Children’s fitness and art tax credits offset the cost of fees for children to take fitness classes, engage in organized sports, and learn about art. In 2017, the Canada Revenue Agency (CRA) phased out the children’s fitness and arts credits. Government officials believe this change is justifiable, since few families claimed the credits, and the credits did not encourage children to become more active. Additionally, high-income families seemed to benefit from the credit more than low-income families. To address this discrepancy, the government put more funding behind the Canada Child Benefit.
What Is the Canada Child Benefit?
If your clients were likely to benefit from children’s fitness or arts tax credits, you may want to talk to them about the Canada Child Benefit (CBB). The CCB is not a tax credit. Instead, this benefit provides monthly payments to families based on the income information on their tax returns. Remind your clients that they need to file tax returns to claim these benefits, and both spouses must file.
Are There Similar Tax Credits for Children?
Some provinces also offer tax credits similar to the phased-out federal fitness and arts credit. For example, Manitoba offers a children’s arts and cultural activity tax credit worth up to $54. The cost of artistic, recreational, and developmental activities for children under the age of 16 helps determine the amount of this credit. For children under 16 and young adults under 25, the province also offers an additional credit for fitness expenses. This credit is also worth up to $54, or up to $108 for children with disabilities.
Occasionally, the government introduces or phases out certain credits and deductions. To soften the blow for your clients at tax time, research alternative programs or similar credits that could help them.
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