18 June 2004 Internal T.I. 2004-0070671I7 - Payment of Tuition Fees

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 a University issue form T2202A to a student in respect of a prior year when tuition fees are not paid until the current year?

Position: Yes

Reasons: Subsection 118.5(1) of the Act, for purposes of the tuition tax credit, does not require that tuition fees have to be paid in a particular year, only that fees are paid "in respect of the year". As there is no requirement under the Act nor in the Regulations that requires or precludes an educational institution from issuing form T2202A, in circumstances where eligible fees under subsection 118.5(1) are paid to the institution in respect of the year, the form T2202A may be issued.

			June 18, 2004

HEADQUARTERS		HEADQUARTERS
Appeals Branch		Income Tax Rulings
	Voluntary Disclosure Program			  Directorate
				Kimberly Duval
	Attention:  E.Wayne Hood			957-8982

				2004-007067

Payment of Tuition Fees

We are writing in response to your e-mail of April 8, 2004 where you requested our comments on whether a University can issue a T2202A receipt to a student for tuition fees paid in respect of a prior year during which the student was enrolled in a qualifying program.

Specifically, you are considering a situation where a University is reluctant to issue a T2202A form for the 2002 taxation year to a student in respect of 2002 tuition fees paid to the school in 2004. You have mentioned that it is the University's understanding of the law as it pertains to the tuition tax credit, that it is unable to issue the T2202A in 2004 with respect to 2002 tuition fees because the University did not receive the payment during the 2002 school year.

Your Views

You have expressed concerns that the University's interpretation of the law with respect to the tuition tax credit may be incorrect. It is your opinion that, pursuant to subsection 118.5(1) of the Income Tax Act (the "Act"), tuition fees paid by a student subsequent to the year of instruction could still be considered for purposes of the income tax credit under subsection 118.5(1) and as such, the University should consider these fees for purposes of issuing a T2202A for the year of instruction.

Our Comments

With respect to a student's eligibility for purposes of claiming a tuition tax credit for a particular year, subsection 118.5(1) of the Act generally requires that the student's tuition fees for the year be paid in respect of the year in which the student was enrolled in a qualifying program of a post-secondary educational institution. The legislation does not require the tuition fees be paid "in the year of instruction".

In fact, when the amendments to the Act were passed to change the tuition fees deduction to a tax credit in 1988, the following technical notes were provided by the Department of Finance:

"New subsection 118.5 provides a tax credit in respect of tuition fees for the 1988 and subsequent years. These amendments to 118.5(a), 118.5(b) and 118.5(c) ensure that the credit will be available in those cases where the tuition for a semester in one year is paid in another year. In those cases the credit will be available for the year [in respect of] which the tuition is paid, rather than the year in which it is paid." [Emphasis added]

The term 'enrolled' is not a defined term in the Act, therefore, it should be given its ordinary meaning in the application of the provisions of subsection 118.5(1) of the Act. In the context of enrolment of a student at an educational institution for purposes of the tuition tax credit, it is our opinion that the student must be registered with the registrar of the institution such that the student would be contractually liable for any tuition fees required to be paid to the institution with respect to the chosen course of study.

Therefore, where eligible tuition fees are paid by a student in respect of a particular taxation year with a qualifying educational institution after the year of study, it is our view that these fees would still be considered eligible tuition fees for purposes of the issuance of a T2202A for the particular year.

That being said, however, there is also no legislated requirement in the Act or in the Income Tax Regulations that requires any educational institution to issue a form T2202A. In the circumstances, however, it would seem inappropriate for the University not to issue a T2202A form for the prior year, thereby restricting the ability of the student (or other eligible individual who supported the student) to properly calculate his or her income tax liability for that particular year.

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 Canada Revenue Agency'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.

Roxane Brazeau-LeBlond, C.A.

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