19 February 2003 Internal T.I. 2003-0000617 - TUITION TAX CREDIT PILOT LICENCE

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: Eligibility of cost of private pilot's licence for the Tuition Tax Credit.

Position: The student must provide proof of enrolment in a commercial pilot licence program in order for the tuition for private pilot licence training to be eligible for the Tuition Tax Credit.

Reasons: Information obtained from Individual Returns and Payments Processing Directorate.

		February 19, 2003

	XXXXXXXXXX TSO	HEADQUARTERS
		Renée Shields
	Attention:  XXXXXXXXXX 	(613) 948-5273

		2003-000061

Tuition Tax Credit for Private Pilot Licence

This is in response to your facsimile of January 29, 2003 regarding the availability of the tuition tax credit for fees paid to obtain a private pilot licence (PPL) as a pre-requisite to a commercial pilot licence (CPL).

You have forwarded a letter from XXXXXXXXXX, in which he explains that some students of the school have recently been advised by Canada Customs and Revenue Agency (CCRA) auditors that fees incurred in obtaining a PPL will not qualify for the tuition tax credit unless the PPL has already been obtained and training for the CPL is underway. It is XXXXXXXXXX position that a student's statement that he or she intends to obtain a CPL should be sufficient to substantiate the tuition tax credit for the tuition cost of the PPL in the year it is paid.

We have assumed that the XXXXXXXXXX has been certified by the Minister of Human Resources Development under subparagraph 118.5(1)(a)(ii) of the Income Tax Act (the "Act") 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. As such, where an individual is enrolled at the institution in a CPL program, the tuition costs associated with the program will be eligible for the tuition tax credit. Insofar as the acquisition of a PPL is a precursor to obtaining a CPL, the tuition costs of the PPL are eligible for the tuition tax credit. The comments in paragraphs 8 and 29 of Information Bulletin IT-516R2, Tuition Tax Credit, are relevant to such a claim.

In order for tuition fees for a PPL to be eligible, it must be clear that the individual is enrolled in a program that will furnish the person with skills for an occupation. As pointed out in paragraph 30 of IT-516R2 an individual may be required to provide the CCRA with proof that they are working towards an occupation by taking such courses [emphasis added]. For purposes of administering the provisions of the Act relating to the tuition tax credit, an individual's assertion that they will be pursuing a CPL, though perhaps evidence of intention, is not considered to constitute "proof".

We cannot comment on the historical approach of CCRA auditors with respect to what proof they have accepted in this regard. However, we have been advised, in conversation with an official of the Validation Section of the Individual Returns and Payments Processing Directorate (IRPPD) of the CCRA, that it is their position that to claim the PPL tuition fees while taking the PPL training, the student must provide a written statement from the flight school confirming the student's enrolment in a CPL program, the first stage of which is the PPL. Our understanding is that the student need not actually be training at the CPL level, but must be enrolled in a CPL program. If necessary, you can discuss this further with IRPPD.

If at the PPL stage an individual does not provide the requisite proof of enrolment, but later trains for a CPL, and wishes to claim the tuition tax credit for the PPL fees, IRPPD advised that the procedure has been to re-assess the prior year during which the tuition for the PPL was paid. There does not appear to be an interpretational issue with respect to the re-assessment process, so we have assumed that you will address XXXXXXXXXX concern that the Act does not allow for the re-opening of tax returns.

We trust that these comments will be of assistance.

For your information a copy of this memorandum will be severed using the Access to Information Act criteria and placed in the CCRA's electronic library. A severed copy will also be distributed to the commercial tax publishers for inclusion in their databases. The severing process will remove all material that is not subject to disclosure, including information that could disclose the identity of the taxpayer. Should your client request a copy of this memorandum, they can be provided with the electronic library version, or they may request a severed copy using the Privacy Act criteria, which does not remove client identity. You should make requests for this latter version to Mrs. Jackie Page at (819) 994-2898. A copy will be sent to you for delivery to the client.

Mickey Sarazin, C.A.

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