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 the XXXXXXXXXX and XXXXXXXXXX programs offered through XXXXXXXXXX and various provincial regional institutions would be eligible for the tuition credit, education and textbook credit and for educational assistance payments under an RESP.
Position: It depends
Reasons: (i) Tuition Tax Credit - if the specific educational institution that the student is enrolled in meets the requirements of subparagraph 118.5(1)(a)(i) or (ii), the student will likely be eligible for the tuition tax credit.
(ii) Education Tax Credit - Where a student is enrolled on a part-time basis at a designated educational institution in a specified educational program that requires the student spend not less than 12 hours in the program in the month on courses in the program, the student would be eligible for the education tax credit.
(iii) EAP: Assuming the hour requirements are met, the programs would likely meet the definition of either a qualifying educational program or a specified educational program.
XXXXXXXXXX
2016-065611
E. Wirag, CPA, CMA
(613) 670-9053
June 26, 2017
Dear XXXXXXXXXX,
We are replying to your letter in which you asked whether a student’s enrollment in one of XXXXXXXXXX’s various educational programs qualify for the tuition tax credit, for the education and textbook tax credit (for 2016 or prior years), or for an educational assistance payment (“EAP”) made from a Registered Education Savings Plan (“RESP”). The educational programs are XXXXXXXXXX.
Based on the information you have provided, the information provided on the various XXXXXXXXXX websites and our telephone conversation (XXXXXXXXXX/Wirag) of February 16, 2017, our understanding is that the structure and content of each educational program is developed by XXXXXXXXXX. The delivery of each program is provided by different XXXXXXXXXX organizations, depending on the program and the location of the student.
XXXXXXXXXX is delivered by XXXXXXXXXX for all students. The XXXXXXXXXX programs are each delivered through the provincial or regional bodies, depending on the location of the student. Students in XXXXXXXXXX enroll with XXXXXXXXXX. Students XXXXXXXXXX enroll with XXXXXXXXXX for these programs, while students XXXXXXXXXX enroll with XXXXXXXXXX.
Our comments:
This technical interpretation provides general comments about the provisions of the Income Tax Act (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 70-6R7, Advance Income Tax Rulings and Technical Interpretations.
Tuition Tax Credit
An individual must meet the requirements of subsection 118.5(1) of the Act to qualify for the tuition tax credit. Our views on the tuition tax credit are discussed in Income Tax Folio S1-F2-C2, Tuition Tax Credit (the “Tuition Folio”).
As indicated in paragraph 2.3 of the Tuition Folio, pursuant to paragraph 118.5(1)(a) of the Act, a student who is enrolled at an educational institution in Canada may be eligible to claim a tuition tax credit for eligible tuition fees paid in respect of the year to that educational institution, as long as the total of such fees exceeds $100 (in accordance with subsection 118.5(1.1)). Specifically, an educational institution in Canada whose tuition fees may be eligible for the tuition tax credit is an educational institution in Canada that is:
a) a university, college or other educational institution providing courses at a post-secondary school level (subparagraph 118.5(1)(a)(i)); or
b) certified by the Minister of Employment and Social Development to be an educational institution providing courses (other than courses designed for university credit) that furnish a person with skills for, or improve a person’s skills in, an occupation (subparagraph 118.5(1)(a)(ii)).
It is the specific educational institution that a student is enrolled with that must meet the requirements of subparagraph 118.5(1)(a)(i) or (ii). For example, where a student in Alberta is enrolled in a program with the XXXXXXXXXX, it is that institution that must meet the requirements of subparagraph 118.5(1)(a)(i) or (ii). Other educational institutions may include professional organizations and institutions that provide courses at a post-secondary level. Paragraph 2.5 of the Tuition Folio provides more information regarding the eligibility of an institution for purposes of subparagraph 118.5(1)(a)(i).
As indicated in subparagraph 118.5(1)(a)(ii.1) of the Act, tuition fees that are paid to a university, college or other educational institution in Canada must be in respect of courses at a post-secondary level. Paragraph 2.8 of the Tuition Folio states that, generally, for a course to be considered to be at the post?secondary school level:
a) the course should provide credit towards a degree, diploma or certificate; and
b) a prerequisite for taking the course should be completion of secondary school.
Although it is a question of fact, it is likely that the courses would be considered to be at the post-secondary school level.
Although a student may receive form T2202A for tuition fees paid to an educational institution in Canada to claim a tuition tax credit, it does not ensure the student’s eligibility for the credit. The student is responsible for ensuring they meet all the requirements of paragraph 118.5(1)(a) to claim a tuition tax credit for tuition fees paid to an educational institution in Canada. For example, where tuition fees are paid on behalf of, or reimbursed to an individual by his or her employer and the amount is not included in the individual’s income, subparagraph 118.5(1)(a)(iii) of the Act does not allow the amount to be claimed for the tuition tax credit, even if they have received a T2202A in the year.
To note, if the draft legislation released by the Department of Finance on March 22, 2017, is enacted into law as currently proposed, the eligibility criteria for the tuition tax credit for fees for an individual’s tuition paid to a university, college or other post-secondary institution will be extended. These proposed changes will allow for courses taken at these educational institutions that are not at the post-secondary school level, but taken for the purpose of providing the individual with skills (or improving an individual’s skills) in an occupation to be eligible for the tuition tax credit. The individual must have attained the age of 16 years of age before the end of the year. This measure will apply in respect of eligible tuition fees for courses taken after 2016.
Education and Textbook Tax Credit
An individual must meet the requirements of section 118.6 of the Act to qualify for the education and textbook tax credits. Our views on these credits are discussed in Income Tax Folio S1-F2-C1, Education and Textbook Tax Credits (the “Education Folio”).
In order for a student to qualify for the education and textbook tax credits, the student must be enrolled at a “designated educational institution” as defined in subsection 118.6(1). A designated educational institution includes an educational institution in Canada that is:
a) a university, college or other educational institution designated by the lieutenant governor in council of a province as a specified educational institution under the Canada Student Loans Act, designated by an appropriate authority under the Canada Student Financial Assistance Act, or designated by the Minister of Education of the Province of Quebec for the purposes of An Act respecting financial assistance for education expenses; or
b) an educational institution in Canada that is certified by the Minister of Employment and Social Development to be an educational institution providing courses, other than courses designed for university credit, that furnish a person with skills for, or improve a person’s skills in, an occupation.
Similar to the tuition tax credit, it is the specific educational institution that a student is enrolled with that must meet requirements of the definition of a designated educational institution. Where a student is enrolled at a particular institution that is not designated in the manner specified in the definition of a designated educational institution, the student is not eligible for the education and textbook tax credits with respect to the courses taken with that institution.
Our understanding is that none of the XXXXXXXXXX organizations would meet the requirements of paragraph (a) above. Alternatively, as some of the XXXXXXXXXX organizations are certified by the Minister of Employment and Social Development Canada per paragraph (b) above, those organizations would likely be considered “designated educational institutions” as defined in subsection 118.6(1). The XXXXXXXXXX organizations that do not meet the requirements of paragraph (a) or (b) above would not be considered “designated educational institutions” and therefore, students in programs at those institutions would not be eligible for the education and textbook tax credits.
In addition, the student must be enrolled at a designated educational institution in either:
a) a “qualifying educational program” as a full-time student, or
b) a “specified educational program” as a part-time student.
A qualifying educational program, as defined in subsection 118.6(1), is a program of not less than three consecutive weeks duration that provides each student in the program spend not less than ten hours per week on courses or work in the program. The program is one that is at an institution that is a designated educational institution, and generally, at a post-secondary school level that does not primarily consist of research. The definition states that a qualifying educational program does not include a program if the student receives any allowance, benefit, grant or reimbursement for expenses in respect of the program (other than a few noted exceptions) from a person with whom the student was dealing with at arm’s length, such as an employer.
A specified educational program, as defined in subsection 118.6(1), is one that would be a qualifying educational program if the requirement of a student spending not less than ten hours per week on courses or work in the program was not applied. To be eligible for the part-time credit under subsection 118.6(2), the program must instead provide each student spend not less than 12 hours per the month on courses in the program.
Paragraphs 1.25 and 1.26 of the Education Folio provide general comments regarding the CRA’s interpretation of enrollment as a full-time or part-time student. The CRA generally relies on the institution’s determination as to whether the individual is registered as a full-time student or part-time student.
You have indicated that the students enrolled in the various XXXXXXXXXX programs are generally taking courses concurrently while working, and it is your view that they would likely be considered part-time students. Where a student is enrolled on a part-time basis at a designated educational institution in a specified educational program that requires the student spend not less than 12 hours in the program in the month on courses in the program, the student would generally be eligible for the education tax credit.
Beginning in the 2017 tax year, the education and textbook tax credits have been eliminated and will no longer be available for a student to claim. The credits are still available for tax years up to, and including, the 2016 tax year. Unused education and textbook credit amounts that were earned and carried forward from years prior to 2017 will remain available to be claimed in future years.
Educational Assistance Payments
Generally, an EAP may be paid from an RESP where the beneficiary is either enrolled in a qualifying educational program at a post-secondary educational institution, or is at least 16 years of age and is enrolled in a specified educational program at a post-secondary educational institution. The terms “post-secondary educational institution,” “specified educational program” and “qualifying educational program” are defined in subsection 146.1(1) of the Act.
A “post-secondary educational institution” includes an educational institution in Canada as described in paragraph (a) of the definition of “designated educational institution” in subsection 118.6(1). Therefore, as discussed above, those institutions that have been certified by the Minister of Employment and Social Development, and meet the definition of designated educational institution for purposes of the education and textbook tax credits, would also be considered post-secondary educational institutions for purposes of EAPs.
A “qualifying educational program” is defined as an educational program at the post-secondary school level that is at least three consecutive weeks duration and that requires each student in the program spend not less than 10 hours per week on courses or work in the program. A “specified educational program” is defined as a program at a post-secondary school level of not less than three consecutive weeks duration that requires each student taking the program spend not less than 12 hours per month on courses in the program.
For the purpose of the EAP, “post-secondary school level” includes a program of courses at an educational institution certified by ESDC where the courses are of a technical or vocational nature designed to furnish a person with skills for, or improve a person’s skills in, an occupation.
We trust our comments will be of assistance.
Yours truly,
Pamela Burnley, CPA, CA
Acting Director
Business and Employment Division
Income Tax Rulings Directorate
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