The Physical Activity Tax Credit provides a refundable tax credit up to $2,000 per family. This credit is an incentive for families as they look to access sport and recreational activities. It also holds the added benefit of supporting the local health and wellness industry.
An eligible fitness expense must be for the cost of registration in an eligible program of physical activity or membership in an eligible organization. Generally, such a program must require significant physical activity contributing to cardiorespiratory endurance, plus one or more of:
- muscular strength,
- muscular endurance,
- flexibility, and/or
In addition to obviously strenuous games like hockey and soccer, activities such as golf, horseback riding, sailing and bowling (as well as others that require a similar level of physical activity) are considered to be eligible for the credit. If an individual rides on, or in, a motorized vehicle as an essential part of an activity, that activity does not qualify as a physical activity.
Registration and membership fees include the costs of administration, instruction, and the rental of required facilities, uniforms and equipment. If part of the fees is for accommodation, travel, food, or beverages (e.g., room and board at a fitness camp), then this part must be subtracted from the total registration and membership fee paid to the organization. Amounts deductible as child care expenses are not eligible fitness expenses. Amounts paid to an individual’s parent, spouse or common-law partner or an individual under 18 years of age is not an eligible fitness expense.
The full cost of a 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 by the organization include a significant amount of physical activity. If the 50% test is not met, a receipt can be issued for a prorated amount, which will represent the percentage of activities offered by the organization that include a significant amount of physical activity.
In circumstances where an individual in the program can select from among various activities, the full cost of a registration in a program offered by a club, association, or similar organization will be eligible for the credit if more than 50% of the activities offered include a significant amount of physical activity; or more than 50% of the available program time is devoted to activities that include a significant amount of physical activity. If neither of these 50% tests is met, a receipt can be issued for a prorated amount, which will represent the percentage of activities offered by the organization that include a significant amount of physical activity, or the percentage of program time that is devoted to such activities.
Although the Physical Activity Tax Credit is provincially funded and administered by the Canada Revenue Agency, organizations are in the best position to determine if the programs they offer qualify as an eligible program of physical activity for the purposes of the credit.
Claiming the credit
You can claim the Physical Activity Tax Credit on your personal income tax return beginning with the 2021 taxation year. You must keep receipts to support your claim in case the Canada Revenue Agency requests them.
Calculating the tax credit
You can claim the lesser of $2,000 per family (you, you spouse or common-law partner, if applicable, and any dependent children less than 18 years of age) or the total of your eligible fitness expenses. Eligible fitness expenses must be reduced by the amount of any reimbursement or assistance received in respect of those expenses. This amount is then multiplied by the lowest statutory tax rate (currently 8.7%) to determine the value of your credit.
Example: A. Smith has $1,500 in eligible fitness expenses. A. can claim the lesser of $2,000 or $1,500, which in this case is $1,500, so the total value of the credit is 8.7% of $1,500, or $130.50. The credit can be used to reduce tax payable or if there is no tax payable, it will be refunded.
Tom has $3,000 in eligible fitness expenses. Tom can claim the maximum of $2,000 for the Physical Activity Tax Credit for a credit of $174. Tom can use this credit to reduce tax payable or as a refund if there is no tax payable.
Either you or your spouse or common-law partner may claim the credit for eligible fitness expenses. However, the total amount claimed cannot exceed the maximum amount that can be claimed if only one of you claimed the tax credit. If both people make a claim for the same amounts, the Canada Revenue Agency will determine the amounts claimed by each person.
Organizations should issue a receipt for income tax purposes representing the amount of eligible fitness expenses paid in the calendar year. A receipt for amounts paid in 2021 should be issued for 2021 even if the activity takes place in 2022. A receipt should contain the following information:
- organization’s name and address
- name of the eligible program or activity
- amount received, date received, amount that is eligible for the physical activity tax credit (eligible fitness expenses)
- full name of the payer
- authorized signature (not required if issuing electronic receipts).
For more information regarding the Physical Activity Tax Credit, please contact:
Tax and Fiscal Analysis Division
Department of Finance
5 Mews Place
P.O. Box 8700
Tel: (709) 729-3166
Fax: (709) 729-0393