 and 6 total and if we have children of our own under the age set by our province, they are also included.

    Secondly - you are looking a gross income to a business. That's the same as thinking Walmart's profits = the money taken from customers at the register. You are completely forgetting business costs and there's a lot of costs for providing quality care.

    Dayhome insurance = about $350 a year. Food that follows the Canada Food guide and offers a grain, a veg or fruit, a protein and a dairly product for lunch plus 2 snacks a day using at least two of the food groups = about $7 a day for each child. All day heating in winter which we would not use if we worked outside the home. Higher water due to toileting, laundry. Cleaning products for sanitizing at the end of the day. Add in police checks, keeping first aid up to date, replacing toys, craft supplies. Depending on what province you are in, it COSTS about $10 a day in business costs.

    So, $35 a day per child minus the business costs means $25 a day profit. Most day homes are open at least 10 hours. Add in the time to clean, sanitize, prep crafts for next day, grocery shop and prep meals for tomorrow and even the most time efficient day home is working 11-12 hours most days.

    $25 profit divided by 12 hours a day = $2.08 per hour per child income.

    If a provider is allowed 6 children which is the high end for most provinces that would be $12.50 per hour but only if the provider was at max capacity. That does not take into account fewer children due to the ages of her own or when there's a vacancy. That is less than min wage in EVERY province.

    60 hour week, for $12.50 max income. We then pay tax like everyone else. And we also pay double the amount of CPP that an employee would pay because there's no employer making a contribution.

    So your income guess is wrong because you are multiplying it by more children than most of us would legally be allowed but you are also forgetting all the costs.


    But excuse me if I’m wrong, some expenses are just a luxury of being able to claim...ie; mortgage interest, hydro, water, internet, cable, etc. All things that you’d be paying for regardless if you ran a daycare. And no one forces you to claim those things. You could claim $0 in expenses if you wanted to. You just wouldn’t benefit at tax time.
    You are wrong.

    You are thinking that for each dollar we claim, we get that back. We do not. We don't get a penny back. What does happen is we don't pay the tax only of that business expense.

    For instance if our water bill has increased by $100 per month because of the day care, we only get to claim that $100 as a business expense, not our entire water bill. But that $100 expense isn't refunded to us period. We are given a tax credit for it. So we actually recover the taxable part of that $100 expense. We don't get the expense back and we are not given credit for the full expense.

    Suppose we earned $40,000 in the course of the year. And our only business cost was the above water bill. $100 each month would be $1200 per year. We don't get a refund of the $1,200. We don't even get $1,200 knocked off our tax bill. We get taxed on $38,800 so we get back just the taxable portion of the expense.

    Yes, for SOME of the day care expenses they would be things we are paying but not at the consumption use we would if we didn't do this job.

    In my house, there is just two of us now our children are grown. I have 5 day care children which is the limit in my province.

    My water bills is more than double what it used to be because I have 4 children flushing the toilet several times a day which would not happen if I worked from home. I would not be buying the groceries needed for 25 lunches a week and 50 snacks. I would not be buying craft supplies or toys. I would not be laundering 5 lots of bedding twice a week which uses power and water. I would not be paying for daycare insurance. I would not be annually updating my husband's and mine own police checks each year. I would not be having a new first aid course every three years. I would not have the heating on all day in winter because we would turn down the thermostat for the time the house would be empty if we worked outside the home. I would not be running air conditioners all day in the summer either but they would be on timers to come on around 6pm when we were getting home.

    So you are very wrong in thinking we'd have these expenses anyway. And if you believe we can claim our whole power bills, heat bill, water bill, you are wrong there too. It's based on the sq footage of the home used for daycare divided by the hours open. i.e. only the bills used during the business day can be claimed. The remaining percentage is 100% a personal cost and not a business expense. -


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    You could claim $0 in expenses if you wanted to. You just wouldn’t benefit at tax time. 
    True. but since our expenses are so high, since we are the most audited home business in the country so had better have our taxes in order with proof of every expense, why would we not claim the taxable amount of the $100 water when we've paid the extra $100 for water?


    My main question is though, for someone running a home daycare that is planning on having another child eventually, is it worth it to pay into EI? Because as I’ve been told, the maternity leave benefit amount is calculated as 55% of your income AFTER expenses. However...could you not just NOT claim any expenses the year prior to planning on becoming pregnant, that way your income on paper is at its highest, and your maternity leave benefit amount would be based off of that? Please help!
    You could decide not to claim any expenses and some do that in your situation. Be aware that if you opt into EI, you cannot make a claim for a full year but yes, it would be 55% of your profit not your takings. Personally, I think you'd be better off saving for your time off. Not claiming your expenses only saves you the taxable amount of that and as said, this is the most audited business there is. If your income is way higher than others in your area, you can expect an audit in the coming years.
    Last edited by Suzie_Homemaker; 10-07-2017 at 10:45 AM.

  3. #3
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    Which province are you in?

  4. #4
    Again, I’m not trying to offend anyone. Everyone’s situation is different...

    I’m in Manitoba. A licensed provider is allowed 8 children. 5 full time and 3 school age.

    Also, not everyone provides lunch. I, for one, am doing drinks and snacks.

    And for those of us who would’ve been staying home with our own child instead of going back to work, things like the heat or air conditioning running all day would remain the same. Internet and cable remains the same. Mortgage interest remains the same. Yes, the toilets may flush more than often and I’ll use cleaning supplies more than usual. I understand the costs. You don’t need to remind me there are toys and crafts involved. There are many ways to keep those costs minimal. Everyone’s situation is different. I am not “very wrong” in thinking anything. I never once stated I believed you could claim 100% of your utilities. I understand it’s based on square footage, and we will all have different amounts. I will be using 50% of my home, I know some that use 75-100% and some that use 30%.

    My job as an Education Assistant required staff to keep up with police record check and child abuse registry, as well as First Aid and CPR at our own cost. Not to mention, my husband and I want to be trained with First Aid and CPR regardless for the safety of our own child. So this remains the same for me.

    I know that you can’t opt out of EI once filing a claim, but on mat leave right now I’m receiving $21,450 for the year. How would I save that amount within a year or two? Saving for mat leave isn’t always an option. Which is why I asked, if we are able to not claim expenses the year prior and have our mat leave calculated based on that income. EI payments are $1.63 per $100 to a maximum of $836.19 per year. It would take roughly 25 years to reach my EI mat leave payout amount by opting into EI. So for everyone, it’s not a bad decision. I just don’t know if you’d get in trouble or red flagged for not claiming expenses, as I don’t think it’s mandatory to claim expenses, but I don’t know if that would be considered manipulating the system. That is why I am asking if anyone has experience with this.

  5. #5
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    You are in a unique situation.
    I'm sure you will find your unique answers


    I know some that use 75-100%
    That doesn't mean 75%-100% of their bills can be claimed unless they are open 24 x 7 i.e. 100% of the space for 100% of the time.

    [quote]on mat leave right now I’m receiving $21,450 for the year. How would I save that amount within a year or two?[/quote
    You can manage your bills right now for a year getting $21,450. You believe with 5 full time children and 3 before and after school children your annual income if you dont claim expenses which clearly you don't have, will be $53,300.

    By your own reasoning and statements about no food, not having expenses higher than you would anyway, that's $31,850 more than your current annual mat leave pay. If you can pay your bills this year on your mat leave income, then clearly you could save $31k for next time. You're welcome.
    Last edited by Suzie_Homemaker; 10-07-2017 at 08:54 PM.

  6. #6
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    I think there are a lot of things you re just not taking into consideration. You can make a living off this career path but it isn't easy and you won't be guaranteed that steady source of income.

    It can take months to a year+ to get a full group of children signed on. Many leave for mat leaves, for centre based care, for school etc so at any random point of time your down a child (or two or three).

    Sure you can save some money by not providing lunch, but it will be harder to fill those spots as most families don't want that hassle. I certainly wouldn't be paying you the same amount that I would pay a caregiver that provides all meals.

    The biggest thing is that $53,300 you mention is pre-tax. You will be losing a decent chunk of that for taxes.

    It is do-able and can be enjoyable and a decent source of income but until you have done it I think it looks a lot more rosy and pink than it is a year in to the business!

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