I feel like it is up to the child.
Some of my kids figured it out and never said anything; some sat me down for a heart to heart and wanted the bottom line–I could see it in their eyes. One hung on long after I knew she really knew despite all her friends. And all this was okay with me.
I think you need to be ready to answer their questions if they ask, and find out what they think. Tell the truth when they are ready, but remember too that it isn’t the realness of Santa that is in question – he’s a saint (underneath today’s overcommercialism) who is the embodiment of charity; through his intercession and the Lord’s love we are moved to give gifts for no other reason than to make someone happy or to fill a need of theirs. People wouldn’t give and receive gifts without him.
Having said all that, I’d expect some disappointment as your daughter realizes that the world is not as simple and magical as she originally believed…but there are many of those instances and I think that is part of growing up …
And I for one think all the magic and simplicity is important to have when you’re young; it allows us to recognize it later when we’re old and see that some of it is still there.