It is tough to believe that I am writing about health, fitness, and taxes all in the same article. No, this is not another episode of “The Twilight Zone”!

In the May 2006 federal budget, the Conservative government introduced the new “children’s fitness credit”. The children’s fitness tax credit lets parents claim up to $500 per year for eligible fitness expenses paid for each child who is under 16 years of age at the beginning of the year in which the expenses are paid. The credit is worth 15 per cent of the amount spent, up to the $500 maximum per child.

You are now probably wondering what constitutes an eligible program of physical fitness. The Canada Revenue Agency (CRA) describes an eligible fitness expense as the cost of registration or membership of an eligible child in a prescribed program of physical activity. Such a program must:

• be ongoing (either a minimum of eight consecutive weeks long or, for children’s camps, five consecutive days long);
• be supervised;
• be suitable for children; and
• include a significant amount of physical activity that contributes to cardio-respiratory endurance, plus one or more of: muscular strength, muscular endurance, flexibility and balance.

As with any new tax law, there have been several challenges to the interpretation of this law and specifically “physical fitness”. The Department of Finance has issued a statement that “sporting, recreational and other activities in which motorized vehicles (automobiles, motorcycles, power boats, airplanes or snowmobiles, for example) are used as an essential component of the activity will be excluded. Unfortunately, this will most likely exclude popular summer activities such as wakeboarding and waterskiing from qualifying for the tax credit.

A receipt should be obtained or may need to be asked for from the organizations that provide prescribed programs of physical activity for which you paid to have your child enrolled. You do not have to include this receipt with your income tax return, but it should be kept for six years in case you need to verify your claim.

This tax credit will not only give parents some tax relief when registering their children for eligible fitness activities, but will also give more incentive for parents to keep their children active and hopefully healthier.

It is wonderful to see the government taking steps to encourage physical activity towards the youth of this country. Perhaps a similar credit for adults will encourage more Canadians to participate in physical activity and in the long run take the stress off of our health system.

August 27, 2008