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Fredericton Daily Gleaner ~ Capital Appreciation ~ Healthy Credits ~ January 8, 2007 - 25 Feb 2007 by TaxHelp
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Just in time for the new year, and the many resolutions that are related to physical activity, the federal government released more details late Friday on their new tax credit that is destined to be a winner with parents.
You might recall that last year’s federal budget included something called the Children’s Fitness Tax Credit. While it is effective only starting in 2007 (and therefore will not be a claim when you file your tax return this spring), it provides a non-refundable tax credit against federal tax due of 15.5 per cent to a maximum of $77.50.
Any program which wishes to qualify must deal with cardio-respiratory endurance plus at least one other component in the area of either muscular strength, muscular endurance, flexibility or balance.
Qualifying programs are those involving physical activity that have a duration consisting of at least eight weekly sessions. Additionally, any program that is only five days in length also qualifies, provided that at least 50 per cent of the time is dedicated to physical activity.
Since fees are paid in real dollars and not tax credits, the maximum claim is for fees up to $500 per child in any given year, provided the child is under the age of 16 at any time during the year. The fee needs to be paid in 2007 or later. Any paid in 2006 are ineligible. Also, the credit needs to reflect the activity portion – fees related to meals or residence does not qualify.
The backgrounder provides some interesting detail that really opens this credit up. For instance, memberships in clubs that are at least two months long may qualify provided more that 50 per cent of the programs offered are physical in nature. Also, family memberships qualify, and administrators are allowed to carve out the relevant portion related to qualified children and issue a receipt. Another interesting application is that fees for extra-curricular activity at school also qualify, provided they don’t relate to the regular school physical activity program.
While it’s obvious that soccer registrations fit within the boundaries, these rules also allow for summer camps and dance instruction as well as family memberships to the “Y”. Student athletes who have additional charges for things like green fees or lift tickets also have tax credit access. However, any activity that uses a motorized vehicle as an essential component will be excluded.
Disabled children will have an increased age limitation of 18 with an additional $500 credit in recognition of the potential extra costs that they may face in order to participate in these endeavours.
Don’t forget to collect the receipt from the registrar. You may need it, if the tax department comes to verify the claim.
On a separate note it's that time of year again when we offer a service to various garden clubs, lunch-and-learn employee sessions, business meetings and association functions where we discuss the newest tax changes. These events usually run somewhere around an hour once a question-and-answer is completed and are offered both during the day and evening. Most important, there is no charge for this service. If you or someone you know has responsibility for meeting planning at your work or social club, and would like us to come out and have a chat early in the new year, please contact the office to arrange a time and give us some details so we can tailor it to your specific organization.
Roger Haineault is with Help 4 Taxes. He can be reached by email at roger@help4taxes.ca or by calling 1 (888) 450-1212. His column appears Mondays.
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