Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
Principal Issues: Whether examination fees paid to the Canadian Veterinary Medical Association qualify for the tuition tax credit.
Position: No.
Reasons: They are not paid to a designated educational institution and they do not form an integral part of a course of study.
XXXXXXXXXX 2006-017546
J. Gibbons, CGA
August 3, 2006
Dear XXXXXXXXXX:
Re: "Examination Fees" - Canadian Veterinary Medical Association (the "CVMA")
We are responding to your letter concerning the income tax treatment of fees charged by the CVMA for the qualifying examinations (the "Qualifying Examinations") that immigrant veterinarians are required to pass in order to obtain a license to practise in Canada. You have requested that we reconsider the position of the Canada Revenue Agency (the "CRA") that such fees do not qualify for the tuition tax credit. In this regard, you indicated that CVMA would not issue a T2202A to you for such fees as it is not an educational institution.
Written confirmation of the tax implications inherent in particular transactions is given by this Directorate only where the transactions are proposed and are the subject matter of a request for an advanced income tax ruling submitted in the manner set out in Information Circular IC 70-6R5, Advance Tax Rulings, dated May 17, 2002. However, we have provided some general comments below, which we hope will be of some assistance to you.
In our view, the Examination Fees do not qualify for the tuition tax credit since, under the requirements for this credit in section 118.5 of the Income Tax Act (the "Act"), tuition fees must be paid to a designated educational institution (whether a university, college or other educational institution offering courses at a post-secondary school level or an educational institution that is certified by the Minister of Human Resources Development). Further, although certain examination fees paid to a designated educational institution may qualify for the tuition tax credit, they will only so qualify if they form an integral part of a course of study, which doesn't appear to be the case for the Qualifying Examinations. Finally, you should note that this position was recently confirmed by the Tax Court of Canada in Arrioja v. The Queen, 2005 DTC 392. Any change in the CRA's current position on this matter would require an amendment to the Act, which is under the purview of the Department of Finance.
Notwithstanding the above, since the Examination Fees can be expected to result in an enduring benefit for a veterinarian, they may qualify as "eligible capital expenditures," defined in subsection 14(5) of the Act, provided that they were incurred by the veterinarian for the purpose of earning income from a veterinarian business carried on by him or her. If so, a portion may be deducted each year in computing the income from that business pursuant to paragraph 20(1)(b) of the Act. (Refer to Interpretation Bulletins IT-123R6, Transactions Involving Eligible Capital Property, and IT- 143R3, Meaning of Eligible Capital Expenditure, for more details, copies of which can be obtained through the CRA's website located at www.cra.gc.ca.) While there may be some question about whether a business can be considered to be carried on before the required license to practise the business is obtained, paragraph 4 of IT-364, Commencement of Business Operations, indicates that a business can be viewed as having commenced not later than the day when steps were taken to obtain any required licences.
Finally, it should be noted that no deduction is available if the Examination Fees were incurred for the purpose of earning employment income.
We trust that these comments will be of assistance.
Yours truly,
Randy Hewlett
for Director
Business and Partnerships Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch
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