Canada Revenue Agency
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Income Tax Interpretation Bulletin

Tuition Tax Credit

SUBJECT: INCOME TAX ACT
Tuition Tax Credit

 

DATE: December 9, 1996
NO.: IT-516R2

REFERENCE:
Section 118.5 (also sections 118, 118.3,118.7, 118.8, 118.9 and 250, subsections 117(2), 252(2) and 252(4), paragraphs56(1)(n) and 252(1)(b), subparagraph 6(1)(b)(ix) of the Income Tax Act and Schedule VIII of the Income Tax Regulations)


Contents


Application

This bulletin cancels and replaces Interpretation Bulletin IT-516R dated March 25, 1994.

Summary

A student may be able to claim a tuition tax credit, which is a non-refundable tax credit, when calculating Part I tax otherwise payable. The purpose of the tuition tax credit is to allow students to reduce their income taxes by taking into account tuition fees for certain types of education. The amount of the tuition tax credit is determined by multiplying the lowest personal tax rate percentage (e.g., 17% for 1996) by the amount of eligible tuition fees paid for the year. Generally, tuition fees that qualify for the tuition tax credit are as follows:

  • tuition fees (if they total more than $100) for courses at a post-secondary school level paid to a university, college or other educational institution in Canada;
  • tuition fees (if they total more than $100) for courses to provide a student who is at least 16 years old at the end of the taxation year with skills for (or improve the student's skills in) an occupation, paid to an educational institution in Canada certified by the Minister of Human Resources Development;
  • tuition fees for a student in full-time attendance at a university outside Canada for a course, of at least 13 consecutive weeks in duration, leading to a degree; and
  • tuition fees (if they total more than $100) for courses at a post-secondary school level paid to a university, college or other educational institution in the United States to which a student living near the Canada-United States border commutes.

It is possible for tuition fees meeting the applicable requirements mentioned above to be ineligible for the tuition tax credit because of other rules in the law. For example, tuition fees paid by an employer on a student's behalf that are not included in income are not eligible for the tuition tax credit.

There are also provisions that allow the transfer of the amount of a student's unused tuition tax credit to a spouse or to a parent or grandparent, subject to certain requirements and limitations.

Discussion and Interpretation

Introduction

1. Subsection 118.5(1) sets out the circumstances under which a student may determine a tuition tax credit for tuition fees paid to educational institutions in and outside Canada. In general terms, the amount of the tuition tax credit is determined by multiplying the lowest tax rate percentage referred to in subsection 117(2) by the amount of eligible fees for tuition paid for the year to a qualifying educational institution. The total of such fees paid to an educational institution in Canada for the year must exceed $100. This $100 minimum also applies to tuition fees of a student commuting to the United States but does not apply to tuition fees paid to a university outside Canada in which a student is enrolled in full-time attendance. The lowest tax rate percentage has been 17% from 1988 to the date of publication of this bulletin. Thus, for example, if an amount of $2,000 has been paid for eligible tuition fees for 1996, the student is entitled to a tuition tax credit of $340 for 1996 determined as follows: $2,000 x 17%.

Educational Institutions in Canada

2. The types of educational institutions in Canada whose tuition fees may be eligible for the tuition tax credit are described in paragraph 118.5(1)(a). Subject to the general comments in 8 below, paragraph 118.5(1)(a) provides that a student must be enrolled at

  • an educational institution in Canada that is a university, college or other educational institution providing courses at a post-secondary school level (subparagraph 118.5(1)(a)(i) - see also 3 below), or
  • an educational institution in Canada certified by the Minister of Human Resources Development to be an educational institution providing courses (other than courses designed for university credit) that furnish a student with skills for, or improve a student's skills in, an occupation (subparagraph 118.5(1)(a)(ii) - see also 4 below).

If a student is deemed by section 250 to be a resident of Canada, subsection 118.5(2) removes the requirement in paragraph 118.5(1)(a) that the educational institution be in Canada. The rule in subsection 118.5(2) applies only for the period of deemed residence. The current version of IT-221, Determination of an Individual's Residence Status, primarily discusses factual residence in Canada, but it also contains a discussion of deemed residence in Canada under section 250.

3. For purposes of subparagraph 118.5(1)(a)(i), there is no all-inclusive list of universities, colleges or other educational institutions in Canada providing courses at a post-secondary school level. The Revenue Canada tax services office serving the area in which a particular institution is located is best able to make a judgment concerning that institution's eligibility for this purpose. Some assumptions and interpretations that are normally applied in determining eligibility of an institution for purposes of subparagraph 118.5(1)(a)(i) are as follows:

(a) Unless there is specific information to the contrary, an educational institution whose name includes the words "university" or "college" is usually eligible, as long as courses are given at a post-secondary school level.

(b) An "other educational institution" may include a professional organization that provides educational courses to members, as long as one minimum qualification for membership is secondary school graduation.

(c) An educational institution is not ineligible under subparagraph 118.5(1)(a)(i) solely by reason of the fact that it provides other courses in addition to post-secondary school level courses.

(d) An institution in Canada that has been designated as a "specified educational institution" under the Canada Student Loans Act or that has been recognized for the purposes of the Canada Student Financial Assistance Act or the Act Respecting Financial Assistance for Students of the Province of Quebec is presumed to satisfy the eligibility requirements.

4. For purposes of subparagraph 118.5(1)(a)(ii), each Revenue Canada tax services office has an updated list of institutions in Canada which have been certified by the Minister of Human Resources Development. Institutions wishing to obtain information on certification requirements and procedures for purposes of subparagraph 118.5(1)(a)(ii) should direct their enquiries to

Certification of Private Educational Institutions
Human Resources Development Canada
Phase IV, 4th Floor
Place du Portage
140 Promenade du Portage
Hull QC  K1A 0J9

Educational Institutions Outside Canada

5. The types of educational institutions outside Canada whose fees are eligible for the tuition tax credit are described in paragraphs 118.5(1)(b) and 118.5(1)(c). Paragraph 118.5(1)(b) refers to (full-time attendance at) "a university outside Canada in a course leading to a degree." An educational institution located in a country outside Canada is presumed to qualify for purposes of paragraph 118.5(1)(b) if it is recognized by an accrediting body (that is nationally accepted in that country) as being an educational institution which confers degrees at least at the bachelor or equivalent level (see 9(a) below). For example, an institution listed in the current edition of Accredited Institutions of Postsecondary Education published by the American Council on Education and indicated in that publication as being an institution granting degrees at the "B" level (bachelor's degree or equivalent), "M" level (master's degree or equivalent), "D" level (doctoral degree) or "P" level (first professional degree such as J.D., M.D. or M.Div.) will be regarded as a university that qualifies under paragraph 118.5(1)(b). Also, an institution listed in Schedule VIII of the Income Tax Regulations is recognized as satisfying the requirements of paragraph 118.5(1)(b).

6. Each Revenue Canada tax services office has a current list of institutions outside Canada that are recognized as universities for purposes of paragraph 118.5(1)(b). Therefore, a student can direct an enquiry regarding tuition fees paid to such institutions to the local Revenue Canada tax services office. Recognition of an unlisted institution as a university will be considered at the request of the institution. Such enquiries should be directed to

Director General
International Tax Directorate
Revenue Canada
2nd Floor
Tower C
Place Vanier
25 McArthur Avenue
Vanier ON  K1A 0L5

7. If a student resides throughout the year in Canada near the boundary between Canada and the United States and is enrolled in and commutes to a university, college or other educational institution in the United States providing courses at a post-secondary school level, paragraph 118.5(1)(c) provides a tuition tax credit for any tuition fees paid for the year to that educational institution, as long as the total of such fees exceeds $100. The eligibility of a United States educational institution under paragraph 118.5(1)(c) is determined by the International Tax Directorate of the Department on an individual basis by applying similar considerations to those used in determining the eligibility of Canadian educational institutions under subparagraph 118.5(1)(a)(i) (see 3 above). Any educational institution in the United States which is within commuting distance of Canada and which is listed in the current edition of Accredited Institutions of Postsecondary Education (published by the American Council on Education) is presumed to be an institution that qualifies for purposes of paragraph 118.5(1)(c). Also, any institution in the United States within commuting distance of Canada that is designated as a "specified educational institution" under the Canada Student Loans Act or recognized for the purposes of the Canada Student Financial Assistance Act or the Act Respecting Financial Assistance for Students of the Province of Quebec is presumed to be an eligible institution for purposes of paragraph 118.5(1)(c). Any enquiries by a student concerning eligibility of an educational institution for purposes of paragraph 118.5(1)(c) should be directed to his or her Revenue Canada tax services office.

General Considerations

8. A student who is enrolled (see 13 below) at an educational institution in Canada described in paragraph 118.5(1)(a) (see 2 above) may claim a tuition tax credit for any tuition fees paid for the year to that educational institution, as long as the total of such fees exceeds $100. However, such tuition fees do not qualify under paragraph 118.5(1)(a) to the extent that they are any of the following:

(a) They are paid on the student's behalf by his or her employer and are not included in the student's income.

(b) They are included as part of an allowance received by the student's parent on the student's behalf from an employer and are excluded from the parent's income under subparagraph 6(1)(b)(ix).

(c) They are fees for which the student is, or was, entitled to receive a reimbursement or any form of assistance under a program of the federal or a provincial government designed to facilitate the entry or re-entry of workers into the labour force, if the amount of the reimbursement or assistance is not included in calculating the student's income.

(d) Note: The detailed Notice of Ways and Means Motion that was tabled in the House of Commons on June 20, 1996 proposes to amend paragraph 118.5(1)(a). Under the proposed amendment, tuition fees under a federal government program designed to assist athletes will not be able to be claimed under paragraph 118.5(1)(a) to the extent that

  • the fees are paid on the student's behalf (or are fees for which the student is or was entitled to receive a reimbursement), and
  • the fees so paid or reimbursed are not included in computing the student's income.

This amendment is to take effect for the 1994 and subsequent taxation years.

If a tuition tax credit claim relates to tuition fees paid to a university, college or other educational institution in Canada providing courses at a post-secondary school level as referred to in subparagraph 118.5(1)(a)(i) (see 2 above), subparagraph 118.5(1)(a)(ii.1) requires that the courses for which the fees are paid must actually be at the post-secondary school level. Thus, for example, if an educational institution in Canada provides courses at the post-secondary school level as well as other courses, even though the educational institution can qualify for purposes of subparagraph 118.5(1)(a)(i) (see 3(c) above), tuition fees paid to the institution for any of the "other" courses cannot qualify for a tuition tax credit under paragraph 118.5(1)(a). Generally, for a course to be considered to be at the "post-secondary school level,"

  • the course should provide credit towards a degree, diploma or certificate; and
  • a prerequisite for taking the course should be completion of secondary school.

It is generally assumed that a course is at the post-secondary school level if the education ministry for the province in which the course is given considers it to be at that level.

If a claim relates to tuition fees paid to an educational institution certified by the Minister of Human Resources Development, as described in subparagraph 118.5(1)(a)(ii) (see 2 above), such fees cannot qualify for the tuition tax credit unless

  • the student is at least 16 years old at the end of the year, and
  • the student is enrolled in the educational institution to obtain skills for, or improve the student's skills in, an occupation.

The phrase "to obtain skills for an occupation" means that there must be sufficient skills to be acquired in the course to enable the student to work at an occupation. The phrase "to improve the student's skills in an occupation" implies that the student already possesses sufficient skills to enable the student to work at an occupation and the course must be capable of improving those skills. It is a question of fact whether a particular course is capable of improving a student's occupational skills or is sufficient to furnish the student with enough skills to enable the student to work at an occupation. If a student takes a number of courses that are required in order to acquire the skills necessary to work at an occupation, each course will qualify. On the other hand, if a student takes only an initial or introductory course in a particular trade or profession, that course will normally not qualify because sufficient skills have not been obtained. However, if the student goes on and takes the necessary additional courses required for a person to carry on that trade or profession, both the initial course and the additional courses will qualify.

9. A student at an educational institution outside Canada described in paragraph 118.5(1)(b) or (c) may claim a tuition tax credit for the tuition fees paid for the year to that institution in the circumstances and to the extent set out below:

(a) An individual who is, during the year, a student in full-time attendance (see 10 to 12 below) at a university outside Canada in a course leading to a degree at not lower than the bachelor or equivalent level may claim under paragraph 118.5(1)(b) a tuition tax credit for any tuition fees paid for the year to that university, provided that the fees are for a course of not less than 13 consecutive weeks in duration (see 24 below). However, tuition fees do not qualify under paragraph 118.5(1)(b) to the extent that they

  • are paid by the student's employer on his or her behalf and are not included in the student's income tax return, or
  • are paid on the student's behalf by the employer of the student's parent and are excluded from the parent's income under subparagraph 6(1)(b)(ix).

(b) An individual who is, at any time in the year, a student enrolled (see 13 below) at a university, college, or other educational institution in the United States providing courses at a post-secondary school level (the meaning of "post-secondary school level" is discussed in 8 above, following 8(d)) may claim a tuition tax credit for any tuition fees paid for the year to that institution under paragraph 118.5(1)(c) if the following conditions are met:

  • the student resided throughout the year in Canada near the boundary between Canada and the United States,
  • the student commuted to that educational institution in the United States and attaches to his or her income tax return a statement to that effect, and
  • the total of the tuition fees paid to the educational institution for the year exceeds $100.

However, such tuition fees do not qualify under paragraph 118.5(1)(c) to the extent that they

  • are paid on the student's behalf by his or her employer and are not included in the student's income tax return, or
  • are included as part of an allowance received by the student's parent on the student's behalf from an employer and are excluded from the parent's income under subparagraph 6(1)(b)(ix).

"Full-Time Attendance" and "Enrolment"

10. Paragraph 118.5(1)(b) applies only to a student who is in "full-time attendance" at a university outside Canada. Students are ordinarily accepted as being in "full-time attendance" if the university regards them as such. Accordingly, a certificate from a university stating that a student was in full-time attendance in a particular academic year or semester will normally be accepted.

11. A student is not considered to be in full-time attendance at a university outside Canada if

(a) only a few subjects at evening classes are being taken,

(b) courses are taken only by correspondence, or

(c) although a day student, the student is carrying only a minor course load and at the same time is devoting so much time and energy to other activities (such as money-earning activities) that they are clearly the student's primary occupation.

However, a student holding a full-time job while taking a major course load is considered to be in full-time attendance, provided that the educational institution being attended regards the student as a full-time student.

12. A student who is participating in post-graduate studies on a regular basis is ordinarily considered to be in full-time attendance if registered for the regular academic year, even though the requirements for attendance in class are minimal. Therefore, such a registered student who spends much of the time in a laboratory or a library engaged in research or writing a thesis or who spends part of the academic year engaged in research elsewhere than at the university would normally be regarded as being in full-time attendance. As in 11 above, a post-graduate student holding a full-time job is not necessarily precluded from being considered in full-time attendance at a university.

13. Paragraphs 118.5(1)(a) and (c) require a student to be "enrolled" in an educational institution of a kind set out in these paragraphs, but there is no requirement that the student be in full-time attendance. Consequently, tuition fees paid for part-time courses, such as night school courses, can qualify for the tuition tax credit under these provisions. Tuition fees paid for correspondence courses may be eligible for the tuition tax credit if taken with an educational institution in Canada, but not if taken with an educational institution in the United States, since paragraph 118.5(1)(c) requires the student to commute to the institution in the United States.

Individuals Eligible to Claim the Tuition Tax Credit

14. The tuition tax credit determined under subsection 118.5(1) may be claimed by the student (see 1 above) and any unused portion may be transferred to, and claimed as a tax credit by, the student's spouse (see 18 below) or the student's parent or grandparent (see 19 below). Subject to the general comments set forth in 8 and 9 above, the tuition fees may be paid by the student personally or by another person on the student's behalf (see 15 to 17 below).

15. A student who has all or part of the tuition fees paid by his or her employer may determine and claim a tuition tax credit for those fees only if the amount paid by the employer is included in the student's income tax return. Similarly, a student who has all or part of the tuition fees reimbursed by his or her employer may determine and claim a tuition tax credit for those fees if the amount reimbursed by the employer is included in the student's income tax return. In the case of an employer who pays tuition fees for an employee, such fees may be deductible by the employer as a business expense (see the current version of IT-357, Expenses of Training).

16. Generally, a recipient of tuition provided at no charge by an educational institution is not entitled to claim a tuition tax credit for the value of the tuition since no fees are paid to the educational institution. Thus, a student who is provided with "free" tuition as an achievement award by an educational institution may not claim a tuition tax credit for such tuition. However, if the value of "free" tuition has been included in the income of the student or a member of the student's family as a benefit from employment, a tuition tax credit for the value of the tuition may be claimed.

17. Tuition fees for which a tuition tax credit is claimed can include fees paid out of prizes, scholarships, fellowships or bursaries. (Rules for the taxation of such awards are contained in paragraph 56(1)(n) of the Income Tax Act, which is discussed in the current version of IT-75, Scholarships, Fellowships, Bursaries, Prizes, and Research Grants.)

Transfer of Unused Tuition Tax Credit

18. Under section 118.8, certain of the student's unused tax credits for the year, including the tuition tax credit, may be transferred to, and claimed as a tax credit by, the student's spouse. In determining the transferable amount of the student's tuition tax credit, it is combined with the student's education tax credit. The amount that may be claimed as a tax credit by the student's spouse under section 118.8 is determined by the following formula:

A + B - C

The variables in this formula are as follows:

A

is the total of the amounts that the student may claim for the year as tuition and education tax credits (up to a combined maximum of $680). Note: In the March 6, 1996 Notice of Ways and Means Motion to amend the Income Tax Act (which was released with and pertains to the Federal Budget of March 6, 1996), there is a proposal which, if enacted, would increase the above-mentioned combined maximum amount from $680 to $850 for the 1996 and subsequent taxation years.
   

B

is the total of the amounts that the student may claim for the year as age, pension and disability tax credits.
   

C

is the student's Part I tax payable determined before deducting any tax credits other than the basic personal tax credit under paragraph 118(1)(c) and the tax credits under section 118.7 for premiums for unemployment insurance (now known as employment insurance) and contributions under the Canada and Quebec Pension Plans.

The general rule is that an amount may be claimed as a tax credit under section 118.8 for a particular taxation year by an individual who was the student's spouse at any time in the year. The individual may not, however, make the claim for the year under section 118.8 if he or she was living separate and apart from the student at the end of the year and for a period of 90 days commencing in the year because of a marriage breakdown.

The meaning of "spouse" for purposes of the provisions of the Income Tax Act (as defined in subsection 252(4) of the Act) includes common-law couples, subject to certain requirements being fulfilled. Further details can be found in the T1 income tax package for the applicable taxation year.

19. If the student is unmarried in the year, or if the student is married but the student's spouse claims neither a personal tax credit for the student under section 118 nor a tax credit under section 118.8 for any of the student's unused tax credits (see 18 above), the student's combined education and tuition tax credits for the year may be transferred to, and claimed as a tax credit under subsection 118.9(1) by, the student's parent or grandparent. The amount that may be claimed as a tax credit by the student's parent or grandparent under subsection 118.9(1) is determined by the following formula:

A - B

The variables in this formula are as follows:

A

is the total of the amounts that the student may claim for the year as tuition and education tax credits (up to a combined maximum of $680). Note: In the March 6, 1996 Notice of Ways and Means Motion to amend the Income Tax Act (which was released with and pertains to the Federal Budget of March 6, 1996), there is a proposal which, if enacted, would increase the above-mentioned combined maximum amount from $680 to $850 for the 1996 and subsequent taxation years.
   

B

is the student's Part I tax payable determined before deducting any tax credits other than, if applicable, the personal, age and pension tax credits under section 118, the disability tax credits under section 118.3 and the tax credits under section 118.7 for premiums for unemployment insurance (now known as employment insurance) and contributions under the Canada and Quebec Pension Plans.

20. Subsection 118.9(2) provides that when a particular parent or grandparent has claimed a personal tax credit for the student under section 118 for a certain taxation year, that parent or grandparent is the only person entitled to make the claim under subsection 118.9(1) for that year. In any other case, the student must designate in writing the one parent or grandparent who will be entitled to claim the tax credit.

21. For the purposes of 19 and 20 above, by virtue of subsection 252(2), a grandparent of a student includes an individual who is

(a) the grandfather or grandmother of the student's spouse; or

(b) the spouse of the student's grandfather or grandmother.

Also by virtue of subsection 252(2), a parent of a student includes an individual

(c) who is a natural parent, a step-parent or an adoptive parent of the student;

(d) who is a natural parent, a step-parent or an adoptive parent of the student's spouse; or

(e) of whom the student is or was, pursuant to paragraph 252(1)(b), considered to be a child. Such an individual is one upon whom the student is or was at any time wholly dependent for support and under whose custody and control, in law or in fact, the student is or was immediately before attaining the age of 19. However, such an individual would not include a student's foster parent who received support payments from an agency responsible for the student's care, since the student would not be considered wholly dependent on the foster parent in such a case.

The definition of spouse contained in subsection 252(4) (see 18 above) is relevant to an understanding of who is a parent or grandparent.

22. In all cases in which a student's unused tuition tax credit is transferred to and claimed by the student's parent or grandparent under subsection 118.9(1), a certificate in prescribed form (form T2202 or T2202A) issued by the educational institution and containing prescribed information must be obtained by the parent or grandparent from the student. The student's parent or grandparent who claims all or a portion of the student's unused tuition tax credit should retain a copy of the certificate for his or her records.

Period Covered by Fees

23. The tuition tax credit for a particular taxation year can be based only on tuition fees paid for that year. Thus, for example, when the academic session covered by eligible tuition fees paid in a particular year extends from September of that year to April of the next year, the tuition tax credit for the fees is computed for each of those years as one-half of the fees multiplied by the lowest tax rate percentage (see 1 above).

24. In the case of a course taken by a student in full-time attendance at a university outside Canada, the fees must be for a course of not less than 13 consecutive weeks in duration to be eligible for the tuition tax credit under paragraph 118.5(1)(b). However, the tuition tax credit would not be denied simply because

(a) the student dropped out of the course before completing 13 weeks of study under the course;

(b) the course (which usually satisfies the 13 consecutive weeks requirement) does not do so in a particular academic term because the term itself happens to fall a little short of being a full 13 weeks (e.g., because of a holiday at the beginning or end of the term); or

(c) the particular academic term in which the course falls is interrupted, for example, by Easter Holidays.

25. There is no requirement regarding the length of a course taken by a student at an educational institution in Canada, or by a student who commutes from Canada to an educational institution in the United States. Thus, fees paid for relatively short courses, such as those taken during the summer, may be eligible for the tuition tax credit.

Eligible Tuition Fees

26. The following items that relate to a particular program (whether identified separately or included as course or subject fees) are considered eligible tuition fees:

(a) admission fees;

(b) charges for use of library or laboratory facilities;

(c) exemption fees;

(d) examination fees (including re-reading charges);

(e) application fees (but only if the student subsequently enrols in the institution);

(f) confirmation fees;

(g) charges for a certificate, diploma or degree;

(h) membership or seminar fees that are specifically related to an academic program and its administration;

(i) mandatory computer service fees; and

(j) academic fees.

When the Goods and Services Tax (GST) is added to an eligible tuition fee, the amount of the fee including the GST is eligible for the tuition tax credit.

27. Fees for the following items (whether identified separately or included as course or subject fees) are not considered eligible tuition fees:

(a) student activities, whether social or athletic;

(b) medical care or health services;

(c) transportation and parking;

(d) board and lodging;

(e) goods of enduring value that are to be retained by students (e.g. slide rule, microscope, uniform, gown, etc.);

(f) initiation fees or entrance fees to professional organizations; and

(g) administrative penalties incurred when a student withdraws from a program or an institution.

28. Although the cost of books, cassettes, videotapes or compact disks (CDs) ordinarily does not come within the meaning of tuition fees, an exception is made when the student is enrolled in a correspondence course given by an eligible educational institution in Canada (see 2 above) and the cost of the books, cassettes, videotapes or CDs which form part of the course is included in the fees paid for the course.

29. Subject to the comments in 8 above, fees paid by or on behalf of students enrolled at flying training schools or clubs certified by the Minister of Human Resources Development (see 2 and 4 above) are eligible tuition fees under paragraph 118.5(1)(a) only if the student is taking flying lessons in order to become a commercial pilot or a professional instructor. Fees are eligible only to the extent that they may be regarded as having been paid for "tuition". Therefore, a student must be under instruction and direct supervision before the cost of flying time is eligible for the tuition tax credit. The Department accepts that a student is under instruction and direct supervision while flying solo; consequently, the cost of dual and solo flying hours required to obtain the following licences or ratings, to the minimum flight training requirements of the Department of Transport, is considered to be part of the student's tuition:

(a) Private Pilot Licence - aeroplane;

(b) Private Pilot Licence - helicopter;

(c) Commercial Pilot Licence - aeroplane;

(d) Commercial Pilot Licence - helicopter;

(e) Instrument Rating;

(f) Flight Instructor Rating;

(g) Night Rating; or

(h) Alternate Landplane or Seaplane Rating.

The minimum dual and solo flying time is currently 45 hours for a Private Pilot's Licence and 65 additional hours for a Commercial Pilot's Licence. Fees for ground school and flight simulators are eligible for the tuition tax credit but costs incurred by a student in flying a personal aircraft while taking a course at a flying training school or club are not eligible.

Certification to Support Claims

30. In all cases in which the student's tuition tax credit or the student's unused portion of the tuition tax credit (see 18 to 22 above) is claimed, the individual or individuals making the claim should retain a copy of the certificate to support the tuition fees paid to the educational institution. (While it is no longer necessary to file the certificate with the T1 income tax return, the Minister of National Revenue has the authority under subsection 220(2.1) of the Income Tax Act to subsequently request it.) Form T2202A or an official income tax receipt is the appropriate certificate for tuition fees paid to any of the educational institutions in Canada that are referred to in 2 above. (The signature of an authorized officer is not necessary on form T2202A.) If the fees are paid to a flying training school or club, form TL11B is the appropriate certificate (see 32 below). In those cases in which an educational institution that is certified by the Minister of Human Resources Development does not use form T2202A, the institution should provide the student with a letter of certification substantially in the following form:

"NAME OF EDUCATIONAL

INSTITUTION................................

IT IS HEREBY CERTIFIED:

THAT............................................................

was enrolled as a student at this educational institution in a course entitled ................................................

THAT, out of the total fees paid for the session(s) given during 19  , the sum of.............constitutes the amount of tuition paid for purposes of paragraph 118.5(1)(a) of the Income Tax Act;

THAT no part of the above amount was levied for student activities (either social or athletic), medical care or health services, the cost of books, cassettes, videotapes or compact disks (CDs) (other than costs which are an integral part of the fees for a correspondence course), charges for board and lodging or any charges other than fees for tuition and the related fees for admission, use of library and laboratories, examinations, degree or diploma, re-reading of examination papers, and student memberships specifically related to an academic program and its administration.

Signature of Authorized Officer................................"

In addition, when the tuition fees are for courses at an educational institution described in subparagraph 118.5(1)(a)(ii) (see 8 above), students may be requested to provide the Department with proof that they are working towards an occupation or improving their skills in an occupation by taking such courses.

31. An educational institution in Canada wishing to incorporate the required certificate with its regular receipt for tuition fees may do so, provided that the document contains substantially the same information as that contained in the form of certificate shown in 30 above. A receipt issued by an educational institution for tuition fees paid that does not contain such information is, by itself, not acceptable.

32. As noted in 30 above, a claim for a tuition tax credit for tuition fees paid to a flying training school or club in Canada must be supported by a certificate or a copy of it available from the flying school or club (form TL11B). For individuals calculating a tuition tax credit for tuition fees paid to a university outside Canada under paragraph 118.5(1)(b) or to an educational institution in the United States under paragraph 118.5(1)(c), the required certificates (forms TL11A and TL11C) are available at any Revenue Canada tax services office.

Refund of Tuition Fees

33. If a certificate has been issued by an educational institution to a student who subsequently receives a refund for part or all of the tuition fees covered by that certificate, the student should be requested by the institution to return the original certificate and, in the case of a partial refund, a new one should be provided covering the actual tuition fees paid. If the institution is unable to retrieve the original certificate, it will advise the local Revenue Canada tax services office of the name and address of the student and the amount of tuition fees refunded.

If you have any comments regarding the matters discussed in this bulletin, please send them to:

Director, Business and Publications Division
Income Tax Rulings & Interpretations Directorate
Policy and Legislation Branch
Revenue Canada
25 Nicholas Street
Ottawa ON K1A 0L5


Explanation of Changes

Introduction

The purpose of the Explanation of Changes is to give the reasons for the revisions to an interpretation bulletin. It outlines revisions that we have made as a result of changes to the law, as well as changes reflecting new or revised departmental interpretations.

Reasons for the Revision

This bulletin has been revised (i) to remove a particular departmental position, (ii) to add a reference to a financial assistance act for students not previously mentioned, (iii) to reflect a name change for one of the department's divisions and for another government department, (iv) to remove the discussion of rules that are not relevant to current taxation years or that are now considered outside the scope of the bulletin, and (v) to add notes regarding relevant proposed amendments to the law. The bulletin is not affected by any proposed amendments (other than those so noted) announced before September 27, 1996.

Legislative and Other Changes

In s2, 4 (formerly part of 2), 8 (formerly 7), 29 (formerly 30) and 30 (formerly 31), the references to the Minister or Department of "Employment and Immigration" have been changed to "Human Resources Development" as of July 12, 1996. These references are made in the bulletin in connection with the certification of an institution for purposes of subparagraph 118.5(1)(a)(ii) of the Income Tax Act.

In s 3(d) and 7 (formerly 6), a reference has been added to the Canada Student Financial Assistance Act. That is, an institution in Canada or the United States that has been recognized for purposes of that Act will be presumed to be an eligible institution for purposes of subparagraph 118.5(1)(a)(i) or paragraph 118.5(1)(c) of the Income Tax Act, respectively.

5 (formerly 4) does not contain the sentence in former 4 to the effect that an educational institution whose name includes "university" is generally accepted for purposes of paragraph 118.5(1)(b).

5 (formerly 4) and 7 (formerly 6) now refer to Accredited Institutions of Postsecondary Education published by the American Council on Education, which we use as an authority when determining whether an educational institution in the United States is recognized for purposes of paragraph 118.5(1)(b) or 118.5(1)(c), respectively.

In 6 (formerly 5) and 7 (formerly 6), note that the International Taxation Programs Directorate has been renamed the International Tax Directorate and that the address of that Division has also changed.

In 8 (formerly 7), 8(d) has been added to provide a note regarding a proposed amendment to paragraph 118.5(1)(a). Also, 8 (following 8(d)) now discusses the meaning of "post-secondary school level."

17 (formerly 16) no longer indicates that if an award (as described in that paragraph) is made by the educational institution itself, a tuition fee paid out of the award is eligible for the tuition tax credit only if the award is made out of trust funds, or the income from trust funds, held by the institution.

In variable A in both 18 (formerly 17) and 19 (formerly 18), there is a note regarding a proposed amendment to the law.

The last part of 18 (formerly 17) no longer gives all the details of what subsection 252(4) provides with respect to the meaning of "spouse" for purposes of the Income Tax Act. As we indicated in our Income Tax Technical News, Issue No. 2 dated December 30, 1994, because there are about 100 income tax interpretation bulletins and information circulars that contain references to a taxpayer's spouse, we will not be revising each of these publications to explain the rules in subsection 252(4).

Rules discussed in the former bulletin that have no relevance to current taxation years, including all of former s 19 and 22, have been removed.

Other changes have been made in the bulletin for purposes of clarification. We have also removed information that is outside the scope of the bulletin.