Understanding the new Children’s Art Tax Credit

Raising kids is getting more expensive and participating in extra-curricular activities only adds to the total cost. But parents will be able to take advantage of the new federal Children’s Art Tax Credit on their 2011 tax returns. It many ways, this credit mirrors the existing Children’s Fitness Tax Credit, as you can claim registration expenses up to $500 per child with an additional $500 available for disabled children once they incur $100 of registration costs. And a child must be 16 and younger to qualify. For disabled children, the age limit is 18.

When converted into a non-refundable tax credit, the $500 credit provides a tax savings of $75 (calculated as $500 x 15%).

But many people have been asking us what types of programs actually qualify for the credit. Unlike the fitness credit, which requires a certain amount of physical and cardiovascular activity, the arts credit may be slightly harder to define.

Some of the examples of eligible programs for this credit include: art, languages, public speaking, chess, crafts, music, Scouting, Girl Guides, drama, pottery, tutoring, sculpting, painting and photography. The organization needs to provide a receipt with the amount paid for the program. It cannot include additional expenses, like supplies or uniform, as they are not eligible to be part of the credit.

There are some provinces with similar credits available for 2011. Saskatchewan includes cultural and recreational activities along with sporting activities in its Active Families Credit. Ontario also has a $509 refundable Children’s Activity Credit that was introduced to help offset the additional HST costs on registration fees. Manitoba has also introduced the $500 Children’s Arts and Cultural Activity Credit for programs relating to children’s arts and cultural activities.

In most cases, if a program qualifies for the federal credit, it will also qualify for the provincial claim.

There is also some good news for parents who have argued that some activities should be counted as child care expenses, as a child may attend the program after school. These activities can now legitimately be claimed with the Children’s Arts Credit.

Brenda Bryant
Senior tax pro and community supporter