Do your programs create a tax credit? 
By: Yvonne Chenier
 
Organizations that put on children's programing should check to see if they can help families take advantage of a new tax credit.  The Government of Canada has just released details about the Children's Arts Tax Credit (CATC), announced in the 2011 federal budget (www.cra.gc.ca/artscredit). This new tax credit, available starting in the 2011 tax year, is similar to the Children's Fitness Tax Credit that has been available for a few years now.  

The Canada Revenue agency leaves it up to each individual organization to determine if the programs they offer are eligible. Therefore it is wise to take steps now to see if your programs qualify and communicate with your family users about this credit.  If your programs do not qualify at this time then perhaps with a bit of tweaking you can make it work. 

There are three things to check.

1. Is your children's program activity eligible?

Eligible activities either contribute to the development of creative skills or expertise in artistic or cultural activities, 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. This is a broad range of activities that could cover everything from a toddlers' play group to teen group camping activities.

2. Does the duration of your children's program qualify?

The eligible activity must be supervised and be:

a) weekly program of a minimum eight consecutive weeks duration in which a minimum of 90% of all the activities are eligible activities;

b) program of a minimum five consecutive days duration in which more than 50% of the daily activities are eligible activities;

c) program of a minimum eight consecutive weeks duration offered to children by a club, association or similar organization offering a variety of different activities when more than 50% of the activities offered are eligible activities or more than 50% of the time scheduled for activities offered to children is for activities that are eligible activities (if both 50% tests are not met, a prorated portion of the fees will be allowed, representing the percentage of eligible activities offered by the organization or the percentage of time scheduled for these activities by the organization); or

d) membership of a minimum eight consecutive weeks duration in an organization if more than 50% of all the activities offered to children by the organization are eligible activities (if the 50% test is not met, a prorated portion of the fees will be allowed, representing the percentage of eligible activities offered to children by the organization).

This definition will allow many more organizations to qualify for tax credits than ever before.  Organizations should review their practices of charging membership fees and program fees. 

3. Do you issue proper receipts?

At a minimum a receipt should contain the organization's name and address; name of the eligible program, amount received, date received, amount that is eligible for the CATC full name of the payer, full name of the child, and the child's year of birth and an authorized signature unless it is electronically generated.
It should be noted that any program that is part of a school curriculum is not eligible for this tax credit.  Children must be under 16 years of age at the beginning of the year in which the expenses are paid or under 18 years of age at the beginning of the year in which the expenses are paid if the child is eligible for the disability tax credit. An additional amount of $500 can be claimed for those children who are eligible for the disability tax credit.

There is no double dipping allowed.  If the fees are considered an eligible expense for the purposes of the Children's Fitness Tax Credit, they will not be eligible for the CATC. It is hoped that the CRA will soon publish a checklist for organizations similar to the Children's Fitness Tax Credit Eligibility Checklist    http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/ddctns/lns360-390/365/chcklst-eng.html.  This kind of tool for both credits would make it simple for those organizations to follow the rules and issue receipts for the right tax credit. 

Those organizations that help families get more tax credits may benefit.  It is worth taking a look at your practices.  Since the CATC covers up to a maximum of $500 of the cost of programs, this credit alone is worth up to $75 per child.  You never know if you will get that - or more - back in donations!