Minister of National Revenue Gail Shea continued her cross-Canada promotional tour this week, stopping by the Edmonton Children's Dance Theatre to highlight the recently passed children's arts tax credit, a non-refundable credit that starts this year.
The credit, originally introduced in the budget, allows parents of kids under 16 who participate in paid artistic, cultural, recreational and developmental programs to enjoy the same tax credit as parents whose children participate in physical activity who can already claim the children's fitness tax credit. Parents whose children participate in both arts and fitness activities may claim credits for the costs of both programs.
The credit, which is based on up to $500 of the cost of various programs, is worth 15% or $75. Eligible programs include those in the fields of fine arts, music, performing arts, outdoor wilderness training, learning a language, studying a culture and tutoring.
To be eligible, the program can either be a weekly program lasting a minimum of eight consecutive weeks of which at least 90% of the activities are eligible or can be a program, like a specialty camp, lasting a minimum of five consecutive days in which more than 50% of the daily activities are eligible activities.
So, which expenses qualify? Registration or membership fees, which typically include the costs of administration, instruction and perhaps the rental of facilities or equipment qualify. For some activities, a portion of the fee can include the cost of equipment or uniforms that are provided for the kids to use in the program. Since this equipment or uniform typically has little or no resale value, their cost is included in the eligible fees that can be claimed.
That being said, the CRA has stated that if you enroll your kids in a program for which you have to buy uniforms or equipment either from the program or from third-party suppliers whose cost is separate and distinct from the registration or membership fee, these costs are not an eligible expense.
The CRA, perhaps fearing potential abuse of this credit, also spelled out a list of "ineligible" expenses. These include the costs of any associated travel, meals and accommodation, as well as any fees paid for a program if the instructor or leader is either someone under 18 or the spouse or partner of the parent making the claim.
Also, amounts claimed under the arts credit cannot be claimed as a childcare expense, the fitness credit nor any other credit.
Finally, to substantiate your claim come tax time, get a receipt from the organization that provides the arts program. As with many other credits, you don't need to actually submit them with your return but you should hang on to them in case the CRA asks for them later to verify your claim.
To date, only Manitoba, Ontario and Saskatchewan have introduced similar provincial arts tax credits.