Another reason for keeping the kids active
If you have kids and live in Ontario, the cost of their extracurricular activities may soon be getting cheaper, thanks to draft legislation introduced this past week to establish a new provincial tax credit.
Ontario's new Children's Activity Tax Credit would allow parents to claim up to $500 of eligible expenses per child and receive a refundable tax credit worth up to $50 per child under 16 years of age or up to $100 for a child with a disability under age 18.
Manitoba and Nova Scotia have already introduced similar measures. Ontario's credit is modelled to some extent on the federal children's fitness credit with two important differences:
First, it would apply to a wide range of activities beyond physical fitness. Some of the eligible activities that would qualify are listed on the Ontario government's website and include: language instruction, tutoring, chess, choir, CPR courses, crafts, dance, drama, first aid, girl guides, life guarding, music lessons and scouts.
The second big difference is that, unlike the federal program, Ontario's tax credit would be fully refundable and thus benefit all families, including those with low incomes who don't pay Ontario tax.
As a recap, the federal program introduced in 2007 provides a non-refundable children's fitness tax credit for up to $500 for the enrolment of a child under 16 in an "eligible program of physical activity." The federal credit is worth 15% of the amount spent, thus worth a maximum of $75.
An eligible program of physical activity under the federal program is defined as "an ongoing, supervised program, suitable for children, in which substantially all of the activities undertaken include a significant amount of physical activity that contributes to cardio-respiratory endurance, plus one or more of: muscular strength, muscular endurance, flexibility and balance."
The Manitoba non-refundable credit uses the same criteria as the federal program and provides a credit worth up to $54 (or $108 for a child with a disability). Starting in 2011, the Manitoba credit is available to all young adults from age 16 through 24.
Nova Scotia's non-refundable credit is similar to the federal credit, but is available to children aged 17 and under who are registered in an "approved" organized sport, physical recreation or physical activity program. Sport, recreation and physical activity providers in Nova Scotia must register with the Nova Scotia government for their participants to benefit from the tax credit.
A parent who claims the Nova Scotia maximum of $500 per child can expect a tax reduction of about $44 per child. While the incentive program was to be available to all Nova Scotia taxpayers, not just kids, beginning in 2009, that measure was deferred to a later date.