2 May 2012 Ministerial Correspondence 2012-0438981M4 - Children's Arts & Fitness Tax Credits

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.

Principal Issues: Should there be splitting the receipts from a dance studio where students partake in both song and dance, both being eligible activities for each of the respective tax credits?

Position: Where there are two distinct programs and each program is eligible for one of the credits based on the criteria provided above, the dance studio should be issuing two receipts or one receipt that clearly shows that the amount paid was in respect of two distinct programs.

Reasons: Regulation

XXXXXXXXXX

Dear XXXXXXXXXX:

The office of the Honourable James M. Flaherty, Minister of Finance, forwarded to me a copy of your correspondence, which I received on February 28, 2012, concerning the children's arts tax credit (CATC) and the children's fitness tax credit (CFTC).

You ask if your daughter should be splitting the receipts she issues at her dance studio where students partake in both song and dance, as each of the activities is an eligible activity for one of the noted tax credits.

Generally, eligible programs, which do not include programs that are part of a school curriculum, include:

• weekly programs of at least eight consecutive weeks in which a minimum of 90% of the activities are eligible;
• programs of five or more consecutive days in which more than 50% of the daily activities are eligible; or
• weekly programs of at least eight consecutive weeks in which a child can select among a variety of activities if more than 50% of the activities offered to children by a club, association, or similar organization are eligible or if more than 50% of the time scheduled is for eligible activities.

An eligible program cannot qualify for both the CATC and the CFTC. For example, if a dance program lasted for five consecutive days where 60% of the daily activities were eligible physical activities, such as dancing, the program is eligible for the CFTC. In this case, the program is not eligible for the CATC even if the remaining 40% of daily activities were devoted to singing.

Where there are two distinct programs and each program is eligible for one of the credits based on the criteria provided above, the dance studio should be issuing two receipts or one receipt that clearly shows that the amount paid was in respect of two distinct programs. In each case, the receipt should clearly identify the amount that is eligible for the CATC and the amount that is eligible for the CFTC. If a child was enrolled in one program that offered both types of activities, only one receipt should be issued by the dance studio for either the CATC or the CFTC, not for both. You can find more information about the CATC on the CRA Web site at www.cra.gc.ca/artscredit. Information on the CFTC is available at www.cra.gc.ca/fitness.

I trust that the information I have provided is helpful.

Yours sincerely,

Gail Shea, P.C., M.P.
Minister of National Revenue

c.c.: Mr. Robert Greene
Policy Analyst
Income Tax Legislative Amendments Section
Legislative Policy Directorate
22nd Floor, Tower A, Place de Ville
320 Queen Street
Ottawa ON K1A 0L5

George A. Robertson
(905) 721-5196
2012-043898