Children's Arts Tax Credit (CATC)
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:
- under 16 years of age at the beginning of the year in which the expenses are paid; or
- under 18 years of age at the beginning of the year in which the expenses are paid if the child is eligible for the disability tax credit.
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 weekly program of a minimum eight consecutive weeks duration in which a minimum of 90% of all the activities are eligible activities;
- a program of a minimum five consecutive days duration in which more than 50% of the daily activities are eligible activities;
- a program of a minimum eight consecutive weeks duration offered to children by a club, association or similar organization offering a variety of different activities when more than 50% of the activities offered are eligible activities or more than 50% of the time scheduled for activities offered to children is for activities that are eligible activities (if both 50% tests are not met, a prorated portion of the fees will be allowed, representing the percentage of eligible activities offered by the organization or the percentage of time scheduled for these activities by the organization); and
- a membership of a minimum eight consecutive weeks duration in an organization if more than 50% of all the activities offered to children by the organization are eligible activities (if the 50% test is not met, a prorated portion of the fees will be allowed, representing the percentage of eligible activities offered to children by the organization).
A program that is part of a school curriculum will be ineligible.
6. What are eligible activities?
Eligible activities will include an activity that:
- contributes to the development of creative skills or expertise in artistic or cultural activities;
- provides a substantial focus on wilderness and the natural environment;
- helps children develop and use particular intellectual skills;
- includes structured interaction among children where supervisors teach or help children develop interpersonal skills; or
- provides enrichment or tutoring in academic subjects.
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:
- a fee paid for the costs that relate to travel, meals and accommodation;
- a fee paid if the prescribed program is provided by a person who is under age 18 or a person who is the spouse or common-law partner of the parent making the claim for the credit at the time the payment is made;
- an amount that is deductible in the computation of any person's income for any year, such as a deduction for a childcare expense;
- an amount that can be claimed for the Children's Fitness Tax Credit by any person; or
- an amount that is claimed for any other tax credit
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:
- organization's name and address;
- name of the eligible program;
- amount received, date received, amount that is eligible for the CATC;
- full name of the payer;
- full name of the child, and the child's year of birth; and
- authorized signature.
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 documents for details.