Kids, Sports and the Canada Fitness Tax Credit

As we mentioned in last week's Breaking Tax and Investment News, it's that time of year again, back to school and back to enrolling our children in their various activities. Most of us are aware of the Federal government's Canada Fitness Credit, which is a tax credit of up to $500 ($1,000 for disabled children) provided for enrolling children in an eligible program of physical activity, so let's do a quick review of the eligibility guidelines:

Eligibility for the Credit:

  • Fees must be paid in respect of eligible expenses in an eligible program of physical activity.
  • Eligible expenses will include those for the operation and administration of the program, instruction, renting facilities, equipment used in common (e.g. team jerseys provided for the season), referees and judges, and incidental supplies (e.g., trophies).

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.

Organizations providing eligible programs of physical activity will determine the part of the fee that qualifies for the tax credit.

Ineligible Expenses:

  • the purchase or rental of equipment for exclusive personal use
  • travel,
  • meals and accommodation.

Tax Receipting. Claims for the children's fitness tax credit will need to be supported by a tax receipt that contains information sufficient for the CRA to monitor compliance. Similarly, organizations will be required to keep relevant books and records.

Child Care Expenses. To ensure that the same expenses are not claimed under both the children's fitness tax credit and the child care expense deduction, an individual will not be allowed to make a claim for a children's fitness tax credit in respect of amounts for which any person has made a claim under the child care expense deduction.

Public Transit Credit: This credit was introduced in 2006 and is claimable for every family member by either spouse or the family member depending on best benefit.

  • Allows for costs of public transit passes that cover a period of at least 30 days This requirement is relaxed for purchases relating to travel after 2006, in two respects.
  • First, the cost of an electronic payment card will qualify for the credit provided the card provides at least 32 one-way trips in a period not exceeding 31 days.
  • Secondly, the cost of a weekly transit pass covering a period of 5 to 7 days will also qualify so long as the taxpayer purchased at least four consecutive weekly passes.
  • Appropriate receipts are required. In addition, a transit authority issuing an electronic payment card must provide sufficient documentation of use to allow the CRA to audit the claim.