Principal Issues: Who can claim eligible expenses for the Children's Fitness Tax Credit in the year of separation?
Position: Eligibility to claim the CFTC does not depend on whether the child resides with the parent. Generally, either parent can claim.
Reasons: Definition of qualifying child in subsection 118.03(1).
July 2, 2009
Newfoundland and Labrador HEADQUARTERS Tax Services Office Income Tax Rulings Team Resource Directorate Attention to: David Chaulk Andrea Boyle, CGA
2009-031991
Children's Fitness Tax Credit
This in reply to your facsimile dated April 28, 2009, in which you asked which parent claims eligible expenses with respect to the children's fitness tax credit (CFTC) in the year of separation.
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").
In this particular case, the taxpayer and his spouse were together at the beginning of 2008 and he paid expenses eligible for the CFTC while they were together. The taxpayer and his spouse separated before the end of 2008 and the child remained with the spouse.
Subsection 118.03(2) provides the calculation of the CFTC available to an individual in a taxation year and the amount paid in the year for a qualifying child is limited to $500. Furthermore variable C of the calculation requires that an eligible expense must be paid in the taxation year by the individual, or by the individual's spouse or common law partner in respect of the qualifying child of the individual.
As defined in subsection 118.03(1), a "qualifying child" of an individual for a taxation year for the purposes of the CFTC means a child of the individual who is, at the beginning of the taxation year, under 16 years of age; or in the case where a child qualifies for the disability tax credit, under 18 years of age.
Consequently it is our view that eligibility to claim the CFTC does not depend on whether the child resides with the parent who is claiming the credit.
Under 118.03(3), if more than one individual is entitled to the CFTC for a taxation year in respect of a qualifying child, either individual can claim the CFTC for the child as long as another person has not already claimed the same eligible fitness expenses and as long as the total amount claimed for that qualifying child is not more than the maximum that would be allowed if only one of the individuals were claiming the credit. If the individuals cannot agree as to what portion of the eligible amount each can deduct, the Minister may fix the portions. In this particular situation, provided that the expense is an eligible fitness expense as defined under subsection 118.03(1), and the maximum amount of $500 for the qualifying child has not been used, the taxpayer could be eligible to claim the CFTC with respect to the expenses.
For your information a copy of this memorandum will be severed using the Access to Information Act criteria and placed in the Legislation Access Database (LAD) on the CRA's mainframe computer. A severed copy will also be distributed to the commercial tax publishers for inclusion in their databases. The severing process will remove all material that is not subject to disclosure including information that could disclose the identity of the taxpayer. Should your client request a copy of this memorandum, they can be provided with the LAD version or they may request a copy severed using the Privacy Act criteria which does not remove client identity. Requests for this latter version should be made by you to Jackie Page at (819) 994-2898. The severed copy will be sent to you for delivery to the client.
We trust that 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