Children’s Fitness Tax Credit in Year of Separation
The Children’s Fitness Tax Credit provides a tax credit on up to $500 of expenses incurred by parents to provide for participation of their children in supervised physical activities. Generally, the credit applies to children under the age of 16 except where the child qualifies for the disability tax credit, in which case the limit is 18 years of age. The expense incurred must be an "eligible fitness expenses", which generally means that the activity must be a supervised physical activity. Regulation 9400 of the Income Tax Act (Canada) provides greater detail as to what are prescribed activities.
The Children’s Fitness Tax Credit can be claimed by either parent but the total of the expenses that qualify for the credit is $500 per child.
If an eligible fitness expense was incurred prior to a separation of the parents, the Income Tax Act does not provide any guidance with respect to which parent should claim the tax credit. The parent with whom the child resides does not have any greater claim to the tax credit than the other parent.
Accordingly, which parent will claim the Child Fitness Tax Credit, should be an item for negotiation and documentation in the separation agreement. If not, the parent that files his or her tax return first, will be able to claim the tax credit, and no credit will be available to the other parent.
Canada Child Benefits
The CRA has released an updated Guide T4114 – Canada Child Benefits for the period July 2009 to June 2010. The guide can be viewed here.