fitness tax credit: should we be able to claim workout expenses on our taxes?
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the child and youth fitness tax credit ran until 2016, but was thought by some analysts to be ineffective in encouraging non-active families to sign up for fitness activities.
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the fitness industry council of canada (fic) is asking the government of canada to include gym memberships as an approved medical expense for tax credit.
currently, line 33099 allows canadians to claim up to $2,479 of medical expenses not covered by their provincial health plan for a tax credit. approved expenses include things like laser eye surgery, braces/casts, crutches, and egg/sperm freezing. other expenses, like the increased cost of gluten-free foods over normal food, air conditioners, and orthopedic shoes can also be claimed if prescribed by a physician.
gyms and studios should also be considered tax deductible because long-term fitness helps people stay healthy and away from the doctor, says gabriel hardy, executive director of fic. he says providing a range of equipment and knowledgeable staff, like that found at gyms, can help create a reliable workout regime that minimizes risk of injury.
“having gym memberships as part of tax credit will for sure help people move more and at least give a strong message of the importance of physical activity [as a] preventive health solution,” says hardy.
evidence suggests inactivity carries a financial burden, placing a cost of roughly $2.7 billion on the canadian public health-care system, according to a june 2022 report issued by deloitte. the loss in productivity from the health effects of inactivity costs the economy approximately $7.9 billion per year.
physical activity is noted for reducing the risk of cardiovascular diseases, cancer, and diabetes, and reduces symptoms of depression and anxiety, according to the world health organization. the who recommends 150 to 300 minutes of aerobic activity each week, plus two strength training sessions.
embracing workouts that encompass strength, cardio and flexibility also has protective health effects for later in life. an element that will prove important in the coming decades as canada continues to shift towards an aging demographic.
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“the gym is not just a place where you can go … if you have an injury, you go see a physiotherapist. you have a question on medication, you go see a pharmacologist. you have an illness, you go see a doctor,” says hardy. “but when you want to train and when you want to start moving, who do you go to see? normally, you [look] for a trainer, you [look] for a kinesiologist. those people work in a gym.”
what would a fitness tax credit look like?
designing a tax credit would first require defining what an approved fitness studio would look like, explains tim barrett, partner at thorsteinssons llp, a canadian tax law firm. would particular pieces of equipment need to be available for a studio to be considered a “gym,” or would elements of a workout class be required, like designated cardio and resistance segments? if classes were to be considered, what would qualify — if a dance class is accepted, would a social dance night also be included?
“the question becomes, well, what’s a gym?” says barrett. “…does the gym have to register or something?”
the government of newfoundland announced a physical activity tax credit in 2021, which allows for a tax credit of up to $2,000 per family for the cost of eligible programs that contribute to cardiorespiratory endurance, muscular strength, muscular endurance, flexibility, and/or balance. this includes gym memberships as well as activities like soccer, hockey, golfing, sailing, and boating.
still available in 2022, the province’s 2023/24 proposed budget would double the fitness tax credit. however, not everyone is convinced these credits result in an increase in physical activity.
not all analysts think fitness tax credits work
the government of canada previously implemented — and then revoked — a fitness tax credit for children, but analysis reveals that the program wasn’t as effective as initially hoped.
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federally, the children’s fitness tax credit ran until 2016, allowing families to claim $500 to $1000 per child (the total amount increased over the years). the credit gave parents a 15 per cent break of the amount claimed on their taxes — up to $75-$150.
however, each year no more than 55 per cent of tax-paying parents took advantage of the fitness credit or its sister arts credit, according to the cbc. it was also far more likely to be used by high-income families, who would arguably be more likely to be able to afford these memberships than lower income families. there was also little proof that the credit influenced families to sign their kids up for classes if they weren’t already participating pre-benefit. instead, it was noted the government may see more impact by directly funding recreational activities, so families could simply show up and participate rather than paying upfront and waiting for a tax credit in april.
hardy isn’t dissuaded by the analysis of the children’s fitness tax credit, explaining that connecting physical activity to medicine, rather than aesthetics, is a crucial point of the incentive.
“abascus data we gathered in july 2021, 59% of canadians would be incentivized to join a gym if they could claim it as a medical expense,” says hardy over email. “… education regarding the importance of being physically active to help release the pressure on the health care system is an important point to make in the years to come. population listens to doctors as they trust their knowledge and expertise regarding their health.”
the proposal to include gym memberships on line 33099 was not included in the 2023 budget, but hardy says his team has connected with several high-ranking members of the liberal government and is hopeful that will change in coming years. the next goal is to determine how much money each gym membership will save the canadian health care system.
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update 2023-04-20: this article was updated to include a response from the fic director on why the children’s fitness tax credit was ended.
emma jones is the multimedia editor for healthing. you can reach her at emjones@postmedia.com or on instagram and twitter @jonesyjourn.
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