24 May 2012 Ministerial Correspondence 2012-0441061M4 - CATC - Fees paid for an optional school trip

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: 1. Whether the fees paid for an optional school trip that is outside of the school’s curriculum are eligible expenses for the children’s arts tax credit.
2. Whether the optional annual fee paid to a fund organized by the Music Parents Society would be an eligible expense.

Position: 1. Yes, if it meets all of the requirements provided under section 118.031 of the Act. Specifically, fees paid for costs related to travel, meals, and accommodation do not qualify as eligible expenses for the CATC.
2. Yes, providing all other requirements of the legislation are met.

Reasons: 1. Based on the legislation, artistic activities include performing arts and music programs, and therefore, if the activity meets all other requirements, an optional six-day school trip that is outside of the school’s curriculum may qualify as an eligible activity for the CATC.
2. The content of the legislation.

									May 24, 20012

XXXXXXXXXX

Dear XXXXXXXXXX:

The office of the Honourable James M. Flaherty, Minister of Finance, forwarded to me a copy of your correspondence asking if the fees paid for an optional school trip that is outside of the school’s curriculum are eligible expenses for the children’s arts tax credit (CATC). I apologize for the delay in responding.

Expenses made for a child are eligible if they are paid to a qualifying entity as fees resulting from the cost of registration or membership in a prescribed program of artistic, cultural, recreational, or developmental activity. The Income Tax Act defines a qualifying entity as a person or partnership that offers one or more programs of artistic, cultural, recreational, or developmental activities that are prescribed or specified in the Income Tax Regulations. The definition of “person” includes entities such as clubs and associations.

A prescribed program of artistic, cultural, recreational, or developmental activities includes a program that is not part of a school’s curriculum, is at least five consecutive days, and in which more than 50% of the daily activities include a significant amount of artistic, cultural, recreational, or developmental activities.

To be eligible, an artistic, cultural, recreational, or developmental activity must:

• be supervised;
• be suitable for children; and
• contribute to a child’s ability to develop creative skills or expertise, acquire and apply knowledge, or improve dexterity or coordination in an artistic or cultural discipline.

Although the Canada Revenue Agency administers the CATC, it does not determine the general eligibility of a particular activity. Based on the specifics of the program, the person or organization offering the program determines if the program meets the requirements of the Act. Based on the legislation, artistic activities include performing arts and music programs. Therefore, if it meets all other requirements, an optional six-day school trip that is outside of the school’s curriculum may qualify as an eligible activity for the CATC.

Even though an activity adapted for children may be eligible, the fees paid to a qualifying entity may be ineligible for the CATC. Only those fees the qualifying entity charges for costs to operate and administer a program, offer instruction, rent facilities, and purchase uniforms and equipment qualify as eligible expenses for the CATC. Specifically, fees paid for costs related to travel, meals, and accommodation do not qualify as eligible expenses for the CATC. The qualifying entity offering the program is responsible for determining if specific program expenses are eligible and for issuing receipts.

In your email, you ask if the optional annual fee paid to a fund organized by the Music Parents Society would be an eligible expense. Providing all other requirements of the legislation are met, a membership fee paid to an organization may qualify as an eligible expense if:

• the membership in the organization is not part of a school’s curriculum;
• the membership lasts eight or more consecutive weeks; and
• more than 50% of the activities the organization offers to children include a significant amount of artistic, cultural, recreational, or developmental activities.

I trust that the information I have provided is helpful.

Yours sincerely,

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

Ananthy Mahendran
(905) 721-5204
2012-044106