Principal Issues: Whether an activity suitable for a disabled child will be eligible for the Children's Fitness Tax Credit.
Position: Likely yes
Reasons: For children eligible for the disability tax credit, the Regulations contain a specific definition of "physical activity". Further, in recognition of additional expenses incurred, the Act was amended to introduce a separate non-refundable amount for children eligible for the disability tax credit.
XXXXXXXXXX
May 7, 2008
Dear XXXXXXXXXX :
The Honourable James M. Flaherty, Minister of Finance, forwarded a copy of your correspondence, which was received on July 19, 2007, concerning the children's fitness tax credit as it relates to persons with disabilities.
The children's fitness tax credit is a measure introduced by the Government of Canada to provide parents with a non-refundable tax credit on eligible amounts of up to $500 paid to register a child under the age of 16 in an "eligible program of physical activity." The Income Tax Act has recently been amended to provide additional support to children who are eligible for the disability tax credit to recognize the challenges they face in becoming more active. The Income Tax Regulations define what constitutes "physical activity" for purposes of the credit and provide that for children who are eligible for the disability tax credit, this expression means a supervised activity, suitable for children, that results in movement and an observable expenditure of energy in a recreational context. For these children, eligible fitness expenses incurred up to the age of 18 will qualify for the credit.
Furthermore, in light of the additional expenses incurred by children with disabilities for such things as specialized equipment, transportation, and attendant care, the Act was amended to introduce a separate $500 non-refundable amount for disability tax credit-eligible children subject to spending a minimum of $100 on registration fees for an eligible program.
Although the Canada Revenue Agency (CRA) administers the credit, it will not be making general determinations as to whether a particular activity is either eligible or ineligible. The organization offering the program has the detailed knowledge necessary to determine if the criteria in the Regulations are being met. I note that it is not an organization's responsibility to determine whether a child is eligible for the disability tax credit. If a parent tells an organization that a child is eligible for the disability tax credit, the organization should issue a receipt accordingly.
More detailed information about the children's fitness tax credit is available on the CRA Web site at www.cra.gc.ca/whatsnew/fitness-e.html.
I appreciate the opportunity to address your concerns and trust that my comments will be helpful.
Sincerely,
The Honourable Gordon O'Connor, P.C., M.P.
Renée Shields
(613) 957-2049
2007-024708
April 21, 2008