25 August 2004 External T.I. 2004-0091151E5 - Tuition tax credit

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: Are tuition fees paid to a university in Wales for a distance learning program eligible for the tuition tax credit?

Position: Question of fact. General comments given.

Reasons: See 2003-0002555. Referral to TSO.

2004-009115
XXXXXXXXXX G. Moore
(613) 957-2747
August 25, 2004

Dear XXXXXXXXXX:

Re: Distance Education

This is in response to your letter of August 11, 2004, inquiring about distance education for purposes of the tuition and education tax credits.

We understand that you are a Canadian resident, you have a full-time job in Canada, and you have enrolled in a distance education XXXXXXXXXX (the "Program") at the XXXXXXXXXX (the "University") in Wales. In your view, the program for which you are enrolled would qualify for the tuition tax credit based on paragraph 12 of IT-516R2, Tuition Tax Credit.

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 an advance income tax ruling request submitted in the manner set out in Information Circular 70-6R5, Advanced Income Tax Rulings, dated May 17, 2002. Where the particular transactions are completed, the inquiry should be addressed to the relevant tax services office. The following comments are, therefore, of a general nature only and are not binding on the Canada Revenue Agency ("CRA"). All publications referred to herein can be accessed on the CRA website at the following address: http://www.ccra-adrc.gc.ca/tax/technical/incometax/menu-e.html.

The CRA's general views regarding the tuition tax credit are found in Interpretation Bulletin IT-516R2 entitled "Tuition Tax Credit".

One of the specific requirements for claiming a tuition tax credit with respect to tuition fees paid to a university outside Canada, in respect of a course of 13 or more consecutive weeks, is that the student must be in full-time attendance at the university in a course leading to a degree. In any case, the determination of whether a student is considered in full-time attendance at a university is a question of fact.

The full-time attendance requirement is discussed in paragraphs 10 to 12 of IT-516R2. It states that, where a university or college considers that the students enrolled in their programs are in full-time attendance, the students are generally considered to have met the full-time attendance requirement under the Act. However, as noted in paragraph 11 of IT-516R2, a student is not considered to be in full-time attendance at a university outside Canada where the courses are taken only by correspondence, or where the student is carrying only a minor course load and is devoting much of his or her time to money earning activities. Generally, if there is no physical presence at the foreign university, the students cannot claim the tuition tax credit.

You have referred to paragraph 12 of IT-516R2, which discusses full-time attendance for a student participating in post-graduate studies. Please note that the comments in paragraph 12 of IT-516R2 apply to students who are, to some degree, in physical attendance at a university outside Canada and therefore, must consider whether other activities such as their employment, research or thesis writing, would disqualify them from being in attendance "full-time." We note that you are in physical attendance at the XXXXXXXXXX for three compulsory study schools, of 4 to 5 days each. In any case, the determination of whether you would be considered a student in full-time attendance at a university outside Canada is a question of fact that can only be resolved after a review of the circumstances is conducted. In this regard, we have forwarded the documentation you submitted, including the tuition tax receipt for a course at XXXXXXXXXX for the 2002 taxation year, to Ms Sharon Froude, Assistant Director, Client Services, Toronto Centre Taxation Services Office. Ms Froude has been apprised of your situation and may be reached at (416) 954-3705.

You have requested that the Act be amended to permit tuition fees paid for distance learning programs outside Canada to qualify for the tuition tax credit. The CRA administers and enforces the laws set out in the Act. The Department of Finance is responsible for tax policy and amending the Act. In this regard, recent amendments to subsection 118.6(2) of the Income Tax Act (the "Act") removed the requirement that an individual be in full-time attendance at a designated educational institution to benefit from the education tax credit. The purpose of that amendment was to ensure that the credit was available to full-time post-secondary students enrolled in distance education programs or correspondence courses. In our view, had the Department of Finance viewed foreign university distance learning education programs as programs which should qualify for the tuition credit, they would likely have made a similar amendment to paragraph 118.5(1)(b) of the Act. Nevertheless, should you wish to write to the Department of Finance to reconsider its existing policy to take into account your situation, you may do so by writing to the following address: Department of Finance, Tax Policy Branch, L'Esplanade Laurier, 140 O'Connor Street, Ottawa, Ontario, K1A 0G5.

We trust that these comments will be of assistance.

Yours truly,

Roxane Brazeau-LeBlond, C.A.

for Director
Financial Industries Division
Income Tax Rulings Directorate
Policy and Legislation Branch

c.c. Sharon Froude
Assistant Director, Client Services
Toronto Centre Taxation Services Office