From 2011 to 2015, the Canada Revenue Agency allowed a claim of $500 per child annually to the parents of children participating in arts-related activities. This claim generated a non-refundable tax credit up to $75 per child to offset the costs of membership or registration of an activity program that qualifies for the children’s arts amount. With the latest Federal Budget announcement, the Children’s Arts Amount has changed for tax years 2016 and beyond. For tax year 2016, the maximum credit is $250/child (plus the supplemental amount of $500 per qualifying disabled child if applicable). 2016 is also the last year to claim the Children’s Arts Amount. It is slated to be phased out completely in 2017.
“To qualify for the children’s art tax credit, an arts activity must be geared to children, supervised and ongoing rather than a single-day workshop,” says Ben Campbell, certified financial planner and consultant with Investors Group in Winnipeg, Manitoba. Weekly programs must have one or more sessions per week and run for at least eight consecutive weeks to qualify for the children’s arts credit. In addition, 90 percent or more of the activities in the program require a substantial amount of activity focused on the arts. Programs of this type may include extracurricular school activities that charge a fee, but they cannot be part of the normal school curriculum. Programs that operate on a daily basis, such as arts camps, must run for five consecutive days, and more than 50 percent of the daily activities must be arts-related.
Prescribed Program Content
While the CRA retains final approval about the suitability of an activity for the children’s arts tax credit, it recognizes that the organizations presenting arts programming are better placed to judge the suitability of an activity in regard to content requirements. This content must meet broad criteria set by the CRA, particularly for the development of creative skill and knowledge in literary, visual or performing arts, music, media, languages, customs or heritage. Programs with a significant focus on the natural environment and wilderness also qualify, as do programs that provide tutoring in academic subjects. Programs with substantial focus on cultural activity will also qualify, provided there is structured interaction among the participants, with supervision to assist development of interpersonal skills.
A child qualifying for the children’s arts amount must be under the age of 16 at the start of the tax year during which an eligible registration or membership fee is paid, for a prescribed children’s arts program. If a child with a disability qualifies for the disability tax credit through approval of form T2201 by the CRA, the age of eligibility rises to 18. An additional $500 can be claimed for disabled children, provided a minimum of $100 is paid for membership or registration fees. An expense is no longer eligible for the children’s arts amount if it can be deducted by an individual. For example, if a family uses an arts camp as summer child care and deducts the amount as a childcare expense, the arts camp amount cannot be used for the children’s arts tax credit.
How to Claim the Credit
The children’s arts amount is claimed on line 370 of a parent’s federal tax return. Allowable expenses must be supported by receipts, canceled cheques or other written confirmation. The arts amount can be claimed by more than one person, such as between parents or grandparents, but the total amount claimed may not exceed the maximum allowance per child. If all or part of an eligible arts expense is reimbursed, the children’s arts amount cannot be claimed unless the reimbursed portion is also listed as income on the tax return, such as through a taxable benefit listed on a T4 information slip. If a return is filed electronically, supporting documentation must be maintained as required by the CRA.
References & Resources
- Ben Campbell B.Comm (Hons.), CFP, Financial Consultant, Investors Group, Winnipeg Manitoba
- Canada Revenue Agency: Information for Organizations Providing Prescribed Programs of Artistic, Cultural, Recreational, or Developmental Activities
- Canada Revenue Agency: Line 370 — Children’s Arts Amount
- Canada Revenue Agency: Children’s Arts Amount: Eligibility
- Canada Revenue Agency: Children’s Arts Amount: Completing Your Tax Return