An Early Start On Healthy Living: Children's fitness Tax Credit Worth Up To $500

National Post

2006-12-23


Whether it's an excess of gingerbread or latkes, your kids most likely could
use some physical activity once the holidays are over.

Earlier this week, the government published its program eligibility
guidelines for the new children's fitness tax credit set to go into effect on
Jan. 1.

You may recall that in its federal budget last May, the Conservative
government introduced a non-refundable children's fitness tax credit for up to
$500 in eligible fees for the enrolment of a child under age 16 in an "eligible
program of physical activity" beginning in 2007. The credit will be worth 15.5%
of the amount spent, up to the $500 maximum.

On July 31, Finance Minister Jim Flaherty appointed an expert panel of health
and fitness experts to advise on what types of programs should qualify for the
credit. The panel, chaired by Dr. Khristinn Kellie Leitch, head of pediatric
surgery at the Children's Hospital of Western Ontario, delivered its
recommendations on Oct. 26, and the government has based its definition of an
eligible programon this report.

An eligible program of physical activity for the purposes of the new credit
will be 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 above definition will cover most sports and is broad enough to encompass
other recreational programs that involve physical activity, such as dance
lessons.

Taking into account the Physical Activity Guides for Children and Youth
published by the Public Health Agency of Canada, in order for a program to be
eligible for the credit, it should consist of at least 30 minutes of "sustained
moderate to vigorous physical activity" per session for children under age 10.
Kids 10 and older should be active for at least an hour.

Furthermore, the government stated that the programs will only be eligible
for the tax credit if they are at least eight weeks long with a minimum of one
session per week. Children's camps may also qualify if they are at least five
consecutive days in length and provided half the program time is devoted to
physical activity.

What about children's memberships in gyms or recreational centres? Good news:
The child's membership fees paid to join such a club may also qualify, provided
they join for at least two months and half the child's time is spent on
qualifying physical activities.

Costs accrued from extracurricular physical activities at school will also be
eligible.

"We know families have limited budgets and the children's fitness tax credit
will help make it possible for more young Canadians to get involved in sport and
physical activity," said Minister for Sport Peter Van Loan.

- Jamie Golombek, CA, CPA, CFP, CLU, TEP is the vice-president, taxation and
estate planning, at AIM Trimark Investments in Toronto. Financial Post