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Federal Government Promoting Children’s Art Tax Credit

Government of Canada [1]The Honourable Gail Shea, Minister of National Revenue, accompanied by Ed Holder, Member of Parliament for London West, today visited the London Children’s Museum to promote the new children’s arts tax credit [1], a new non-refundable credit passed this year in the 2011 federal budget.

“Parents whose children participate in paid artistic, cultural, recreational, and developmental programs will now enjoy the same benefit as parents whose children participate in paid programs of physical activity. Our Government believes whether a child is inspired by Justin Bieber, Karen Kain, Brett Lawrie, or The Tragically Hip, parents should receive a tax credit to help pay for the programs that will help their children live out those dreams,” said Minister Shea. (Editor’s note: what if your child is inspired by ReBoot, How To Be Indie, Club Penguin or their favourite iPhone app? Are these considered Visual or Creative Arts? The broad language of Canada Revenue leaves much to interpretation and the whim of the tax auditor, it seems.)

“One need not look further than the London Children’s Museum to be reminded of the infinite curiosity and thirst for knowledge our kids possess. I am pleased that our government’s Children’s Art Tax credit will help London families enrich their children’s lives in developing their cultural knowledge and creativity” added Ed Holder.

In addition to fitness programs covered by the children’s fitness tax credit, parents can now claim money spent on programs that focus on fine arts, music, performing arts, outdoor wilderness training, learning a language, studying a culture, tutoring, and more. When parents claim the children’s arts tax credit—up to a maximum of $500 of the cost of programs—they save as much as $75 at tax time per child claimed.

More Information From The Art Tax Credit Web Page:

1. What is the Children’s Art Tax Credit (CATC)?

For 2011 and subsequent years, the budget proposes a new non-refundable tax credit based on eligible expenses paid for the cost of registration or membership of your or your spouse’s or common-law partner’s child in a prescribed program of artistic, cultural, recreational or developmental activity (eligible program).

2. How much can I claim for each of my children?

The CATC will let you claim eligible expenses of up to $500 per year for each of your children who are:

Also, if at least $100 in eligible expenses has been paid for a child eligible for the disability tax credit, an additional amount of $500 can be claimed for that child.

3. How is the credit calculated?

The CATC is calculated by multiplying the lowest personal income tax rate (15% in 2011) by the eligible amount for each child.

4. How will I claim the CATC?

Beginning with the 2011 personal income tax and benefit return, a new line will be incorporated into the Schedule 1, Federal Tax, to allow you to claim the credit.

5. What programs are eligible for the CATC?

To be eligible, a program must be supervised and suitable for children. Eligible programs include:

A program that is part of a school curriculum will be ineligible.

6. What are eligible activities?

Eligible activities will include an activity that:

7. What do creative skills or expertise in artistic or cultural activities involve?

Creative skills or expertise involve a child’s ability to improve dexterity or coordination, or acquire and apply knowledge in the pursuit of artistic or cultural activity. Artistic and cultural activities include literary arts, visual arts, performing arts, music, media, languages, customs and heritage.

8. What expenses are eligible for the CATC?

Eligible expenses are fees paid for the cost of registration or membership, which includes the costs of administration, instruction, and the rental of facilities or equipment.

Part of a registration or membership fee may be for the cost of equipment or uniforms that are provided for participants to use in the program. At the end of the program, the equipment or the uniforms normally have little or no resale value, in which case the part of the registration or membership fee for their cost is included in the eligible fees for this credit.

In other situations, in addition to paying registration or membership fees, parents will buy uniforms or equipment from third-party suppliers or through the program. In these situations, the purchase price for the uniforms or equipment is not an eligible expense.

9. What expenses are ineligible for the CATC?

The following expenses are not eligible for the CATC:

10. I paid fees for my child to attend a program that involves both physical activity and artistic, cultural, recreational and developmental activities. Can I claim both the CATC and the Children’s Fitness Tax Credit?

No. If the fees are considered an eligible expense for the purposes of the Children’s Fitness Tax Credit, you will not be able to claim the CATC for these fees.

11. How do I know if a program is eligible for the CATC?

Although the CRA will administer the CATC, organizations are in the best position to determine if the programs they offer are eligible.

12. Should I ask for a receipt?

You should receive, or ask for, a receipt from organizations that provide prescribed art programs for which you paid to have your child enrolled. The organizations will determine the part of the fee that qualifies for the CATC.

Keep the receipts issued by the organizations that deliver the programs. Do not include the receipts when you file your income tax and benefit return. However, keep the receipts in case we ask for them to verify your claim.

13. What does the CRA consider to be an acceptable receipt?

A receipt should contain the following information:

Note: An authorized signature is not required for electronically generated receipts.

14. Where can I get more information about this new tax credit?

The CRA is committed to providing taxpayers with up-to-date information. The CRA encourages taxpayers to check its Web pages often. All new forms, policies, and guidelines will be posted as they become available.

In the meantime, please consult the Department of Finance Canada’s Budget 2011 [2] documents for details.