Principal Issues:
Whether a program for children's swimming lessons held for more than eight weeks but not eight consecutive weeks because of an interruption for a statutory holiday in one week is eligible for the children's fitness tax credit.
Position:
Yes, assuming that all other requirements are met.
Reasons:
If a particular swimming program takes place several times during the year and lessons are normally held for 8 consecutive weeks (or more), then assuming that all the other criteria are met, CRA will consider the consecutive week requirement to be met in a situation in which 8 or more sessions are held, but a statutory holiday interrupts the consecutive week requirement during one particular session of the program.
XXXXXXXXXX 2009-031093 I. Landry, M. Fisc. April 17, 2009
Dear XXXXXXXXXX :
Re: Children's Fitness Tax Credit
This is in response to your email of February 19, 2009 in which you requested our comments regarding the eligibility for the children's fitness tax credit in the situation where a nine week program for children's swimming lessons is held over ten weeks because of the interruption by a statutory holiday.
Unless otherwise stated, all statutory references in this letter are references to the provisions of the Income Tax Act, R.S.C. 1985 (5th supp.) c. 1, as amended (the "Act").
The situation outlined in your letter relates to completed transactions involving a specific taxpayer. As explained in Information Circular 70-6R5, it is not this Directorate's practice to comment on transactions involving specific taxpayers other than in the form of an advance income tax ruling. For situations involving completed transactions, all relevant facts and documentation should be submitted to the appropriate tax services office for their views. However, we are prepared to offer the following general comments, which may be of assistance.
In general terms, the children's fitness tax credit is based on the amount paid in the year, up to a maximum of $500, by an individual as an eligible fitness expense for his or her child who is under the age of 16 at the beginning of the year. The expression "eligible fitness expense" is defined in the Act as a fee attributable to the cost of the child's registration in a "prescribed program of physical activity".
The Income Tax Regulations define a "prescribed program of physical activity" for the purpose of the children's fitness tax credit to include, among other things, a weekly program, which is not part of a school's curriculum, of a duration of eight or more consecutive weeks in which all or substantially all of the activities include a significant amount of physical activity.
The Canada Revenue Agency will consider that the consecutive week requirement has been met where a qualifying program would normally run for eight or more consecutive weeks, but a statutory holiday occurs during the schedule, thereby extending the program by a week and interrupting the consecutive nature of the lessons.
We trust these comments will be of assistance.
Yours truly,
Louise J. Roy, CGA
Manager
For acting Director
Ontario Corporate Tax Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch