Children’s Arts Tax Credit – Something from Nothing
Student at Law
One new measure proposed in Budget 2011 that will be welcome news for certain arts organizations is the introduction of a new Children’s Arts Tax Credit. Essentially, this initiative is modeled after the Children’s Fitness Tax Credit, which was introduced in the 2006 Budget and has been available since 2007.
The Children’s Fitness Tax Credit promotes physical fitness among children through a 15 percent credit up to $500 in eligible fees for the enrolment of a child under the age of 16 in an eligible program of physical activity. Similarly, the Children’s Arts Tax Credit introduces a new 15 percent credit, provided on up to $500 of eligible expenses for programs associated with children’s artistic, cultural recreational and developmental activities.
The credit will be available for children under the age of 16 years for registration costs associated with participation in qualifying supervised activities. (The age limit will be raised by two years for children eligible for the Disability Tax Credit and an additional $500 non-refundable amount will be provided.) This new measure will apply to eligible expenses paid starting in the 2011 taxation year and it is estimated to reduce federal revenues by $100 million in each of 2011-2012 and 2012-13.
Pretty much the only thing that differentiates the Children’s Arts Tax Credit from the Children’s Fitness Tax Credit is the definition of eligible activities. An eligible activity will be a supervised activity suitable for children that:
· Contributes to the development of creative skills or expertise in an artistic or cultural activity:
· Creative skills or expertise involve a child’s ability to improve dexterity or co-ordination, or acquire and apply knowledge in the pursuit of artistic or cultural activities, and
· Artistic and cultural activities include the literary arts, visual arts, performing arts, music, media, languages, customs and heritage;
· 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.
An eligible activity will also include similar activities that have been adapted to accommodate the needs and abilities of a child who is eligible for the Disability Tax Credit.
An eligible program must include a significant amount of eligible activities and must be ongoing in nature. In this regard, an eligible program will be either:
a) A weekly program lasting a minimum of eight consecutive weeks; or
b) In the case of children’s camps, a program lasting a minimum of five consecutive days.
Provided that all other requirements are met (i.e., the program is ongoing, supervised, and suitable for children), the full cost of a child’s membership in an organization (including a club, association or similar organization) will be eligible for the credit if more than 50% of the activities offered to children by the organization include a significant amount of eligible activities.
Under the proposed measure, parents may claim up to $500 for each child’s art or music lessons, which is in addition to eligible expenses of up to $500 they may already claim for their fitness and sports programs. As a result, parents will be able to claim up to $1000 combined in expenses for their children’s activities between them.
While the Children’s Arts Tax Credit will surely come as welcome news to more affluent families who can afford to enrol their children in arts and recreational cultural programming, this incentive program will be of little relevance to families with limited means. For arts organizations with offerings that meet the criteria set out above, this will be a useful tool to help enlist participants in their programs in the coming years.
Other than the introduction of the new Children’s Arts Tax Credit, Budget 2011 offers few highlights for artists and arts organizations. That being said, it is always a revelation to discover what groups and programs gain the Government’s support each year. The chosen ones in 2011 include the Harbourfront Centre, receiving $25 million over five years, the Calgary Stampede, receiving $5 million to mark its 100th anniversary, and the Canadian Football League receiving $5 million in honour the 100th anniversary of the Grey Cup.
Otherwise, Canada’s cultural sector will see an increase of $800,000 a year going to Special Olympics Canada, $15 million in ongoing funding to the Canada Periodical Fund, and a one-time investment of $7.5 million to launch a Royal Conservatory of Music national examination system in partnership with Carnegie Hall.
Finally, Budget 2011 provides $100 million per year to the Canadian Media Fund, formerly the Canadian Television Fund, and $60 million to the CBA/Radio-Canada in 2011-12. Though not going to be sufficient for either, these figures will come as no great surprise to these institutions that have no choice but to live with less.