Child-care deduction versus the children's fitness tax credit
It seems that nearly every week I hear of a different specialty camp to which parents are sending their kids this summer: tennis camp, horseback-riding camp, fashion-design camp as well as week-long camps at the local museum or science centre.
But whether you can claim some tax relief for camp fees -- and how much you can get -- may depend on the type of camp it is.
Tax relief, if applicable, can come in one of two forms: the long-standing child-care deduction or the relatively new children's fitness tax credit.
Child-care deduction While childcare expenses do not include fees paid for sports activities, such as tennis lessons, the Canada Revenue Agency does acknowledge that many summer sports camp programs include elements of education and training as well as child care.
In fact, the CRA has specifically stated that since many summer sports camps for young children include a sufficient degree of child care, despite the program being enriched by instructional sporting activities, the costs paid to send kids to these camps would generally qualify for the child-care deduction.
For overnight camps, however, the amount of camp fees deducible is limited to $175 per week for kids seven and under and $100 per week for kids age eight to 15, subject to the general annual per-child childcare deduction limitations of $7,000 and $4,000 respectively.
Children's fitness tax credit This federal non-refundable credit was first introduced for the 2007 calendar year and is applicable for up to $500 in eligible fees paid for the enrolment of a child under 16 in an "eligible program of physical activity." The credit is worth 15% of the amount spent, up to the $500 maximum creditable per child.
An eligible program of physical activity is defined by the CRA as "an ongoing, supervised program, suitable for children, in which substantially all of the activities undertaken include a significant amount of physical activity that contribute to cardio-respiratory endurance, plus one or more of: muscular strength, muscular endurance, flexibility and balance."
Normally, programs are only eligible for the tax credit if they are at least eight weeks long with a minimum of one session per week. Children's camps, however, can also qualify if they are at least five consecutive days, provided half the program time is devoted to physical activity.
So, which to claim: the child-care deduction or the fitness credit?
Since summer camp fees may qualify for both, it's generally advisable for a parent who is not in the lowest federal tax bracket to claim the child-care deduction first since it will, by construction, always be worth more than the 15% fitness credit.
On the other hand, if the family is already taking advantage of the full annual deductible child-care expense limits, as discussed above, then claiming the fitness credit will provide some additional relief.