A student may deduct a credit for tuition fees paid for certain types of
schooling from federal taxes payable. To be eligible, the student must pay
tuition fees in excess of $100 to either an educational institution in
Canada for courses at the post-secondary level or an institution certified
by the Minister of Human Resources. This would generally include a college
or university, a professional organization providing courses to graduates
of a secondary school, or a ministry-certified institution to acquire or
improve occupational skills.
However, based on new rules as a result of the 2017 federal budget, if a
student is at least 16 years of age, and the purpose of the course is to
provide occupational skills, such courses will also apply. The
credit is equal to an amount equal to the lowest tax rate multiplied by the
tuition paid for the year (i.e., 15% for 2017). Some private secondary
schools offer university-level courses that qualify for the tuition and
education tax credits.
However, where an athletic scholarship is paid on behalf of an individual
or the individual is entitled to a reimbursement for the fees, the tuition
tax credit is not available unless the scholar-ship or reimbursement is
included in the student’s income for the year. The tuition credit will not
be available if the fees are reimbursed by a student’s employer, or if the
student is reimbursed or receives assistance from a federal or provincial
job training program, unless the amount is included in the student’s
Prior to 2017, a student was also able to claim an “education credit” equal
to the lowest tax rate percentage (i.e., 15% for 2017) multiplied by $400
per month (i.e., $60 a month) for each month in the year that the student
was enrolled as a full-time student at a designated institution, and
enrolled in a qualifying educational program. (Note: There was no full-time
enrolment requirement for students who are disabled or cannot be enrolled
full-time by reason of mental or physical impairment.)
A qualifying educational program was one that required at least 10 hours
per week of work, and was at least three consecutive weeks in duration. at
a post- secondary school level, except in the case of courses to improve
occupational skills certified by the Ministry of Human Resources
A “part-time education credit” was also available for qualifying
educational programs lasting at least three consecutive weeks and involving
a minimum of 12 hours of courses per month. The net tax credit available
was $18 a month (15% of $120 per month).
However, as a result of changes announced in the 2016 federal budget,
effective January 1, 2017, the education tax credit and a textbook credit
were eliminated. If however, you had unused education and textbook credits
carried forward from prior years, they will remain available to be claimed
in 2017 and subsequent years.
Transfer or carry forward credits
The tuition credit, and any unused education and textbook credits from
prior years, may be a good source of shelter for a parent, grandparent, or
spouse of a child, as these credits may be transferred to any of the latter
(only one transferee is allowed). However, the amount transferred is
limited to the amount that the student designates in writing. This amount,
in turn, is limited to the lesser of the total amount of education,
tuition, and textbook credits combined and $5,000 less the amount claimed
by the student. (The transfer does not necessarily have to be to the parent
or grandparent who actually paid the fees.)
Note: One tax case confirms that the transfer can be of current year
credits, but not those carried forward by the student. This extra shelter
provided by your child, when combined with. proper income-splitting
techniques with a child could help ease a parent’s tax burden.
If a parent does not require this extra shelter, and there is insufficient
tax on the part of the student to absorb the credits, any unused combined
education, tuition, and textbook credits can be carried forward for future
use by the student. However, if a student passes up claiming the credit,
thereby leaving a tax liability, a CRA Technical Interpretation confirms
that the credit carryforward will erode. So it’s a case of use it or lose
The CRA also indicates that the use of certain other credits (such
as medical or dividend tax credits), rather than the education-based
credits, will also reduce the amount available for carry forward. Another
way to look at this is that if an individual has more than enough of these
credits to wipe out his or her tax, and there is no benefit to a potential
transferee, they will simply go to waste.
Studying abroad, student loans, transportation credit, and notes on filing
a student tax return.
Samantha Prasad, LL.B., is a Partner with Toronto law firm
Minden Gross LLP, a Meritas Law Firm Worldwide affiliate, and specializes in corporate,
estate, and international tax planning. She writes frequently on tax
issues, and is the co-editor of various
Wolters Kluwer Ltd. tax publications. Portions of this article first appeared in The TaxLetter, © 2017 by
MPL Communications Ltd. Used with permission.
© 2017 by Fund Library. All rights reserved. Reproduction in whole or in
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