Principal Issues: Will wakeboarding and waterskiing programs be eligible for the children's fitness tax credit?
Position: Possibly not
Reasons: The Regulations defining a "prescribed physical activity" for purposes of the credit have not yet been published by the Department of Finance. However, Finance has issued a statement that sporting, recreational and other activities in which motorized vehicles are used as an essential component of the activity will be excluded.
June 29. 2007
XXXXXXXXXX
Dear XXXXXXXXXX:
I am writing in reply to your letter addressed to the Honourable James M. Flaherty, Minister of Finance, concerning the children's fitness tax credit. I received a copy of your letter from Minister Flaherty on May 17, 2007.
As you have noted, the Expert Panel for the Children's Fitness Tax Credit recommended that activities requiring the use of a motorized vehicle not qualify as an eligible program of physical activity. You have expressed concern that, in light of this wording, fees paid to enroll children in water ski or wakeboard programs will not be eligible for the credit.
Although the Department of Finance Canada has publicly endorsed certain guidelines and thresholds of activity that must be met, it has not yet published the provision of the Income Tax Regulations that will define a prescribed physical activity for purposes of the credit. However, the Department of Finance Canada has issued a statement that sporting, recreational, and other activities in which motorized vehicles (for example, automobiles, motorcycles, power boats, airplanes, snowmobiles) are used as an essential component of the activity will also be excluded.
The Canada Revenue Agency will administer the credit, but it will not be making general determinations on whether a particular activity or program is either eligible or ineligible. The organization offering the program will have the detailed knowledge that is necessary to determine if all of the required criteria are met.
I trust the information I have provided will be of assistance.
Sincerely,
The Honourable Carol Skelton, P.C., M.P.
Renée Shields
(613) 957-2049
2007-023739
June 11, 2007