Tax-saving fitness

No matter how physically fit you are, tax time can have you running to exhaustion looking for ways to save on taxes. Common tax credit and tax deductions Canadian might consider are – the spousal/eligible dependant federal credit, medical expenses and charitable donations credit, public transit federal credit – but one that may have escaped your consideration is the Child Fitness Tax Credit, and if you’re eligible for it, there are some tax savings to be had. Here’s how it works:

1.  The Child Fitness Tax Credit may be claimed by a parent for each child under 16 years of age at the beginning of a calendar year (or under 18, if the child is disabled).

2.  The credit may be claimed by either parent but the total credit must not exceed the maximum allowable amount.

3.  Beginning with the 2014 tax year, the federal credit may be claimed on the first $1,000 of eligible costs. The tax credit is calculated using the lowest federal tax rate of 15%, so the maximum federal tax credit per child for 2014 would be $150.00.

4.  Eligible costs include fees paid for administration, instruction and facilities rentals. Travel, food or costs deducted as child care expenses are not eligible. Costs must be paid to someone who offers physical activity programs that are not a part of a school curriculum and generally where more than 50% of the activities offered to children include a significant amount of physical activity. The child’s program must contribute to their cardio-respiratory endurance and contribute to at least one of the following: muscular endurance, muscular strength, flexibility or balance.

5.  The eligibility rules include activities such as water skiing and horseback riding and exclude snowmobile riding.

6.  For the 2014 tax year and prior tax years, the federal credit may be used only to reduce federal tax that otherwise would be payable. Beginning in 2015, this will become a refundable tax credit.

7.  Depending on your province of residence, parents may also be eligible for an additional provincial child fitness credit.

 

By running after all your eligible tax credits – including the Child Fitness Tax Credit – you’ll definitely reduce your tax bill – but to be sure your total financial life is as fit as it can be, talk to your professional advisor.

 

This column, written and published by Investors Group Financial Services Inc. (in Québec – a Financial Services Firm), and Investors Group Securities Inc. (in Québec, a firm in Financial Planning) presents general information only and is not a solicitation to buy or sell any investments. Contact your own advisor for specific advice about your circumstances. For more information on this topic please contact your Investors Group Consultant.

This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.