Principal Issues: 1. Will a reimbursement of tuition in respect of a student from a family member's employer preclude the student from claiming the education tax credit when the reimbursement is included in the employee's income as an employment benefit?
2. If the reimbursement is not included in the employee's income, will the student be precluded from claiming the education tax credit?
Position: 1. Generally, no.
2. It depends on the nature of the payment. If the payment is a scholarship or bursary to the student and included in the student's income under 56(1)(n), generally, the student will not be precluded from claiming the education tax credit.
Reasons: 1. Where the reimbursed tuition is included in the employee's income as a taxable employment benefit, the student family member (spouse or child of the employee) will not be considered to have received a benefit from a person with whom the student is dealing at arm's length.
2. For 2007 and subsequent years, amounts paid to employees' dependants for tuition can be treated as a scholarship or bursary based on the Bartley, Dimaria and Okonski court cases. Receiving a scholarship or a bursary from an arm's length party does not preclude a student from claiming the education tax credit.
2009-030772
XXXXXXXXXX P. Burnley
(613) 957-2100
October 6, 2009