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.
Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CCRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ADRC.
Principal Issues: whether tuition for flying school is deductible as tuition
Position: yes, based on the particular facts
Reasons: 118.5(1)(a)(ii2)(B)
January 28, 2002
Michel Carbonneau HEADQUARTERS
Manager Denise Dalphy, LL.B.
Income Tax Appeals Directorate (613) 941-1722
Attention: Linda Urgolo
2001-011308
XXXXXXXXXX (the "taxpayer")
Tuition Fees - Flying Lessons
This is in response to your memorandum dated November 27, 2001 wherein you enquired whether amounts paid in XXXXXXXXXX by XXXXXXXXXX for flying lessons are deductible as tuition fees under the Income Tax Act (the "Act"). You are seeking our opinion since your interpretation of the Act may not be consistent with the text in paragraph 29 of Interpretation Bulletin IT-516R2 - Tuition Tax Credit ("IT-516R2").
Facts
Our understanding of the relevant facts is as follows:
(a) The taxpayer has a Master's degree in XXXXXXXXXX.
(b) From XXXXXXXXXX, the taxpayer followed a private pilot license course consisting of XXXXXXXXXX. The cost of the course was $XXXXXXXXXX.
(c) XXXXXXXXXX is an educational institute certified by the Minister of Human Resources Development to provide courses (other than courses designed for university credit) that furnish a person with skills for, or improve a person's skills in, an occupation.
(d) The taxpayer has stated that the reason he took the flying lessons was to develop his skills in his occupation, to add to his skills in engineering with hands-on experience flying an aircraft.
(e) After the taxpayer had taken the flying lessons, he started working with XXXXXXXXXX
(f) The taxpayer stated that the flying courses enabled him to occupy this new job.
(g) He also stated that his new job has resulted in an increase in annual pay (XXXXXXXXXX).
(h) The taxpayer works on XXXXXXXXXX.
(i) XXXXXXXXXX. In addition, XXXXXXXXXX stated that the knowledge that the taxpayer gained in the pursuit of a pilot's license is helping him to understand the function and task required of a flight crew provides him with the required technical vocabulary and XXXXXXXXXX.
(j) The taxpayer submitted Form TL11B, Tuition Fees Certificate - Flying School, wherein he stated that he intended to work in the occupation of "XXXXXXXXXX" and that he was enrolled in the course to obtain skills in that occupation.
The Law
The relevant provisions of the Act are as follows:
"118.5 (1) - For the purpose of computing the tax payable under this Part by an individual for a taxation year, there may be deducted,
(a) where the individual was during the year a student enrolled at an educational institution in Canada that is
(i) ...
(ii) 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 person with skills for, or improve a person's skills in, an occupation, an amount equal to ..., except to the extent that those fees
(ii.1) ...
(ii.2) are paid to an educational institution described in subparagraph (ii) if
(A) ...
(B) the purpose of the individual's enrolment at the institution cannot reasonable be regarded as being to provide the individual with skills, or to improve the individual's skills, in an occupation,
...
IT-516R2
The relevant portions of IT-516R2 are as follows:
"8....
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 [emphasis added] 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."
"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."
"30. ... 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."
We agree with your view that, based on the particular facts of this case, the tuition fees in the amount of $XXXXXXXXXX paid by the taxpayer for the private pilot's license course can be claimed by him as a deduction for XXXXXXXXXX in accordance with subparagraph 118.5(a)(ii) of the Act as they improved his skills in his occupation.
We hope the above opinion will assist you. If you would like to discuss this case, please contact the writer.
Steve Tevlin
for Director
Business and Partnerships Division
Income Tax Rulings Directorate
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