Principal Issues: [TaxInterpretations translation] Is horse-back riding a CFTC-qualifying activity?
Position: General comments
Reasons: Generally, the CRA will not indicate whether a program of activities qualifies as the entity offering the program is better able to make that determination.
XXXXXXXXXX 2007-023044 Nancy Turgeon, CGA April 30, 2007
Dear Madam,
Subject: Children's fitness tax credit
This is in response to your letter of March 23, 2007, to the Quebec City Tax Services Office, which was forwarded to us for reply. You asked whether the horseback riding lessons your company offers are eligible for the children's fitness tax credit (CFTC).
Unless otherwise indicated, all statutory references herein are to provisions of the Income Tax Act.
New subsection 118.03(1) contains certain definitions and rules that apply for the purposes of the CFTC. In general terms, an "eligible fitness expense" includes an amount paid to a qualifying entity in respect of the cost of registration or membership of a qualifying child in a program of prescribed physical activity. Provisions in the Income Tax Regulations that will define a program of prescribed physical activity have not yet been proposed.
However, Finance Canada has indicated that such a program must be continuous (i.e., provide at least one session per week for eight weeks or, in the case of a summer or sports camp, be at least five consecutive days in duration), suitable for children, and conducted under supervision. In addition, almost all of the activities in a CFTC-eligible program must include a significant amount of physical activity that contributes to cardio-respiratory endurance and one or more of the following objectives: muscular strength, muscular endurance, flexibility and balance. Although the Canada Revenue Agency (CRA) is responsible for administering the CFTC, it will not generally indicate whether the activity qualifies for the CFTC. Rather, the entity offering a program of physical activity is in a better position to determine whether the program satisfies the specific requirements of the CFTC. In that context, the CRA is committed to working with entities offering programs of physical activity to ensure that they have all the necessary information to make that determination. For more information on the CFTC, we invite you to consult the CRA website at www.cra-arc.gc.ca/whatsnew/fitness-e.html and the Department of Finance Canada website at http://www.fin.gc.ca/news07/07-002e.html. Similarly, the CRA has developed a checklist for entities offering a program of physical activity to determine whether their program qualifies for the CFTC. We invite you to consult that checklist at www.cra-arc.gc.ca/whatsnew/checklist-e.html.
These opinions are not advance decisions and, as stated in paragraph 22 of Information Circular 70-6R5 of May 17, 2002, are not binding.
Best regards,
Louise J. Roy, CGA
Interim Manager
Business and Partnerships Section
Business and Partnerships Division
Income Tax Rulings Directorate
Certified copy: Nicole Goulet
Quebec City Tax Services Office