To help parents with the cost of enrolling their children in activities that encourage them to be healthy and active, the government has introduced a new Children’s Activity Tax Credit. This would be the only tax credit in Canada provided for a comprehensive range of children’s activities.
Under the proposed tax credit, parents and guardians would be able to claim up to $500 of eligible expenses per child. They would receive a refundable tax credit worth up to $50 per child under 16 years of age, or up to $100 for a child with a disability under age 18.
The tax credit would be refundable, unlike the federal Children’s Fitness Tax Credit and similar tax credits in other provinces. Because the credit would be refundable, low-income parents who pay little or no income tax would benefit. The maximum amounts that may be claimed for the credit would rise annually with the cost of living through indexation.
Parents would be able to claim the tax credit on their annual income tax return, beginning with the 2010 tax year. Eligible expenses incurred on or after January 1, 2010 would qualify for the credit.
The Ontario tax credit covers activities that fall into two categories: fitness and non-fitness. Eligible activities must be supervised and suitable for children.
The criteria for fitness activities would be the same as for the federal Children’s Fitness Tax Credit: the activities must require a significant amount of physical activity that contributes to cardio-respiratory endurance, plus one or more of muscular strength, muscular endurance, flexibility, and balance.
To be eligible, non-fitness activities must fall under one of the following categories:
- Instruction in music, dramatic arts, dance and visual arts.
- Language instruction.
- Activities with a substantial focus on wilderness and the natural environment.
- Structured interaction among children where supervisors teach or help children develop interpersonal skills.
- Enrichment or tutoring in academic subjects.