2015-0607311E5 Junior golf memberships

Principal Issues: Whether junior golf memberships in Canada are eligible for the children's fitness tax credit

Position: It is a question of fact in each case. If all conditions are met, a junior golf membership could be eligible.

Reasons: Must meet the requirements of section 122.8 of the Act and section 9400 of the Regulations

Author: Wirag, Eric
Section: 122.8; Regulation 9400

XXXXXXXXXX                          2015-060731
                                                  Eric Wirag, CPA, CMA
                                                  (613) 670-9053

January 21, 2016

Dear XXXXXXXXXX,

We are replying to your letter of September 9, 2015, in which you asked for our comments regarding the eligibility of junior golf memberships for the children’s fitness tax credit in section 122.8 of the Income Tax Act (the “Act”).  Specifically, you have requested our views on the meaning of “supervised activity” in the definition of “physical activity” in subsection 9400(1) of the Income Tax Regulations (the “Regulations”).

Our comments:

This technical interpretation provides general comments about the provisions of the Act and related legislation (where referenced).  It does not confirm the income tax treatment of a particular situation involving a specific taxpayer but is intended to assist you in making that determination.  The income tax treatment of particular transactions proposed by a specific taxpayer will only be confirmed by this Directorate in the context of an advance income tax ruling request submitted in the manner set out in Information Circular IC 70-6R6, Advance Income Tax Rulings and Technical Interpretations.

In general terms, the children’s fitness tax credit is based on the amount an individual paid in the year, up to a maximum of $1,000 ($500 for years prior to 2015), as an “eligible fitness expense” for his or her child who is under the age of 16 at the beginning of the year.  An additional amount is available where the child is eligible for the disability tax credit and is under 18 years of age at the beginning of the year.  The term “eligible fitness expense” is defined in the Act as a fee attributable to the cost of registration or membership of the qualifying child in a prescribed program of physical activity.  Subsection 9400(2) of the Regulations defines a “prescribed program of physical activity” to include, among other things, a membership of eight or more consecutive weeks in an organization (that is not part of a school’s curriculum) if more than 50% of all activities offered to children by the organization include a significant amount of physical activity.

The term “physical activity” is defined in subsection 9400(1) of the Regulations as a supervised activity suitable for children (other than an activity where a child rides on or in a motorized vehicle as an essential component of the activity) that:

*     in the case of a child who qualifies for the disability amount, results in movement and in an observable use of energy in a recreational context; or

*     in the case of any other child, contributes to cardio-respiratory endurance plus either muscular strength, muscular endurance, flexibility, or balance. 

In our view, for the purpose of the children’s fitness tax credit, supervision requires the presence of a responsible individual for safety considerations as well as for encouraging active participation in the physical activity.  The level of supervision must be reasonable given the specific nature of the physical activity and does not necessarily require explicit coaching or instruction.  Additionally, the responsible individual does not need to be an employee of the organization; for example, a volunteer could provide supervision.  

If a membership in an organization does not meet the requirement that more than 50% of all activities offered to children by the organization include a significant amount of physical activity, but meets all of the other requirements, subsection 9400(4) of the Regulations allows a portion of the membership to be a prescribed program of physical activity.  In such a case, only a prorated amount paid for the child’s membership will be eligible for the children’s fitness tax credit.  The prorated amount will be based on the percentage of all activities offered to children by the organization that include a significant amount of physical activity.  For example, if 40% of all activities that are offered include a significant amount of physical activity, then 40% of the amount paid for the membership will be eligible for the children’s fitness tax credit.

Although the Canada Revenue Agency administers the children’s fitness tax credit, organizations are in the best position to determine if the programs they offer qualify as prescribed programs of physical activity for the purposes of the credit.  Provided all the requirements are satisfied, a junior golf membership could be eligible for the credit. 

We trust our comments will be of assistance.

Yours truly,

Pamela Burnley, CPA, CA
Manager, Tax Credits and Ministerial Issues
Business and Employment Division
Income Tax Rulings Directorate

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