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: Can the XXXXXXXXXX which acts as agent in delivering a distance-learning program for the XXXXXXXXXX issue T2202A's to students participating in the distance-learning program?
Position: If the agency agreement allows for it, XXXXXXXXXX can issue form TL11A on behalf of the foreign university if XXXXXXXXXX is satisfied that the student is enrolled full or part-time in a designated educational institution and the program is a qualifying educational program.
Reasons: Sections 118.5 and 118.6 of the ITA.
2007-026093
XXXXXXXXXX L. Zannese
(613) 957-2747
February 12, 2008
Dear XXXXXXXXXX :
Re: Issuance of Form T2202A
This is in reply to your letter dated November 22, 2007, wherein you sought advice regarding the issuance of form T2202A.
You advise in your letter that the XXXXXXXXXX acts as agent for the XXXXXXXXXX in delivering a program on behalf of this University to students in Canada. The XXXXXXXXXX determines the program and any degree to be awarded. Students participating in a XXXXXXXXXX program complete it through distance learning using both paper based study material and electronic resources. As well, the students attend a one-week residency at XXXXXXXXXX where each module is introduced with specific focus lectures. During the residency period, the program and method of study are presented to the students. Each module has a dedicated tutor and students meet with the tutor during the residential session, and continue to communicate with the tutor afterwards by either email or telephone. Assignments are submitted by either paper or electronically. The program must be completed within three to five years.
Further, you advise that XXXXXXXXXX does not consider participants in the program offered by the XXXXXXXXXX to be students of XXXXXXXXXX. Although the XXXXXXXXXX collects fees for the program it does so as agent and forwards the fees collected less its agency fee on to the XXXXXXXXXX. You inquire as to whether XXXXXXXXXX should be issuing T2202A forms to students in this program. If XXXXXXXXXX should not be issuing these forms, then you ask whether students should request such a form from the XXXXXXXXXX.
The situation outlined in your letter appears to relate to a factual one, involving a specific group of taxpayers. It is not this Directorate's practice to comment on proposed transactions involving specific taxpayers other than in the form of an advanced income tax ruling. For more information about how to obtain a ruling, please refer to Information Circular 70-6R5, "Advanced Income Tax Rulings, dated May 17, 2002. This Information Circular and other CRA publications can be accessed on the Internet at http://www.cra-arc.gc.ca. Should your situation involve a specific taxpayer and a completed transaction, you should submit all relevant facts and documentation to the appropriate Tax Services Office ("TSO") for their views. A list of TSOs is available on the "Contact Us" page of the CRA website. Although we cannot comment on your specific situation, we are prepared to provide the following general comments, which may be of assistance.
Education Tax Credit:
The CRA's general view regarding the Education Tax Credit (ETC) is contained in Interpretation Bulletin IT-515R2 Education Tax Credit (the "Bulletin"), which is also available on the CRA web site at http://www.cra-arc.gc.ca. Generally, the ETC is available in respect of regular and correspondence education programs for students who are enrolled in qualifying or specified educational programs at designated educational institutions.
Form T2202A is issued by a designated educational institution in Canada to certify that a student was, during the particular taxation year for the number of months indicated on the form, enrolled in a qualifying educational program either as a full-time or part-time student at a designated educational institution as required by section 118.6 of the Income Tax Act (Act). If the student meets all the requirements of subsection 118.6(2) then the student can claim the ETC for the particular taxation year.
In order to issue a T2202A the designated educational institution must be satisfied that the student is enrolled either on a full-time or part-time basis in a qualifying educational program. The phrase "enrolled as a full-time student" is not defined in the Act. Paragraphs five to seven of the Bulletin provide general comments regarding the CRA's interpretation of this term. However, as indicated in paragraph five of the Bulletin, the requirement for enrolment as a full-time student at a designated educational institution must ultimately be met on the basis of the facts of each case.
You state in your letter that participants in the XXXXXXXXXX 's program are not considered to be students of XXXXXXXXXX. As such, XXXXXXXXXX is not eligible to issue T2202As certifying that the students are enrolled in courses at XXXXXXXXXX. However, depending on the terms of the agency agreement between XXXXXXXXXX and the XXXXXXXXXX may be able to issue such forms on behalf of the XXXXXXXXXX, if the all requirements of section 118.6 are met.
A qualifying educational program is a program running for at least 3 consecutive weeks that provides that each student taking the program spend at least 10 hours per week on courses or work in the program. If the student receives any benefit in respect of the program from a person with whom the student was dealing at arm's length (other than certain forms of financial assistance), the program is not a qualifying educational program. Where the student is enrolled at a designated educational institution but does not qualify as a full-time student, the student may still qualify for the part-time ETC. To qualify, the student must be enrolled in a specified educational program that provides that each student in the program spend not less than 12 hours in the month on courses in the program. A specified educational program means a program that would be a qualifying educational program if the definition for that term were read without reference to the 10 hours per week.
Although the program you describe must be completed within 3 to 5 years, it is the module that the student is enrolled in during the month in question that must meet the definition of qualifying educational program. Based on the limited information you have provided, it is not clear that each of the modules would meet this definition.
In addition to the above, the XXXXXXXXXX must be a designated educational institution. A designated educational institution includes a university outside Canada at which the student is enrolled in a course of not less than 13 consecutive weeks leading to a degree.
If XXXXXXXXXX satisfies itself that the XXXXXXXXXX is a designated educational institution and that the student is enrolled in either a qualifying educational program or a specified educational program, then, should the agency agreement allow it, XXXXXXXXXX may issue form TL11A to the student. If the agency agreement does not allow for this, then the XXXXXXXXXX may be eligible to issue these directly to the students participating in the program if the XXXXXXXXXX is satisfied that the criteria are met. Form TL11A is used by universities, colleges and other institutions outside Canada and is the equivalent of form T2202A used by Canadian institutions.
Tuition Tax Credit
The CRA's general interpretation of the provisions of the Act that apply to the tuition tax credit are contained in Interpretation Bulletin IT 516-R2 "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 is that the student must be in full-time attendance at the university in a course leading to a degree and the course must be of 13 or more consecutive weeks in length. 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.
It may be possible for a student to qualify for a tuition tax credit if the student is taking the course over the Internet and is required to participate in regularly scheduled interactive learning sessions. It is a question of fact whether any course taken over the Internet meets the requirements of full-time attendance. Based on the information you have provided it does not appear that the students in this program would qualify for the tuition tax credit.
We trust that these comments will be of assistance.
Robin Maley
Manager
Non-Profit Organizations and
Aboriginal Issues
Financial Sector and Exempt Entities Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch
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