For parents looking for tax relief, the government is keen to bring music to your ears – figuratively and literally.
Federal Children’s Arts Tax Credit (CATC)
Many parents are already familiar with the Children’s Fitness Tax Credit (CFTC) introduced in 2007. While physically active kids can give you a healthy tax break, you can now paint your artistic children with the same brush. If your kids participate in artistic, cultural, recreational and developmental activities, you may be eligible for the Children’s Arts Tax Credit (CATC), a federal non-refundable tax credit in place since 2011 that works just like the CFTC.
In simple terms, the CATC applies to registration or membership fees paid. Parents can claim fees paid of up to $500 in the year for each child under 16 at the beginning of the year enrolled in an eligible program. For 2014, the CATC can result in tax savings of $75 per eligible child.
What constitutes an ‘eligible program’? Basically, it is a program lasting a certain period of time and consisting of one or more of the following activities:
- Contributes to the development of creative skills or expertise in artistic or cultural activities;
- Provides a substantial focus on wilderness and the natural environment;
- Helps children develop and use particular intellectual or interpersonal skills; or
- Provides enrichment or tutoring in academic subjects.
If you have a child who is both artistically inclined and physically active, be happy and proud: the CATC works hand-in-hand with the CFTC. Consider the example of Adam and Betty and their two young children, Mark and Nancy. Every year, Mark plays competitive softball and attends arts camp, while Nancy plays in a minor hockey league and takes violin lessons. Each activity alone costs well over $500 per year. Between them, Adam and Betty may claim eligible expenses of $500 for Mark’s art camp and $500 for Nancy’s violin lessons under the CATC, in addition to eligible expenses of $500 for Mark’s softball and $500 for Nancy’s hockey under the CFTC. In total, Adam and Betty may claim a credit for $2,000 in expenses for their children’s activities each year, resulting in tax savings of $300.
Ontario Children’s Activity Tax Credit
The Ontario government joined the chorus by introducing the provincial version of the Children’s Activity Tax Credit in 2010 to help parents with the cost to register their children in organized activities. Unlike the federal credit, the Ontario credit covers both ‘fitness’ and ‘non-fitness’ activities, with the latter essentially meaning ‘arts’ activities and includes music, dramatic arts, dance, visual arts, language, and others. For 2014, you can claim up to $541 in eligible expenses and receive up to $54 for each child under 16 (or up to $108 for a child with a disability who is under 18).
With a myriad of children’s programs offering artistic, cultural, recreational, and developmental activities, today’s ‘artsy’ kids can create masterpieces in art, music, literature, film, photography, and sculpture – as well as tax relief opportunities for you.
For more details on these tax credit programs, visit:
Charles Fu is the Senior Tax Manager at Sloan Partners. Contact Charles at Sloan Group today for an analysis of the childrens’ credits your family may be eligible for.