Principal Issues: [TaxInterpretations translation]
Would sports activities offered by an educational institution after school hours that are mandatory for all students be considered a physical activity program as defined in subsection 9400(2) of the Regulation?
Position:
The eligibility of an athletic program offered by an educational institution as a physical activity program as defined in subsection 9400(2) of the Regulations is a question of fact.
Reasons:
Generally, when athletic activities are compulsory for all students and when voluntary cessation of participation in these athletic activities results in consequences for the student, then these athletic activities will be considered part of the school's curriculum.
XXXXXXXXXX 2009-032840
I. Landry, M. Fisc.
December 8, 2009
Dear XXXXXXXXXX,
Subject: Children's Fitness Tax Credit
This is in response to your letter of April 17, 2009 in which you asked us to confirm that your educational institution can issue tax receipts for the purposes of the children's fitness tax credit ("CFTC").
You confirm in your letter that the sports activities related to the fees for which you wish to issue tax receipts are practised after school hours and are mandatory for all students at your school. You also confirm to us that they meet the following eligibility criteria:
- They are continuous, i.e., they last a minimum of eight consecutive weeks with at least one session per week or a minimum of five consecutive days;
- They are supervised by an adult;
- They are suitable for children;
- They include a significant amount of physical activity that contributes to cardio-respiratory endurance, as well as one or more of the following: muscular strength, muscular endurance, flexibility or balance.
For the purposes hereof, we have assumed that the sports activities related to the expense for which you wish to issue tax receipts are not part of a sport-study program.
Unless otherwise indicated, all legislative references herein are to the provisions of the Income Tax Act (the "Act").
The situation you have indicated in your letter appears to be related to an actual situation, which involves specific taxpayers. As explained in Information Circular 70-6R5, Advance Income Tax Rulings, it is not the Directorate’s practice to comment on proposed transactions involving specific taxpayers otherwise than in the form of an advance income tax ruling. If your situation relates to a specific taxpayer and a completed transaction, you should forward all relevant facts and documents to the appropriate Tax Services Office for its views. We are, however, prepared to provide the following general comments, which we hope you will find helpful.
In general, the CTC is a non-refundable tax credit calculated on the amounts paid during the year, up to a maximum of $500, by an individual as eligible fitness expenses for each of his or her children who were under 16 years of age at the beginning of the year. The term "eligible fitness expense" is defined in the Act as the amount of a fee paid to a qualifying entity to the extent that the fee is attributable to the cost of registration or membership of the qualifying child in a prescribed program of physical activity.
The Income Tax Regulations specify, among other things, that for the purposes of the CFTC, a "prescribed program of physical activity" must not be part of a school's curriculum and must be either a weekly program, 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 or a program, of a duration of five or more consecutive days of which more than 50% of the daily activities include a significant amount of physical activity.
Whether a sport program offered by an educational institution is a physical activity program is a question of fact. It is generally our position that where athletic activities are mandatory for all students and where voluntary cessation of participation in these athletic activities results in consequences for the student, then these athletic activities will be considered part of the school's curriculum. Therefore, any fees paid attributable to these activities will not be eligible for the CFTC.
Best regards,
Louise J. Roy, CGA
Manager
for the interim Director
Ontario Corporate Tax Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch.