Turn off the TV and Pick Up That Hockey Stick

The new Children's Fitness Tax Credit (CFTC) provides welcome tax relief to parents for 2007 and subsequent years. Below are some details on what is needed to claim the credit, both for your own tax return and for any children's activities with which you are involved as an organizer. 

The CFTC is a non-refundable, federal tax credit computed on eligible fitness program fees of up to $500 for each child under the age of 16. The credit yields a maximum federal tax benefit of $78 for each eligible child. Disabled children will qualify up to age 18, and an additional non-accountable, non-refundable $500 credit (a further tax reduction of $78) can be claimed, provided at least $100 is spent on an eligible program. 

What activities are eligible?

In general, eligible programs must be supervised, suitable for children, and involve a significant amount of physical activity, emphasizing cardio-respiratory endurance in particular. Ongoing programs must last a minimum of 8 weeks with at least one session per week.

In addition to the more obvious seasonal sports programs like hockey, baseball, soccer and other competitive sports, eligible programs will include activities such as dance lessons, fitness training and yoga, and membership in a multi-purpose facility that offers various eligible programs. Children's camps qualify if they are at least 5 days in duration and at least 50% of the activities involve physical activity.

Some activities are specifically excluded:

• activities where motorized vehicles are an essential element, such as snowmobiling, water-skiing, or skydiving;
• regular school phys-ed programs - presumably to prevent credit claims for a portion of regular school tuition costs (extracurricular program fees qualify);
• "self-directed" activities - apparently, there will be no credit for the family ski pass, even if Mom and Dad supervise.  

What fees qualify?

Eligible fees include those charged for administration, instruction, and rental of facilities, as well as the cost of uniforms and equipment that are not given or sold at a discount to participants. The costs of accommodation, travel, food and beverages are excluded. For example, a one-week baseball camp is an eligible program, but the portion of the registration fees attributable to accommodations and meals must be excluded. 

The credit is claimed in the year in which the fees are paid, not necessarily when the activity took place. Thus, hockey registration fees paid in 2006 will not qualify for the credit, even though half of the season falls into 2007.

A child's membership at a mixed-use facility such as a private health and social club or a community centre will qualify if more than 50% of the club's programs available to the child are eligible programs. A portion of a family membership fee that is attributable to a child's participation in eligible programs will also qualify.     

Receipts are required in order to claim the credit. Receipts should show the following details:

• the organization's name and address
• the name of the eligible program or activity
• the total amount received
• the date received
• the eligible amount received
• the full name of the payer
• the name of the child enrolled in the activity
• the child's year of birth
• an authorized signature

Contact your Collins Barrow advisor for more information about this new tax credit.

Mike Pestowka is a tax partner in Collins Barrow's Chatham member firm.