Children's Fitness Tax Credit (full details can be found at http://www.cra-arc.gc.ca/whatsnew/fitness-e.html ) The Government of Canada proposes to allow, starting in 2007, a non-refundable tax credit on eligible amounts of up to $500 paid by parents to register a child in an eligible program of physical activity. The following information about the proposed tax credit is for parents of children under the age of 16. Information for parents             Amount of the tax credit The proposed children's fitness tax credit will allow parents to claim a maximum of $500 per year for eligible fees paid for each child who is under 16 at any time during the year. As with most other non-refundable tax credits, the credit is calculated by multiplying the eligible amount by the lowest marginal tax rate (15.5% in 2007). Example: Mary registered her three children, Julie (9 years old), Samantha (10 years old), and Eric (15 years old) in an eligible program of physical activity and paid fees of $750 for each child on January 16, 2007. To calculate the amount that she can deduct from her taxes owing on her 2007 income tax return, she uses the following formula: Step 1: $500 (maximum allowable amount per child) x     3 (number of children enrolled in an eligible program of physical activity) $1,500 (total allowable amount eligible for the tax credit) Step 2: $1,500 (total allowable amount eligible for the tax credit) x 15.5% (lowest marginal tax rate for 2007) $232.50 (total amount that can be used to reduce the taxes owing on Mary's 2007 income tax return) Eligible activities The Department of Finance has indicated that, in order to qualify for the tax credit, a program must be: ongoing (either a minimum of eight weeks duration with a minimum of one session per week or, in the case of children's camps, five consecutive days); supervised; suitable for children; and substantially all of the activities must include a significant amount of physical activity that contributes to cardio-respiratory endurance plus one or more of: muscular strength, muscular endurance, flexibility, or balance. You can only claim fees that are related to the cost of registering a child in an eligible program of physical activity. For more information about the criteria for eligible programs of physical activity, See Backgrounder below. Organizations providing eligible programs of physical activity will determine the part of the fee that qualifies for the tax credit. Claiming the tax credit on your 2007 income tax return You can claim the tax credit for each child who was under 16 at any time during the year, provided that another person has not already claimed the same fees and that the total claimed does not exceed the maximum amount that would be allowed if only one of you were claiming the tax credit. The year in which the tax credit can be claimed is determined by the date when the fees are paid, not when the activity takes place. Example: Mary registered... ...her daughter Julie in an eligible physical activity program and paid the eligible fees of $750 on August 30, 2006. This program started on September 15, 2006, and ended on April 21, 2007. ...her son Eric in an eligible physical activity program and paid the eligible fees of $750 on December 20, 2006. This program started on January 6, 2007, and ended on April 28, 2007. ...her daughter Samantha in an eligible physical activity program and paid the eligible fees of $750 on January 2, 2007. This program started on January 6 and ended on April 28, 2007. On her 2007 income tax return, Mary will only be allowed to claim the maximum amount of $500 for Samantha's program because the other two were paid in 2006. Don't forget to ask for a receipt Starting in 2007, you should receive, or ask for, a receipt from organizations providing eligible programs of physical activity in which your child is enrolled. The organizations will determine the part of the fee that qualifies for the tax credit. You will need to keep the receipts issued by the organizations that deliver the programs. You will not need to submit receipts when you file your tax return, but you must keep them in case we ask for them when verifying your claim. Receipts should be kept for six years. Backgrounder 1. Proposed Definition of a Program of Prescribed Physical Activity An eligible program of prescribed physical activity, for the purposes of the credit, will be defined as An ongoing, supervised program, suitable for children, in which substantially all of the activities undertaken include a significant amount of physical activity that contribute to cardio-respiratory endurance, plus one or more of: muscular strength, muscular endurance, flexibility, and balance This definition will cover many sports, as well as other children’s recreational programs that also involve significant physical activity, such as dance lessons. It recognizes that the practice of any sport or physical activity does not always call on cardio-respiratory endurance, notably in the initial learning stages. Eligibility of a program would be based on the general nature of the activities, and the benefits of involvement over time. The definition will also take into account the average participants’ age, health, skills, presence of a disability, and other relevant factors. In keeping with the expressed purpose of the tax credit, and in the spirit of Canada’s Physical Activity Guides for Children and Youth published by the Public Health Agency of Canada, programs of prescribed physical activity for which tax receipts are issued should encourage children to strive towards at least 30 minutes of sustained moderate to vigorous physical activity per session for children under 10, and 60 minutes of sustained moderate to vigorous physical activity for children 10 and over. By requiring a supervisory presence and by referring to activities that are "suitable for children", the proposed definition acknowledges parents’ role in assuring the safety of their children. It reminds those delivering programs of prescribed physical activity for children that safety is paramount and that such programs should comply with federal and provincial safety regulations. 2. Categories of Eligible Programs In addition to the above definition, and in order to recognize the many ways in which children are enrolled and participate in organized physical activity, the Income Tax Regulations will provide that programs are eligible for the tax credit if they last at least eight weeks at a minimum of one session per week, or, in the case of children’s camps, five consecutive days—provided in the latter case that more than 50 per cent of the program time is devoted to physical activity. A child’s membership in a club, association or other organization for two months or more would also be considered participation in an eligible program if more than 50 per cent of the programs available as a result of membership are in the nature of an "eligible program", or more than 50 per cent of the available time is devoted to activities in an "eligible program". Membership and registration fees for programs where the eligible portion of the programs constitutes 50 per cent or less of available programs could in general be pro-rated for the purposes of the credit. As well, that portion of a family membership covering a child’s participation in an eligible program will be eligible, and the organization will be able to issue a tax receipt for that portion. While fees charged for extracurricular programs that take place at a school will be eligible, the credit will not cover fees charged for regular school physical education programming. Sporting, recreational and other activities in which motorized vehicles (e.g., automobiles, motorcycles, power boats, airplanes, snowmobiles) are used as an essential component of the activity will also be excluded. 3. Measures for Children With Disabilities In recognizing the particular challenges that children with disabilities face, the Income Tax Act will be amended to raise the age limit for disability tax credit (DTC)-eligible children from under 16 to under 18 years of age for the purposes of the Children’s Fitness Tax Credit. The Act will also be amended to introduce a separate $500 non-refundable amount for DTC-eligible children subject to spending a minimum of $100 on registration fees for an eligible program. This additional non-itemizable amount provides general recognition of the extra costs that children with disabilities encounter in becoming involved in programs of physical activity, notably with regard to specialized equipment, transportation and attendant care.