9 December 2004 External T.I. 2004-0099741E5 - Issuance of T2202A form

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: 1) Whether an entity, certified by the Minister of Human Resources, may issue a T2202A for amounts paid by an individual to acquire a passport allowing the individual to attend a package of seminars within a specified period? 2) In what taxation year should the entity issue the T2202A form if the seminars are taken in different taxation years? 3) In determining the amount to be entered on the T2202A where the seminars are taken in different taxation years, should the entity prorate the amount paid by the individual for the passport on the T2202A or reflect the cost of the course taken by the students?

Position: 1) Yes, provided that all conditions in subsection 118.5(1) are met. 2) The T2202A should reflect the amount paid by the student for the seminars attended in the taxation year. 3) The T2202A should reflect the amount determined by the entity in respect of the actual amount received by her in respect of the seminars taken in the period.

Reasons: 1) Individual entitled to a deduction for the tuition paid for the seminars taken. 2) The credit may only be taken in respect of seminars taken in the taxation year. 3) Both methods are correct but the amount put on the T2202A cannot exceed the amount received by the entity.

									2004-009974
XXXXXXXXXX 								Michelle Desrosiers,
							  		Notary, M.Fisc.
December 9, 2004

Dear XXXXXXXXXX:

Re: Issuance of T2202A

This is in response to your letter of October 12, 2004 wherein you requested our views regarding the issuance of a T2202A for tuition credit, under paragraph 118.5(1)(a) of the Income Tax Act (the Act), where an individual pays a flat rate for a "Passport" that entitles the holder to attend a preset number of seminars during a specific period and the period overlaps more than one taxation year.

An entity, certified by the Minister of Human Resources to be an educational institution for the purposes of paragraph 118.5(1)(a) of the Act, offers seminars to individuals. Individuals may pay to attend specific seminars or they may pay to acquire a passport that will entitle them to attend a specific number of seminars within a certain time frame. The time frame could overlap two separate calendar years. Generally, seminars purchased through a passport are less expensive than the purchase of individual seminars.

It is assumed that all of the conditions prescribed on subsection 118.5(1) are met.

For example, an individual purchases a Passport, valid from September 1, 2004 to June 30, 2005, in September 2004 for $1,000. The Passport entitles the individual to sign up for a total of 6 days of seminars that are held during this period. The individual registers for 3 seminars that would normally cost $200, $400 and $600. The $200 and $400 seminars are taken in October 2004 and the $600 seminar is taken in February 2005.

Written confirmation of the tax implications inherent in particular transactions is given by this Directorate only where the transactions are proposed and are the subject matter of an advance income tax ruling request. For more information concerning advance tax rulings, please refer to Information Circular 70-6R5 dated May 17, 2002. Information Circulars and Interpretation Bulletins referred to herein are available from your local tax services office or on the Internet at: http://www.ccra-adrc.gc.ca/formspubs/menu-e.html. However, we are prepared to provide the following general comments, which may be of assistance.

The Canada Revenue Agency's general views regarding tuition tax credits are found in Interpretation Bulletin IT-516R2, "Tuition Tax Credit".

We are of the view that the expression "individual's tuition paid" in subsection 118.5(1) refers to an eligible amount actually received from the student by the educational institution in respect of the period covered by the T2202. With respect to the example, the amount to be considered for the purpose of the tax credit will be determined by the entity. The amount that is entered on the T2202A cannot exceed the amount that is actually paid by the individual, in the above case $1 000.

We are also of the view that the expression "in respect of the year to the educational institution" in subsection 118.5(1) of the Act should be interpreted as the period in which the seminar is taken. In the above scenario, where the entity recognizes $600 for 2004 and $400 for 2005 then the T2202As will reflect these amounts. However, where the entity recognizes $500 for 2004 and $500 for 2005 then it will be reasonable that the T2202As reflect these amounts.

We trust that the above comments will be of assistance to you.

Yours truly,

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