February 9, 2007 – The federal government has implemented a new non-refundable tax credit to encourage youths to participate in active sports. Cross Country skiing is one of those sports.

The clubs and membership committee of Cross Country Canada thought that we should make sure that clubs are aware of the programme and are thinking of how they can take advantage of it. We hope that you find this information useful.

The federal government just recently released details on what types of programmes would qualify. Expect changes as there is already significant lobbying going on by groups that believe they have been excluded. This may result in either a loosening of the rules or even a tightening to ensure that only the types of activities that the government had in mind, qualify.

At this time none of the provinces or territories has announced their intention to participate in this programme so for now it remains purely a federal only programme.

What is a non-refundable tax credit?

A brief lesson in non-refundable tax credits. Tax credits reduce the amount of tax that you would otherwise pay. It won’t result in a refund if you have no federal taxes otherwise payable or it will limit the credit to the total federal taxes payable before the credit (that is why it is called a non-refundable tax credit). The amount of the tax credit is the same regardless of how much money you make – so the wealthy have no extra advantage.

How much is it worth?

The maximum expenditure claim per eligible child is $500 per year; however the limit is not really per child but rather a maximum of $500 times the number of eligible children in the family. That means if a family has 3 children and only one is participating in eligible programmes then the maximum for that family is $1,500 which might all be expended on one child.

The tax credit is 15.5% of the expenditures. That means it is worth $77.50 on a $500 expenditure.

What Activities are Eligible?

The broad guidelines announced so far are:

* ongoing (either a minimum of eight weeks duration with a minimum of one session per week or, in the case of children’s camps, five consecutive days), or if the fee is structured as a membership for a period of two months or more would also be eligible if more than 50% of the programmes available as a result of membership meet the prior tests;
* supervised;
* suitable for children; and
* substantially all of the activities must include a significant amount of physical activity that contributes to cardio-respiratory endurance plus one or more of: muscular strength, muscular endurance, flexibility, or balance.

Programmes like the Jack Rabbit programme clearly qualifies (just meets the “ongoing” requirement of eight weeks).

Weekend training camps would not if they are stand alone activities. Training could qualify if in between formal training sessions there was a weekly “supervised” activity. This could be a roller ski night during the summer or weekly time trials in the winter when there are weeks with no races. It will take some thinking to adjust some programmes you are already offering to make them qualify. If you think of sports like hockey or soccer that have regular games and practices you can see how they easily qualify and were probably what the legislators where thinking of when they drafted the legislation. With a little planning most clubs should be able to tailor their offerings to make them qualify.

This is where the provision that memberships that last a period of two months or longer are eligible programmes. If for example you run a racing programme you could qualify by making it a separate class of membership, make it run for an extended period (2 months or longer) and include dry land camps, weekly training sessions, winter racing etc. as part of the programme.

Who is eligible?

Any child who is 16 or younger at any time of the year. This means that even if a participant turns 17 on January 2nd they are eligible.

Who gets to claim the credit?

It appears that either parent can claim the credit. As it is worth the same amount regardless of income this makes sense; however, if one spouse has no income then it would be beneficial for the working spouse to claim the tax credit. This is a more lenient than the system for child care expenses.

What expenses qualify?

Registration and membership costs can include the costs of administration, instruction, and the rental of facilities. If the fees charged to parents include a part for accommodation, travel, food, or beverages (for example, room and board at a fitness camp), then this part must be deducted when calculating the part of the fees that qualify for the tax credit.

What does the club have to provide to allow the parent to make the claim?

The parent will require a receipt that will require the following:

* Club’s name and address
* Name of the eligible program or activity
* Total amount received, date received, and the amount that is eligible for the children’s fitness tax credit
* Full name of the payer
* Name of the child and child’s year of birth
* Authorized signature

Will this cost the club money?

You will have some additional costs to issue the receipts and track the eligible expenses. Since the parents are getting a benefit you may be in a position to raise the fees to cover you additional expenses and the parents will still be better off.

How can clubs benefit from this new tax credit?

The direct beneficiaries of this tax credit will obviously be the parents of enrolled children but it could also represent an opportunity for the club to enhance its programs if the parents would agree to reinvest the equivalent of the tax credit proceeds in club programming and infrastructures. For example, the club could invest in hiring a coach or increasing the commitment of their actual coaches, build a lit trail system, buying equipment to rent, etc, directly impacting the quality of the club programs and building club capacity.

Where can you get more information?

The clubs and membership committee will send out more information as we receive it.

You can get more details at:

http://www.cra-arc.gc.ca/whatsnew/fitness-e.html

http://www.fin.gc.ca/news07/06-002e.html

Who is the club and membership committee of Cross Country Canada?

This is one of the standing operating committees of CCC comprising of volunteers representing all of the regions of Canada. A sub committee of Richard Lemoine (also a member of the club and membership committee), Scott Elliot and Stéphane Barrette are responsible for informing our community about this new tax credit.

Can I contact someone at CCC?

If you have questions you can contact Richard Lemoine – either during the day at 416-464-5875 or via email at rlemoine@lhranone.com If you email me, be warned that I use Spam Arrest to guard myself from unwanted email and you will receive a challenge question to allow your email to make its way to me.