28 March 1996 Ministerial Letter 9610188 - MEDICAL RESIDENTS OF TEACHING HOSPITALS

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.

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.

Principal Issues:

whether medical residents at a teaching hospital would be entitled to a tuition and education tax credit if they are charged a tuition fee for the period of their residency

Position:

tuition tax credit would likely be available but education tax credit would not

Reasons:

residents receive employment income in connection with their residency

A. Humenuk
XXXXXXXXXX							961018

March 28, 1996

Dear XXXXXXXXXX:

Re: Tuition and Education Tax Credits

We are writing in reply to the copy of your letter of March 13, 1996, addressed to the Premier of Ontario that you sent to the Honourable Jane Stewart, Minister of National Revenue and Pierre Gravelle, Deputy Minister of National Revenue, concerning the proposal to charge tuition fees to medical residents of teaching hospitals.

In your letter, you state that medical residents will become entitled to the tuition tax credit and education tax credit if the proposal to charge medical residents a tuition fee is implemented. While we agree with your analysis that the tuition tax credit would presumably be available to them if medical residents are required to pay a tuition fee, they would not be entitled to an education tax credit whether or not a tuition fee is charged.

The education tax credit is only available in respect of a "qualifying educational program" as defined in subsection 118.6(1) of the Income Tax Act. This definition specifically excludes a program of study which is taken in connection with or as part of the duties of the student's employment and the student is receiving compensation for that employment. We refer you to paragraphs 20 and 25 of the enclosed Interpretation Bulletin IT-515R, Education Tax Credit. Please note that the comments in the bulletin do not reflect the proposed changes to the education tax credit which were introduced in the March 6, 1996 Budget.

As indicated in your letter, the monthly amount on which the credit is based will be increased to $100 from $80. In addition, the maximum amount that may be transferred by a student to a supporting spouse, parent or grandparent in respect of the student's tuition fee and education tax credits will be increased to $850 from $680. These changes are effective for the 1996 and subsequent taxation years.

We trust our comments will be of assistance to you.

Yours truly,

P.D. Fuoco
for Director
Business and General Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch

Enclosure