This week, Prime Minister Stephen Harper announced the Conservative Government’s intention to double the Children’s Fitness Tax Credit (CFTC) and make it refundable. The maximum amount of expenses that may be claimed under the credit will be doubled from its current limit to $1,000 for the 2014 tax year and subsequent tax years, and the credit will be made refundable effective for the 2015 and subsequent tax years.
The CFTC was introduced by our Government in Budget 2006 to help promote physical fitness among children by making it more affordable for Canadian families to register their kids in fitness activities. When fully implemented, the proposed enhancements to the CFTC that are being announced today will fulfill a commitment made by our Government in 2011. The enhancements will deliver additional tax relief to about 850,000 families who enrol their children in eligible fitness activities.
Parents will be able to take advantage of the new $1,000 maximum limit in the spring of 2015 when they file their tax returns for 2014. The credit will be made refundable as of the 2015 tax year, increasing benefits to low-income families claiming it for that year and subsequent years.
The CFTC currently provides 1.4 million families with total tax relief of approximately $115 million per year. Claims must be supported by tax receipts. Your child must have been under 16 years of age (or under 18 years of age if eligible for the disability amount) at the beginning of the year in which the eligible fitness expenses were paid. Eligible activities include strenuous games such as hockey or soccer, activities such as golf lessons, horseback riding, sailing, and bowling, as well as others that require a similar level of physical activity. Fees charged for extracurricular programs that take place in school may be eligible. The proposed enhancements to the CFTC are in addition to the many measures that our Government has introduced since 2006 to support Canadian families, including the Universal Child Care Benefit and the Children’s Arts Tax Credit. Families are also major beneficiaries of the substantial tax relief that our Government is providing to all Canadians, such as the 2-percentage-point reduction in the Goods and Services Tax, broad-based personal income tax reductions and the new Tax-Free Savings Account, which helps Canadians meet lifetime savings needs.
Parents know that regular exercise is a key part of their children’s development and gets them started on a lifetime of healthy, active living. Our Government recognizes the impact that expenses for sports activities can have on families, particularly those with lower incomes. That is why we are following through on our promise to enhance this tax credit by doubling the maximum amount and making it refundable
The following examples illustrate how doubling the Children’s Fitness Tax Credit, as well as making it refundable will benefit families:
Example 1 - A couple with one child with $950 in eligible expenses in 2014 ($300 for the child’s fall football program plus $650 for the child’s winter hockey program)
Under the current Children’s Fitness Tax Credit, the couple’s tax liability is reduced by $75 (15 per cent of the maximum credit amount of $500). Under the proposed doubling of the credit, their tax liability would be reduced by about $142 (15 per cent of $950).
Example 2 – A couple with two children in a soccer program ($240 per child in 2015). Yet the family’s income is too low for them to have net tax liability.
Since the original non-refundable Children’s Fitness Tax Credit can only be used to reduce tax owing, the credit, as it currently stands is of no benefit to them. By making the credit refundable as proposed, the couple will be better off by $72 ($36 per child based on 15 per cent of $240). The family’s tax refund would include this $72.
The Children’s Fitness Tax Credit was introduced in Budget 2006 by the Honourable Jim Flaherty, who was Minister of Finance at the time. The credit became effective in 2007, and was designed according to the recommendations of the Expert Panel for the Children’s Fitness Tax Credit. In 2011, our Government committed, upon return to budget balance, to doubling the maximum amount that can be claimed under this credit and to making the credit refundable.
Eligible activities include strenuous games such as hockey or soccer, activities such as golf lessons, horseback riding, sailing, and bowling, as well as others that require a similar level of physical activity. Fees charged for extracurricular programs that take place in school may be eligible. For more information on the Children’s Fitness Tax Credit please visit the Canada Revenue Agency website: http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/ddctns/lns36....
Please feel free to contact my constituency office if you would like more information on this, or other federal tax credits.
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