Canada Highlights New Tax Credit

by Mike Godfrey, Tax-News.com, Washington

07 July 2011

The Canadian government has been promoting its new children's arts tax credit, announced in the recently reintroduced 2011 federal Budget.

The credit, which is non-refundable, is designed to allow parents to claim money spent on programmes focusing on fine arts, music, performing arts, outdoor wilderness training, learning a language, studying a culture and tutoring, among others.

Gail Shea, Minister of National Revenue, spoke of the credit at the Confederation Centre of the Arts in Charlottetown, Prince Edward Island on July 5. She said the government believes that parents "should receive a tax credit to help pay for the programmes that will help their children live out [their] dreams".

She stressed that: "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." A children's fitness tax credit is currently available for those participating in a prescribed fitness activity.

The new arts tax credit will provide for a maximum claim of up to CAD500 (USD715) of the cost of programmes. This, the Revenue Department states, will mean families save as much as CAD75 per child. The credit will be calculated by multiplying the lowest personal income tax rate (15% in 2011) by the eligible amount for each child.

The Canadian parliament recently passed a package of reforms also introduced at the Budget. The measures include a rise in the Guaranteed Income Supplement for vulnerable pensioners, and greater financial assistance to students and those on disability benefits. Parliament is yet to legislate for the children's arts tax credit.

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