Fitness in Canada has both health and tax benefits, so while your children are skipping, biking or swimming in a fitness program, you can take a non-refundable tax credit of as much as $500.
If your child joins a club or other organization for two months or more you can claim the fitness tax credit on your tax return if:
For example, membership in a local boys and girls club entitles each child to participate in a wide range of programs, some of which are eligible, such as a biking club, weekend hip hop dances, open swim or gym or a ski club. Other programs not eligible for the credit would include career planning, board games or a reading club.
A receipt for the full amount of the annual membership cost can be issued if more than 50 per cent of the programs qualify. A receipt for the full annual membership fee paid can also be issued if more than half of the club’s scheduled program hours is devoted to eligible programs.
If neither of the 50 per cent tests are met, a receipt can be issued for a pro-rated amount.
Cost of Uniforms
Often a portion of the registration or membership fee is attributable to the cost of equipment or uniforms that are provided for use during the program.
At the end of the program, the equipment or the uniforms normally have little or no resale value, in which case the portion of the registration or membership fee attributable to their cost will be included in the eligible fitness expense.
In other situations, in addition to paying registration or membership fees, you may purchase uniforms or equipment from third-party suppliers or through the organization offering the program.
In these situations, the purchase price for the uniforms or equipment will not form part of the eligible fitness expense.
To claim the Children’s Fitness Tax Credit your child must be under the age of 16 at anytime during the year and be involved in a program that provides a “considerable amount of cardiorespiratory activity”, as well as training in muscular strength, balance, or flexibility. The credit is being eliminated for taxation years after 2016.
You calculate the non-refundable credit by multiplying the eligible amount in fees by the lowest marginal tax rate. (A non-refundable tax credit means you must have income which you can apply the credit against.)
The fees must be paid in the year of the tax return.
If you paid a family membership to a qualifying program, the amount of the fee that is attributable to eligible children will qualify.
There are a variety of fitness programs eligible for the credit, including hockey and soccer, karate, football, basketball, folk dancing, swimming, hiking, horseback riding and many sailing activities. For other programs, the CRA may determine their eligibility on a case-by-case basis, but generally a physical activity program must:
Exceptions to the credit include:
1. Fees charged for regular school physical education programs, although fees charged for extracurricular programs at a school are eligible.
2. Recreational activities involving motorized vehicles (such as automobiles, motorcycles, power boats, airplanes and snowmobiles).
3. If your child registers for a golf club or organization that sponsors more than just physical activities, only the portion of the membership fee that is activities-based is eligible.
4. If fees include accommodation, travel, food, or beverages, that portion must be deducted when calculating the tax credit.
So let’s say you send your child to a hockey camp and pay a $700 registration fee for the one-week program. The camp provides hockey pucks, jerseys and goalie nets that are retained by the organization at the end of the program. The $700 fee you paid includes $200 for accommodation and $150 for meals.
The portion of the fee that is eligible for the credit is $350 ($700 minus $200 minus $150).
Unlike other tax credits, to claim the fitness credit you must have a receipt that includes:
While it is not necessary to submit this receipt with your tax return, you should keep it for six years in the event that Canada Revenue Agency (CRA) wants to verify your claim.
The age limit is higher for children with disabilities. You can claim the credit for a child with a disability who is under the age of 18 and eligible for the Disability Tax Credit. And there is a separate $500 non-refundable credit for eligible children with a disability subject to spending a minimum of $100 on registration fees for an eligible program.
This additional amount, according to the Department of Finance, “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.”
While fitness programs can be costly, they are usually beneficial for your children. Talk to your financial advisor about how you can offset some of the expense by taking advantage of this credit.