Tax Break for Artistic Children

A federal tax credit is possible when children under the age of 16 participate in artistic, cultural, recreational or developmental activities. Even tutoring in academic subjects qualifies under this provision.

As parents get children registered for their extra-curricular activities, it’s critical to save all receipts in a safe place, including the costs of enrolling children in literary, visual and performing arts programs, or in music or language lessons. Costs of instruction, equipment, uniforms, facility rental and administration costs included in the registration or membership fees will qualify.

How much can you claim for the Children’s Arts Amount? The credit is a maximum of 15 per cent of $500, so the real dollar value is $75, but unlike the new Children’s Fitness Credit which is refundable, the Children’s Arts Amount will only provide a benefit to you in reducing federal taxes payable.  Those with no taxable income won’t benefit.  Note that families can claim up to 15% of $1,000 for disabled children under the age of 18 who participate in these types of activities, provided that at least $100 is spent.

What if they participate in sports and the arts? If your children participate in fitness and arts activities, you can make two claims: one for each credit.  Remember that the Children’s Fitness Amount is refundable.

What are eligible programs?  An eligible program is one that is either a weekly program lasting a minimum of eight consecutive weeks or, in the case of children's camps, a program lasting a minimum of five consecutive days.  An eligible activity is a supervised children’s activity offered by a person or a partnership that offers programs of artistic, cultural, recreational or developmental activities that:

• contribute to the development of a child’s creative skills or expertise in an artistic or cultural activity
• provide a substantial focus on wilderness and the natural environment
• help children develop and use particular intellectual skills
• include structured interaction among children where supervisors teach or help children develop interpersonal skills, or
• provide enrichment or tutoring in academic subjects.

An eligible activity will also include similar activities that have been adapted to accommodate the needs and abilities of a child who is eligible for the disability tax credit.

If all other requirements are met, the full cost of a child's membership in an organization (including a club, association or similar organization) will be eligible for the credit if more than 50 per cent of the activities offered to children by the organization include a significant amount of eligible activities. Programs that are part of school curriculums will not be eligible.

Not allowed are fees paid for programs that are part of a regular school curriculum; nor are costs for travel, meals or accommodation.

Is the Child Care Expense Claim Affected?  Some of the expenses parents have for these artistic activities may also be eligible as child care expenses. In that case, the expenses may only be claimed as child care expenses, which is good for several reasons.  First the maximum dollar amount claimable for children has been increased starting in the 2015 tax year.  In addition, claiming the child care expense deduction will have a better after-tax return for parents with taxable incomes.  Claiming child care expenses also reduces net income, which could increase or create a claim for refundable tax credits like the monthly Canada Child Tax Benefit.  Any amounts that cannot be claimed as child care expenses may be claimed under the Children’s Fitness or Arts Credits.

There is certainly enough complexity in these provisions that consulting with a Tax Services Specialist could be worthwhile.  So could taking a basic tax course before doing it yourself and NETFILING.

Evelyn Jacks’ Family Tax Essentials will be available in October.  Pre-orders may be secured by calling Knowledge Bureau at 1-866-953-4769.