Children's Fitness Tax Credit
Canadian Tax Relief for Children's Physical Activities
Starting in 2007 Canadian taxpayers can get a non-refundable tax credit for some children's physical activities. Disabled children are eligible for extra credit.
Canadian Fitness Tax Credit
As of January 1, 2007, Canadian taxpayers are eligible for a non-refundable tax credit of up to $77.50 per child under 16 for the first $500 spent on eligible physical activities.
For children who are eligible for the Disability Tax Credit, the age limit is 18. There is a separate non-refundable $500 tax credit provided a minimum of $100 is spent on registration fees for an eligible program.
What does this mean?
- A non-refundable tax credit is only worth something if you pay tax. A tax credit reduces the amount of tax you owe.
- From a cash flow perspective, you have to pay the costs of the physical activities during the tax year, but you don't get the benefit of the tax credit until you file your income tax return the following year.
- The types of activities eligible for the credit are limited to those listed by the government in the Backgrounder for the tax credit.
- You must get receipts for the programs your children are enrolled in.
The Credit Applies to Expenditures up to $500 Per Child Per Year
The credit sounds like it is a $500 credit. The actual amount of the tax credit is the amount you spend, up to a maximum of $500 per child per year, times the lowest marginal tax rate, which is 15.5 percent. For someone spending $500, that 15.5 percent works out to $77.50.
As with all tax measures, you should not rely on this article for the final word on what to do or how the tax credit works. Please refer to the government documents and check with your tax advisor if you need advice. Also please remember that tax rules change over time.
While any relief from taxes is welcome, this credit is not the same as getting a cheque for $500. It is worth 15.5 percent of the amount you actually spend, it comes a year later, and it is only of value if you make enough money to be taxable.
Additional reading:
Government of Canada – Canada Revenue Agency news release of January 5, 2007 with information about the Children's Fitness Tax Credit
Children's Fitness Tax Credit – information page from Canada Revenue Agency
Backgrounder about what types of activities are covered Item 3 on this page is about "Measures for Children with Disabilities"
The information in this article may have changed since the article was originally published. Readers should consult with the authorities or their income tax lawyer if in doubt about any income tax rules.
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